WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A009900010001-4
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• Content Type: SUMMARY

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V
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
3 November 1972
No. 0394/72
Copy N9 44
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The WEEKLY SUMMARY,- issued every Friday morning by
the Office of Current Intelligence, reports and analyzes signif-
icant developments of the v eek through noort on Thursday.
It frequently includes material coordinated with or prepared
by the Office of Economic Research, the Office of Strategic
Research, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and there-
fore published separately as Special Reports are listed in the
contents.
CONTENTS (3 November 1972)
1 A Deadline Comes and Goes
FAR EAST
5 Japan: New Spending
6 Hammer and Sickle in Bad Year
7 USSR-Chile: Distant Relations
7 Andreotti and the Communists
9 Yugoslavia: Kissing the Hand
10 Britain's Economic Problems
10 Ireland: Gains and Losses
11 Europe and Space: Still Holding
MIDDLE EAST
AFRICA
12 Israel-Fedayeen: Retaliation
14 Egypt-USSR: A Warming Trend
15 Egypt: More Domestic Problems
16 The Yemens: An Odd Couple
17 India-Pakistan: No Withdrawal
18 Iran: Clouds on the Horizon
19 Dahomey: Still Another
WESTERN
HEMISPHERE
20 Chile: No Rest for the Weary
21 Grenada Seeks Independence
21 Bolivia: Asking for Trouble
22 Uruguay: Bordaberry Bows
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JCI_f RC I
A Deadline Comes and Goes
Hanoi mounted an intense propaganda cam-
paign in,- the wake.of its 26 October revelations
about the peace negotiations. Charging that it was
a "mockery . of truth" to assert that President
Thieu could stand up to US pressure, Vietnamese
Communist pronouncements demanded that the
US sign the agreements on 31 October and
asserted that any delay in the signing would be on
Wash ington'slread. At the same time, both Hanoi
and the Viet tongexhorted Communists North
and South` to keep up the struggle and to be ready
for anything.
Nowhere in this outpouring did the Com-
munists say what would happen if the US did not
meet the deadline, but there were a few hints that
Hanoi's position Was more flexible than it
appeared, North Vietnamese spokesman Nguyen
Thanh Le-, for example, dodged reporters'
questions when, they asked him on 27 October
what Hanoi would do if the deadline passed with-
out a signin A second North Vietnamese spokes-
man saidj_that Hanoi would be satisfied
with an- i.nitialing of the agreement on the 31st
and that the signing itself could occur after the
US elections. "Hanoi, he claimed, would be willing
to do some renegotiating in the interval.
When it became apparent that the deadline
was not going to be met, all Communist talk of
deadlines ceased. The Viet Cong press spokesman
in Paris issued a statement on 31 October that
criticized the Us, for not signing, but said no more
than that th`=--e U must respect the text of the
accords and .sign them as soon as possible. Com-
munist , rnecl a are,' now concentrating on the
theme that the US i's responsible for prolonging
the war.
The Line from Moscow and Peking
All this time, Hanoi was getting no backing
on the deadline question from its two big allies.
In other respects, however, the Soviets and
Chinese differed from each other in several ways.
The Soviets issued pro forma statements of
support for Hanoi's general position, but Moscow
was concerned mainly that a settlement not be
derailed over relatively minor matters. According
to TASS, Kosygin's principal message on 27 Octo-
ber was that the negotiations should continue.
TASS also singled out Dr. Kissinger's statement
that the issues still to be decided are less im-
portant than those already settled. Moscow stuck
to this line as the days passed, although its com-
ments grew more muted as the deadlock per-
sisted.
Peking, in contrast, made no direct mention
of renegotiation in Paris. In a government state-
ment on 30 October and a Peoples Daily on 2
November, the Chinese backed Hanoi's con-
tention that an agreement was ready for signature
and that Washington was to blame for any delay.
Peking's comments implied that Hanoi was re-
sponsible for the breakthrough in the negotiations
and that the US was stalling with its talk of
difficulties in Saigon. This, the Chinese charged,
amounted to a "pretext" that belied the client
nature of Thieu's relationship with Washington.
The Chinese, however, were careful on this and
other occasions not to imply that the negotiations
were at an impasse or that further discussions
should be ruled out. Their somewhat closer ap-
proximation of the North Vietnamese position
seems designed with an eye as much to Moscow as
to Hanoi.
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JtUNt I
The Thieu government, backed by many
demonstrations of popular backing and armed
with statements of support from the supreme
court and the National Assembly, is also
mounting a propaganda campaign, which is grow-
ing more intense. Three special emissaries have
been sent out to explain Saigon's position to
potentially sympathetic Asian governments, and,
in a speech on 1 November, Thieu reiterated his
criticism of the announced terms of settlement.
As in his earlier statements, Thieu avoided ex-
plicit criticism of the US. He charged that the
Communists had put forth a peace agreement
"fraught with perfidy and treachery." He stated
once again his opposition to any agreement that
does not provide for the withdrawal of North
Vietnamese troops from South Vietnam, fails to
recognize South Vietnam as a separate country
distinct from the North, and does not provide for
the right of self-determination of the South
Vietnamese people.
Along with the rhetoric, however, the Saigon
government is warning the populace that there
may soon be an end to the fighting. Radio Saigon
declared on 29 October that everyone under-
stands that "a cease-fire is only a matter of time
and that it will come... possibly in a few weeks."
The army radio has also implied that a cease-fire
was near, asserting that this would mean a com-
plete Communist defeat.
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JAPAN: NEW SPENDING
The cabinet has proposed a supplementary
spending bill of $3.7 billion during the fiscal year
ending 31 March 1973. The bill is intended to
speed recovery from the recent economic slow-
down and help reduce the trade surplus by raising
demand for imports. If passed by the Diet, the
new spending would come at a time when the rate
of growth is accelerating, while its impact on
imports would not be felt for some time.
The proposed expenditures are substantial.
If approved, they would boost government out-
lays during this fiscal year more than 25 percent
above the previous year's level. Spending of this
magnitude would aggravate Japan's incipient
inflation. Noting that both wholesale and con-
sumer prices rose at an annual rate of about ten
percent during the August-September period, the
governor of the central bank has called for fiscal
restraint, and the Ministry of Finance has ex-
pressed apprehension over larger expenditures.
These considerations may lead the Diet to trim
the bill.
With elections expected this winter, how-
ever, Diet memb ers are aware that the new mone
would be earmarked for a variety of objectives
that appeal to important voting blocs. Spending
would go into government salaries, transfers to
local governments, payments to rice producers
and a variety of loans and investments.
Increased government spending would add
fuel to a recovery that already is well under way.
The growth of real gross national product, which
slipped to about six percent during the recent
economic slowd own, is accelerating even faster
than Tokyo had expected. During the first half of
1972, industrial production was up about 8.5
percent from the same period last year and th
pace is increasing.
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J1= _.t1t I
USSR: HAMMER AND SICKLE IN BAD YEAR
Moscow can only have been disappointed in
the performance turned in by Soviet industry and
agriculture during the third quarter of this year.
Although industrial production improved slightly
in the period, output is estimated to have grown
by only five percent from January through Sep-
tember over the comparable period last year-the
lowest nine-month growth rate for industry since
1969. A Pravda editorial stressed that Soviet in-
dustry will have to accelerate production in the
next two months if the industrial output plan for
1972 is to be met. As a result of a severe winter
and summer drought, the grain crop this year will
be at least ten percent below last year, and
harvests of other important crops such as fodder,
potatoes, and sugar beets will be poor.
SOVIET INDUSTRIAL GROWTH
(Noreen rage rate Jan through Sept)
Machlnerp 1n.4 8.8 9^ 7.6
Consumer non-durables 3.1 4,9 39 1.9
Within the industrial sector, output in the
machinery category-which excludes military-
space hardware items-continued to grow faster
than industrial materials or consumer non-
durables. The production of most machinery
items, however, failed to match last year's in-
creases with the notable exception of agricultural
equipment and television sets. The growth in pro-
duction of industrial materials was also down
somewhat from the pace in 1971.
The production of consumer non-durables
failed to live up to the promises made by Brezh-
nev at the beginning of the current five-year plan.
Production of processed foods rose at a rate com-
parable to that in 1971, but at only half the rate
required to meet the ambitious goal of the 1972
plan. Moreover, the impact of the poor harvest in
1972 will be felt in the food industry, possibly by
the end of the year. The growth rate of soft goods
output-clothing and shoes--lagged far behind last
year's and even further behind that necessary to
reach the 1972 target.
Problems continue to plague the agricultural
sector. By mid-October, state and collective farms
still had not threshed about eight percent of the
total area sown to grain. Significant areas in the
European part of the RSFSR and in the Ukraine
probably have been abandoned or used for graz-
ing, and the arrival of winter weather in Siberia
and the Urals may have caused considerable losses
there. Continued uncertainty over the size and
quality of the grain harvest may result in further
Soviet imports before the 1973 harvest. In fact,
recent reports are that international grain com-
pany representatives are in Moscow now, possibly
negotiating additional grain contracts.
Meanwhile, the 1973 grain crop is off to a
bad start. As the fall sowing campaign came to an
end, only 75 percent of the planned area had
been sown to winter grains-which usually con-
tribute about 40 percent of total grain produc-
tion-a record shortfall. The lack of soil moisture
in some areas hit by the summer drought pre-
vented fall seeding. As in 1972, the barren areas
will have to be renown next year with lower
yielding spring grains.
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SECRb I
USSR-CHILE: DISTANT RELATIONS
The Soviet civil airline, Aeroflot, will inaugu-
rate regular weekly service to Santiago via Rabat,
Havana, and Lima on 4 November. The new
service and a large Soviet industrial and agri-
cultural exposition now in Santiago are the most
recent signs of Moscow's interest in Chile since
Marxist President Salvador Allende took office
two years ago.
Aeroflot had sought Latin routes beyond
Cuba for a long time, presumably for political
reasons. At least the long hauls to and from Latin
America with well-below-capacity loads look like
certain money losers. But the Soviets seem to be
angling for more. At present, Lima is only a
refueling stop, but Aeroflot is seeking Peruvian
permi7an- to take on and discharge passengers as
well.
Moscow may also try to arra
along South America's east coast to lessen travel
time to Chile from Rabat.
The Soviet exposition in Santiago opened on
26 October and will run until 21 November. It
reportedly includes exhibits by two dozen Soviet
enterprises, and Soviet commercial counselors
stationed in several Latin American countries are
on hand to facilitate sale of the wide range of
goods on display. There is no Soviet military
representation at the fair, and no military hard-
ware is being offered.
Despite these signs, Moscow and Santiago
remain cautious of each other. For their part, the
Chileans have used only a small portion of the
$169 million in new credits that the Soviets ex-
tended last July. In fact, Santiago still has not
used some Soviet project loans proffered as far
back as 1967. Most of the items offered for
export by Moscow are not really needed in Chile,
and Santiago apparently does not want to become
so dependent on Moscow that its Western ties
would be further reduced. Recently, however,
when such foreign capital became scarce, Chile
did begin to make small drawdowns on Soviet
credits.
Soviet media have been paying greater
attention to Chile in recent weeks. The articles
are uniformly pro-Allende, but the Soviets
scrupulously avoid promising anything more than
ANDREOTTI AND THE COMMUNISTS
Prime Minister Giulio Andreotti's trip to
Moscow last week provided the Soviets with an
opportunity to level sharp criticism at Italian for-
eign and domestic policies. Rome's decision to
permit homeporting of a US submarine tender off
Sardinia-a policy already under attack by Italian
Communists-came under especially heavy fire in
Moscow. Foreign Minister Medici said the talks
were marked by a "frankness" that "could not
always be pleasant-either for one party or the
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Moscow doubtless coordinated its position
with the Italian Communist Party in advance.
The Soviets claimed that talk of detente
contrasted with the Italian lease of a base to the
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US and maintained that this would allow nuclear
submarines to dock at La Maddalena off the
northern tip of Sardinia. Premier Kosygin was
unimpressed by Andreotti's explanation that only
a military repair facility was involved and
observed that the arrangement "might force the
Soviets to reconsider their position on such
matters in the area concerned."
Turning to the European Communities,
Kosygin attacked "closed groups in Europe." He
declared the Soviets could not tolerate the dis-
crimination against socialist states that would re-
sult from a unified EC commercial policy. The
Soviets said they expected to continue to make
bilateral commercial deals with individual coun-
tries rather than negotiate with the Communities
as a unit.
On domestic Italian affairs, Kosygin took
Andreotti to task for the recent terrorist
bombings of trains carrying Communists to a na-
tional labor rally. Kosygin echoed accusations by
Italian labor leaders that neo-fascists were re-
sponsible, allegations that have not yet been
proved.
Rome and Moscow did manage to agree to a
protocol calling for periodic consultations be-
tween Soviet and Italian leaders. There were fairly
detailed discussions of the Conference on Secu-
rity and Cooperation in Europe and the Mutual
and Balanced Force Reduction talks. A long-term
trade agreement was envisaged in economic dis-
cussions, but no conclusion was reached.
Andreotti returned home to face more
trouble from the Communists. The party is
.forcing a Senate test on the homeporting question
early this month. The Communists are likely to
emphasize that, heretofore, the nearest repair
facility for American submarines was the Spanish
port of Rota in the Atlantic.
The government's majority in the Senate is
both narrow and fragile. The neo-fascist Italian
Social Movement may give Andreotti a margin of
victory on this question but, if so, the vote will
antagonize the Social Democrats or the Re-
publicans and might prompt one or the other to
resign from the governing coalition. It could not
survive the defection of either party.
A characteristic of Andreotti's nine-month
tenure has been a more assertive attitude in for-
eign affairs in contrast to the preoccupation with
domestic affairs of most postwar Italian govern-
ments. In addition to the trip to Moscow, the new
approach shows up in Rome's discussions of the
southern Mediterranean with Malta and Libya and
in the serious pitch Rome is making for a perma-
nent seat on the UN Security Council. Rome has
pushed with considerable success for the use of
Italian as an official language at the Conference
on European Security and has won a part-time
role in the force reduction talks as a "flank"
state, sharing a post with Turkey and Greece. To
some extent, the government will be testing the
popular appeal of this more active international
role in the approaching Senate debate.
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Party leaders have swallowed their misgivings
and endorsed Tito's purge. It is now apparent that
he is not just reshuffling personnel but is making
drastic changes in power balances and in the
party's operating style. Since this involves a re-
centralization of power, the task will be painful,
difficult and protracted.
On 30 October, the purge expanded not
only beyond Serbia, but beyond the party itself.
Tito summoned the full party presidium to his
summer home on the island of Brioni. During this
meeting, each of the regional party bosses ad-
mitted to errors in his bailiwick and promised to
follow through on Tito's program for tightening
discipline. They completely accepted his reasons
for purging the Serb leaders two weeks ago and
backed his demands for substantial changes
throughout the party. Tito warned against any
shrinking from the housecleaning he is embarked
upon, and he expressed confidence that the new
a
Serb leaders will not shrink from their pace-
setting task.
As part of the housecleaning, Tito said that
the party must bring in more young people and
workers. The elevation of two representatives
from the generation of post-war Communists,
Tihomir Vlaskalic and Nikola Petrovic, to the top
posts in the Serbian party is an example of what
Tito wants. Similar changes in other regional or-
ganizations can be expected. Plenums are
scheduled for late this week in Kosovo and
Vojvodina, where the provincial parties, closely
tied to the Serbian apparatus, have yet to take
action on Tito's various demands for change.
Belgrade is showing concern over the effect
of the purges on Yugoslavia's image abroad, par-
ticularly in the West. Tito indicated at the
presidium meeting that he does not want heads to
roll indiscriminately. Another speaker denied that
the purge would affect Yugoslavia's
policy of nonalignment. This latter
statement was probably meant to
forestall any thoughts abroad that for-
eign minister Tepavac's resignation
signified a shift in Yugoslav foreign
policy. The US Embassy in Belgrade
foresees no such shifts.
Marko Nikezic, Serb party boss, Presidum member
Latinka Perovic, Nikezic's deputy, Presidium member
Bora Pavlovic, Belgrade party boss, Presidium member
Krste Miloslavlevski, Macedonian party secretary, Presidium member
Stane Kavcic, Slovenian premier, Presidium member
Mirko Tepavac, foreign minister
Frane Barbierri, editor of Nin, Belgrade's most influential weekly
Aleksandar Nenadovic, editor of Politika, influential daily
Veroslava Tadic, political editor, Belgrade TV
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While no open opposition to Tito's
moves has developed, his precipitous
attempt to reorient the party will prove
worrisome for his lieutenants. He has
engineered two regional purges in less
than a year. These have demoralized a
large number of party members, and
public acts of self-contrition by those
purged have, in effect, lessened public
esteem for the regime. Tito will need
time to put together a new team and
straighten out the precise relationship
between regional and federal party or-
ganizations and the relationship of both
to non-party bodies. The big question
now is whether Tito at age 80 has the
time left to get it done. F
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Britain is enjoying its most rapid economic
growth in recent years, but serious inflation, labor
unrest, and a wobbly pound are obstacles to con-
tinued progress. The government has yet to imple-
ment policies that will both sustain growth and
allow smooth integration into the EC in January.
Expansionary budgets in fiscal 1972 and
1973 have increased the level of economic activ-
ity in Britain. Substantial cuts in individual
income taxes and sales taxes have spurred a rapid
rise in consumer spending. Compared with an
average annual growth of 1.9 percent in 1969,
1970 and 1971, real gross domestic product prob-
ably will rise by about 3.5 percent this year.
Private investment, however, has been dis-
appointing. Manufacturing investment in the first
half of 1972 was 7 percent below the comparable
figure for the second half of 1971, and the share
of gross private fixed investment in gross domes-
tic product-9.8 percent-is among the lowest in
Western Europe. Moreover, the faster pace of
economic activity has been accompanied by con-
tinued wage and price inflation. Retail prices,
after falling steadily during the summer, have
again accelerated, reaching a 7.6-percent annual
rate in September, and wage costs continue to rise
at about ten percent annually. Progress toward
voluntary wage-price restraints has been slow, and
even if a settlement is reached, the outlook for
successful implementation is dim. Several large
unions have already indicated that they will
refuse to abide by any such agreement.
Speculation that Prime Minister Heath may
move to impose statutory controls is mounting.
Such measures would be out of step with Heath's
economic philosophy, but he may be forced to
impose them as the only way to avoid a disastrous
wage-price spiral. The Confederation of British
Industries has stated that it will not extend its
voluntary price restraints unless the unions accept
some form of restraint on wages. Without these
restraints, price inflation would be likely to
surpass the 9 percent rate of 1971, with serious
consequences for the competitiveness of British
exports.
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Uncertainty over the outcome of the anti-
inflation talks has apparently heightened the
nervousness in foreign exchange markets over
London's ability to survive the cold shower of
competition in the EC. The value of the pound
has fallen sharply, down to $2.34 on 31 October.
The sell-off was orderly for the most part, but
hectic enough at times to require limited inter-
vention by the Bank of England. A persistent
rumor, initiated by a West German financial pub-
lication, that the pound would be repegged at
$2.25 contributed to the decline, as did the
$700-million trade deficit posted in the third
quarter. The EC would like to see the pound
repegged by the time the UK enters the Com-
munity, but not at the low levels reached in late
October. British officials are likely, however, to
delay setting a new rate, perhaps past 1 January,
partly in the hoe that the pound will recover in
the meantime.
As the date of actual entry into the EC
approaches, concern is mounting in Ireland about
the economic benefits to be realized from
membership. Expecting that free access to the EC
market would enhance Ireland's attractiveness to
foreign investors, Dublin has long counted on the
establishment of foreign plants to alleviate its
serious and chronic unemployment. Some ob-
servers now believe that the continuing rapid
wage increases will erode the international com-
petitiveness of Irish goods and scare away needed
investment.
Ireland's recent economic performance has
been disappointing. Real gross national product
rose by only 1.5 percent in 1970 and less than
three percent last year. Per capita gross national
product, which was about $1,600 in 1971, is
among the lowest in Western Europe, and the
unemployment rate has reached eight percent.
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Kiw
1,96$-7 1971
Ireland
Francs 1
United Kingdom
West G~,
The government hoped that Irish access to
the large EC market would spur growth by pro-
viding greater incentives for production and
investment. In particular, it was hoped that non-
EC, especially US, firms would be attracted by
Ireland's low wage scales and its new position
inside the EC's tariff wall. The need for invest-
ment from additional sources has been accentu-
ated by a sharp drop in British investment in the
wake of the troubles in Northern Ireland. The
incomes generated in Ireland by foreign firms'
activities were anticipated as a major stimulus to
economic growth.
EUROPE AND SPACE: STILL HOLDING
After a series of delays, the European
Space Conference will finally meet on 8-9
November to consider a possible European
role in the US post-Apollo program. The US
had asked for a decision by the end of Octo-
ber, but disagreements among the European
states forced the cancellation of a ministerial
session scheduled for last week. The major
dispute is between the West German prefer-
ence for post-Apollo cooperation and the
French insistence on developing an inde-
pendent European space launcher.
Wage increases have lately been far in excess
of those in other EC countries, seriously eroding
Ireland's chief advantage of low wage costs. Many
commentators fear that Ireland may be pricing
itself out of the market for foreign-financed
industrial investment, especially in view of the
increasing competition for such investment else-
where in Europe. Ireland is still a low-wage area,
but potential investors, who must consider future
as well as present wage levels, will be wary of
investing heavily in an area where annual wage
hikes have been running at 13 to 16 percent.
Dublin, although expressing concern, has not
taken remedial action. A National Pay Agree-
ment, signed in July, ostensibly was designed to
slow inflation and reduce labor strife. The agree-
ment included provisions for industrial pay
increases averaging 12 percent. Barring unlikely
increases in productivity, the higher wages will
boost unit labor costs by seven to nine percent,
thus cutting into the competitiveness of Irish
goods. Any attempts by the Irish Government to
curb wage inflation, however, would be extremely
difficult without the cooperation of labor
overwhelming pressure from consumers.
Next week's meeting will consider a new
German proposal that post-Apollo be treated
as a "special project"-thus leaving open the
possibility that both programs could receive
some form of European endorsement. If this
proposal is not accepted, Bonn threatens to
withdraw from the European cooperative
effort and negotiate a bilateral post-Apollo
agreement with the US. Bonn has, however,
agreed to contribute to continued studies on a
European launcher, thus demonstrating that
its main concern is not to kill the European
project, but to assure a West German role in
the nost-Apollo program.
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Israel-Fedayeen
PRE-EMPTIVE RETALIATION
Israeli aircraft on 30 October bombed four
Arab guerrilla bases close to Damascus, the first
such action since the bombings of 15 October and
Tel Aviv's enunciation of a pre-emptive strike
policy vis-a-vis the fedayeen. The raid came less
than 12 hours after the West German Government
had acceded to the demands of two Black Sep-
tember hijackers of a Lufthansa 727 and released
the three Arab terrorists involved in the Munich
slayings.
An Israeli spokesman denied the action was
directly connected with the prisoner release. The
government and public were incensed over what
they called Bonn's "hasty capitulation" to the
hijackers, however, and the strikes seemed de-
signed to demonstrate that, while other countries
might be soft on terrorists, Israel was not. Tel
Aviv recalled its ambassador from Bonn and the
Israeli parliament passed a resolution calling for
"no submission" in dealing with the fedayeen
"criminals and murderers."
Subsequently, the Israelis struck again, this
time at a Syrian military camp near the northern
Lebanon-Syrian border. This was in retaliation for
a Syrian artillery barrage against the Golan
Heights, which Damascus had undertaken in
response to the Israeli air strikes on 30 October.
On 31 October, the Israelis moved more troops,
armor, and heavy artillery into the heights, ap-
parently to reinforce troops there and to indicate
to Damascus they were ready for any contin-
gency.
These Israeli actions reflect some frustration
in dealing with the new Palestinian terrorist
tactics, particularly in regard to bringing other
countries to act. Israel can readily cope with
terrorism along its cease-fire lines, in the occupied
Arab territories, and within Israel itself. The prob-
lem is with terrorist activities abroad. Last week,
for example, Dutch authorities released a Pales-
tinian found to be carrying an arsenal of ex-
plosive letter bombs and weapons as well as a
half-dozen passports, including an Algerian dip-
lomatic one. Tel Aviv cannot understand such
action by the Dutch or Bonn's "surrender" of the
Munich prisoners. The Israelis, as a result, see the
task of controlling the terrorists as devolving
more and more upon themselves, and this rein-
forces Israel's determination to hit the fedayeen
and their Arab hosts wherever and whenever it
can.
Israel's selection of Syria over Lebanon as a
target is somewhat curious, as the hijackers had
organized themselves at Beirut and boarded the
aircraft there. The US Embassy in Tel Aviv sus-
pects that the Israelis had wanted to hit the
fedayeen in Syria for some time and calculated
that strikes in the wake of the hijacking would
draw less international criticism.
Three Arab terrorists put aboard jet bound for Zagreb
at Munich Airport.
Page 12
Meanwhile, Libya's lionizing of the hijackers
and Munich slayers has drawn special attention in
the semi-offical Israeli newspaper Davar. The day
after the prisoner release, Davar stated, "the
country of destination of the Munich murderers
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which will give them shelter... shall in the eyes of
Israel become a partner to the Munich murders
and as such can expect any punishment." Israel
has the capability to strike fedayeen bases in
Libya.
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opposition to a rapprochement would
appear serious enough for Egyptian leaders to
proceed gingerly.
The reconciliation process seems likely to
continue, however, and the departure of War
Minister Sadiq on 26 October may serve to
smooth the way a little. His relations with the
Soviets were frequently strained_
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Prime Minister Sidqi
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EGYPT-USSR: A WARMING TREND
Top Egyptian officials seem to be pursuing a
thaw in their relations with Moscow, in spite of
the reservations being expressed by some Egyp-
tians about the wisdom of this course.
Following his visit in mid-October to the
Soviet Union, Prime Minister Sidqi painted a
bright picture of the improved state of Soviet-
Egyptian ties. Speaking to a joint session of the
nation's legislature and political organization on
25 October, Sidqi described his discussions in
Moscow as having melted "the ice in our rela-
tions." Underscoring the scope of Soviet military
aid to Egypt, he said, "The Soviet Union is fulfill-
ing and will continue to fulfill all its pledges to
consolidate our war potential." Egyptian Em-
bassy officers in Moscow also put a good face on
the present state of affairs when they told US
officials there that Cairo was satisfied with the
results of Sidqi's visit.
Clearly, numerous and serious
differences remain, however, including the maior
issue of sophisticated arms
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EGYPT: DOMESTIC PROBLEMS
The resignation from all his posts of Muham-
mad Sadiq promises to make President Sadat's life
more uncomfortable. Sadiq was one of the most
powerful officials in Egypt, holding concurrently
the key posts of deputy prime minister, war min-
ister, minister of war production, and commander
in chief of the armed forces. He was popular with
military professionals and had attracted other
followers for his outspoken distaste for the Soviet
Union. Sadiq's personal relationship with Presi-
dent Qadhafi of Libya is reportedly excellent.
They share a deep animosity toward the Soviets,
Qadhafi's money and influence would, ot course,
be useful to Sadiq in any comeback bid.
These actors may have con-
tributed to a iq s unseating, but so did his well-
advertised anti-Soviet attitude. Perhaps the funda-
mental reason was the increasing acrimony in the
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long-standing feud between Sadiq and Prime Min-
ister Sidqi.
Ali.
There are as yet no signs that Sadiq is
planning countermoves, but the regime is perhaps
rightly apprehensive. The chief of the navy, who
was considered close to Sadiq, was replaced, and
more purges of military figures considered loyal
to Sadiq may follow.
No one person succeeded to all of Sadiq's
posts. The chief of Egypt's intelligence organiza-
tion, General Ahmad Ismail Ali, took over as war
minister and commander in chief of the armed
forces. Ali is considered to be one of Sadat's
closest advisers and was a classmate of the Presi-
dent in military school. Ali's loyalty to Sadat,
plus his ties to Egypt's intelligence mechanism,
could be a source of aid to the President in
clealinq with the fallout from Sadiz's re-
moval.
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Prime Ministers al-Ayni (Sana) and Muhammad (Aden) confer with Sadat after reaching agreement.
THE YEMENS: AN ODD COUPLE
The prime ministers of the two Yemens,
their countries on the brink of all-out war for
nearly a month, approved a far-reaching agree-
ment in Cairo on 28 October that provides for the
eventual creation of a single Yemen and spells out
the terms for a settlement of outstanding dif-
ferences. The next step will be for the two heads
of state, Salim Rubayi Ali, Aden's champion of
peasant revolution, and Abd ar-Rahman al-Iryani,
head of Sana's traditionalist regime, to meet-
probably on 25 November in Libya-to bless the
agreement. The two presidents will also appoint
committees to draft a constitution and to make
specific plans for unification within one year.
Before it becomes effective, the new constitution
will have to be ratified by Sana's tribally con-
trolled legislature and by Aden's Marxist Peoples'
Council and then approved in referenda in both
Yemens, surely a lengthy process.
Unity has long been the objective of many
Yemenis, but it seems improbable that a true
modus vivendi can be reached-even in a year-
between the ideologically disparate regimes. Both
governments would like to see unification take
place, but on their own terms and in their own
image. The Cairo agreement is probably not so
much an expectation on the part of the prime
ministers that there will or should be movement
toward unification as a device to stop the
fighting.
Sana Prime Minister Muhsin al-Ayni and
Aden Prime Minister Ali Nasir Muhammad also
announced in Cairo that they had agreed to:
? reopen their borders;
? ban terrorist activity;
? return to Sana or Aden those exiles who
wish to go home;
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JCUKG 1
? withdraw troops from territory captured
after 26 September;
? close "training camps."
These points are to be implemented within
to "training camps" would seem to indicate that
al-Ayni has committed Sana to shut down the
bases used by the National Unity Front, the um-
brella organization of anti-Adeni dissidents whose
incursions into Aden from Sana territory in mid-
September ignited the recent fighting. The demili-
tarization of the National Unity Front, if al-Ayni
can accomplish it in the face of what will very
likely be fierce opposition from the tribesmen
and Saudi Arabia, would be a triumph for Aden.
Neither Saudi Arabia nor the front has publicly
commented on the Cairo agreement.
India-Pakistan
NO DELINEATION, NO WITHDRAWAL
Failure to agree on where the line of
control runs through Kashmir continues to
delay mutual troop withdrawals two months
after the deadline set by President Bhutto and
Prime Minister Gandhi last summer at Simla.
At that time the Indians and Pakistanis agreed
that their forces would pull back to the
border except in Kashmir, where both sides
would continue to occupy the territory they
held when the cease-fire went into effect last
December. New Delhi later made its with-
drawal conditional on the delineation of the
line of control in the disputed state.
The Pakistanis are anxious to have the
Indians withdraw from the relatively large
There are reports that the Sana government
now is in disarray. AI-Ayni's supporters defend
the unity agreement as necessary. They claim that
the military effort to overthrow Aden had bogged
down and note that Kuwait, Algeria, and Iraq
were pressing for conciliation. Tribal and military
leaders in Sana could try-especially if they get
Saudi backing-to obstruct implementation of the
agreement and any future negotiations with
Aden. They might also try to force al-Ayni out of
office. Even if he were ousted, it would be hard
for a successor, no matter how committed he
might be to the overthrow of Aden, to abrogate
the agreement and resume the war.
In the meantime, Prime Minister al-Ayni has
left Cairo en route to Algeria. He will stop over in
Libya before returning to Sana to face his
area they now occupy south of Kashmir and
have acquiesced in Indian claims on several
parts of the Kashmir line. The only current
disagreement is over an area of one and a half
square miles. The Pakistanis believe that if
they withdraw from this particular area, they
would establish a precedent for Indian de-
mands that Pakistan also give up the only
significant territorial gain they made during
the 1971 war. Moreover, the Pakistanis may
well suspect that should they give in on this
point, the Indians will find another reason to
delay the troop withdrawals.
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IRAN: CLOUDS ON THE HORIZON
The country currently is enjoying its greatest
economic boom, with oil revenues skyrocketing
and real gross national product up about 14 per-
cent last year. At the same time, Tehran is con-
fronted with rising unemployment and wide-
spread underemployment, a far cry from the
Shah's hopes for full and meaningful employ-
ment. The International Labor Organization
recently reported that the situation probably will
worsen, particularly in urban areas.
Although the government contends for
public consumption that the unemployment rate
is no more than four percent, it is clear that the
percentage of potential workers without jobs is
considerably higher. Officials admit to
an 11-12 percent unemployment rate in urban
areas, and it has been estimated that roughly one
fifth of the entire labor force is either unem-
ployed or underemployed.
Despite prospects for continued rapid eco-
nomic growth, urban unemployment probably
will continue to rise. The government estimates
that some 1.5 million new workers will enter the
labor market during the five-year period begin-
ning next March. The number of marginally
Marginally Employed Workers
Rural workers moving to city in search of work.
employed rural workers who will flock to the
cities in search of jobs will continue to grow.
Only a small number of young people will be
absorbed into the expanded education programs
that the government is arranging.
Although fixed investment in the economy
is scheduled to more than double during the next
five years, experience suggests that this will not
provide the jobs needed. Much of the new invest-
ment in industry, and to some extent in agri-
culture, will go into capital-intensive projects
where only very limited numbers of new job
opportunities will be created.
Rising unemployment could increase social
and political discontent at a time when the Shah
already is facing sporadic dissidence in urban
centers. Discontent probably will continue to be
largely unorganized; Iranian labor unions and
political parties are little more than showpieces. It
does, however, provide an exploitable issue for
foreign interests as well as domestic dissident
groups.
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The junior army officers who last week over-
threw the three-president civilian government that
had ruled Dahomey since 1970 are established in
power and seem determined to stay for some
time. Although no major policy shifts appear im-
minent, the new junta will perhaps be more na-
tionalistic than previous Dahomey governments.
The well-planned coup, Dahomey's sixth
since 1963, was accomplished quickly by key
army units from a garrison near the capital. There
was no bloodshed. President Ahomadegbe, who
took over last May as head of the ruling three-
man Presidential Council, and his cabinet mem-
bers were taken together in the presidential
palace. Almost simultaneously, the radio station
was seized, and prearranged statements were
broadcast by the coup leader, Major Mathieu
Kerekou, condemning the ousted civilian govern-
ment and announcing the formation of a "rev-
olutionary" military government. Governmental
corruption, particularly a recent financial scandal
involving the former finance minister, was billed
as the motivating factor.
The new cabinet, composed of majors and
captains, includes members from the country's
competing ethnic groups and regions. Several, in-
cluding Kerekou himself, are veterans of previous
coup plots. Some senior civilian officials have
been retained by the new government, and more
civilians, particularly those with needed expertise,
are likely to be added later.
Kerekou told the French ambassador that
Dahomey's senior military officers would not be
given posts in the new government nor allowed to
remain in the army. Most of these senior officers
have figured in past military take-overs, but had
no hand in this one. Kerekou realizes the con-
tinuing threat to his regime from the ever-schem-
ing senior men and plans to place them in com-
fortable sinecures. Two Presidential Council mem-
bers and the cabinet are being detained pending
investigation of their official activities and
possible prosecution on charges of corruption.
Kerekou moved quickly to smooth relations
with France, whose aid helps keep Dahomey
afloat. He asked that President Pompidou not
cancel his trip to Dahomey scheduled for late
November. The French responded with a warm
message from Pompidou, postponing but not can-
celing the visit. When meeting with the US ambas-
sador a few days after the coup, Major Kerekou
appealed for continued US aid for current trans-
portation and telecommunications projects. The
Major Mathieu Kerekou
new leader has also moved to ensure good rela-
tions with his immediate neighbors; delegations
visited Nigeria and Togo on 30 October and a
similar delegation may soon visit Upper Volta.
One nearby state that is distinctly displeased by
the coup is relatively wealthy Ivory Coast, which
provides some financial support to an economic
grouping of states to which Dahomey belongs.
The Ivorian President has voiced his displeasure
with this latest evidence of Dahomey's instabil-
ity.
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 As President Allende completes the first
third of his six-year term this week, his attempt,
to socialize Chile using democratic ground rules is
in disarray. His most recent challenge, the worst
so far, has been a three-week protest shutdown.
Allende's own overriding aim, his grasp on the
presidency, has been served by the support given
him by the armed services in the face of the
shutdown. He has responded to the fluctuating
but widely effective protests by mobilizing mili-
tary and volunteers under a state of emergency to
maintain order and most essential services and
supplies, but the long-range effect will be con-
siderable, especially on the ailing economy.
Allende's handling of the shutdown at first
elicited grudging admiration from his Communist
and Socialist advisers. Then, after the President
negotiated a truce on 27 October with the tiring
strike leaders, the uncompromising Socialists
refused to go along. They argued that time was on
the side of the government and that compromises
were therefore unacceptable. On 28 October,
Allende suffered another of his periodic attacks
of low blood pressure and the Socialists probably
took advantage of this to press their position.
Negotiations were later resumed but again fell
through on 2 November, just as moderates on
both sides were announcing that agreement was at
hand.
Allende has hoped to salvage from the situa-
tion a cabinet more to his liking. For months, he
has reportedly wanted a cabinet composed essen-
tially of military officers and technicians. He felt
that such a team, especially during the period
leading to the legislative elections on 4 March,
would reduce the government's inefficiency and
corruption, lower political tensions, and make
him less vulnerable to the pressures from coalition
politicians. The need for a cabinet reorganization
was hastened by the resignations of two ministers
to meet electoral filing deadlines and by impeach-
ment charges brought in Congress against these
men and two others for allegedly going beyond
their constitutional powers. The entire cabinet
has now resigned to give Allende a free hand in
dealing with this problem.
The President has had difficulty, however,
carrying out his plan for military participation.
The chiefs of the armed services are divided over
the advisability of military participation in the
government. Some fear that the political advan-
tages to Allende would outweigh the influence
that could be brought to bear to moderate his
policies. The Communists reportedly believe that
officers in unimportant posts would strengthen
the government and some Socialists are inclined
to agree despite their lack of enthusiasm for the
scheme.
If Allende's illness and fatigue persist and he
carries out his plan to seek some respite by
making a trip abroad in this unsettled period, the
pre-electoral truce, which moderates in govern-
ment and opposition hope for, will be hard to
find. 25X1
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