WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010000060001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 21, 2016
• Document Release Date: July 2, 2008
• Sequence Number: 1
• Publication Date: January 26, 1973
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
26 January 1973
No. 0354/73
Copy N2 45
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he WEEKLY SUMMARY, issued every Friday morning by
the Office of Current Intelligence, reports and analyzes signif-
icant developments of the week through noon 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-
core published separately as Special Reports are listed in the
(:)ntents.
CONTENTS (26 January 1973)
1
Indochina
3
South Korea: Pulling the Strings
4
China-Japan: Trade Grows
5
Security Conference; Force Talks
6
Finland: Kekkonen Till `78
7
EC Nods Toward Far East
7
Belgium: New Coalition
8
UK: Beating Back Inflation
9
Italy: Hurdles for Andreotti
10
West Germany: Temperate Talk
11
USSR: More Aircraft Deliveries
WESTERN
HEMISPHERE
13
Argentina: Campaign Tactics
14
Haiti: Troubled) Dynasty
15
Mexico: Investment Climate
15
Peru: Tuna Offensive
16
Panama: A Range of Options
17
Chile: Soviet Support; Compromises
MIDDLE EAST
AFRICA
18
and Campaigns
Zambia-Rhodesia: Bargaining
20
Portuguese Guinea - Guinea
21
India: Unmaking of a State
21
Cyprus: Makarios vs. Grivas
22
Egypt: Students and Intellectuals
22
Syria: In Search of Help
SPECIAL
REPORT
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On the eve of the signing of the Vietnam
peace agreement, both Saigon and the Vietnamese
Communists are claiming victory for their side,
but both are also warning that an arduous struggle
lies ahead. President Thieu told his compatriots
on 24 January that the Communists had been
forced to sign, and Premier Pham Van Dong
spoke later the same day of the "great victory"
achieved by the Communists. Dong went on to
assert, however, that although his side would
"seriously implement" the agreement, Hanoi was
determined to step up the struggle. The Viet
Cong's Madame Binh warned in Paris that Thieu's
speech was not that of a man who intended to
honor the agreement. For his part, Thieu called
for watchfulness and unity, and pro-grovernment
papers in Saigon are saying that the cease-fire will
be meaningful only if both sides observe it.
Peking and Moscow Approve
Both the Soviets and the Chinese are making
it clear that they welcome the agreement. Peking
has yet to comment authoritatively, but the for-
eign ministry's information department quickly
issued a favorable statement, and further positive
commentary is sure to be forthcoming. In Mos-
cow, politburo member Kirilenko hailed the
initialing of the agreement as an "important mile-
stone," and a Soviet foreign ministry statement
quickly echoed his remarks.
Following Tuesday's announcement of an
impending cease-fire, the Communists began to
increase the shelling and harassment of govern-
ment military and civil facilities. Although some
battles developed, most of the fighting during this
period appeared to have been precipitated by
South Vietnamese operations. There are numer-
ous indications that the Communists would like
to launch some ground attacks immediately
before the truce goes into effect on 27 January
Page 1
(28 January, Saigon time) in an effort to expand
their control of territory and people. These ac-
tions would be designed to inhibit South Viet-
nam's time to react and counter-attack. There
have been a few reports that the Communists
would continue military action after a cease-fire
claiming poor communications, but many units
have been ordered to stop fighting on time.
With most of the North Vietnamese major
combat units already within South Vietnam-
some in combat positions-there were few unit
relocations noted during the week. One Commu-
nist regiment tried to slip across the Cambodian
border into the delta, but was met by a South
Vietnamese force. The bulk of the enemy forma-
tion was reportedly broken up in the ensuing
battle. Most of the enemy's forces on the Quang
Tri battlefront appear to be in primarily defensive
positions, apparently anticipating South Vietnam-
ese drives to recapture more of the province
before 27 January.
There have also been reports of the massing
of enemy units in northern Tay Ninh Province,
possibly for a last-minute push against the pro-
vincial capital. On the other hand, the movements
of enemy main force units throughout the coun-
try may represent only the final positioning of
Communist forces into the positions they wish to
occupy after the cease-fire.
South Vietnamese forces are on the alert
nationwide to counter enemy combat action and
most commanders are still confident that they
can prevent significant Communist encroach-
ments. By week's end, most government offensive
operations had ended and military units were
placed in defensive positions near population cen-
ters and along known corridors used by the Com-
munists to move toward their potential target
areas.
The approach of the cease-fire and the
recent presidential decree stiffening criteria for
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political parties have prompted South Vietnam's
major political groups to seek out new alliances in
an effort to strengthen their positions. Most
independent and opposition elements still hope to
operate legally as a government opposition, but at
least some of them may be overestimating both
the extent of their influence and their ability to
cooperate with other groups. The pressure politi-
cal confrontation with the Communists will bring
could yet induce some oi- these groups to ally
with the government, but unless President Thieu
makes some conciliatory gestures, they may
simply become more alienated.
Leaders of several Catholic factions now
trying to set up a new political party are opti-
mistic that they can meet the terms of the decree
by bringing in non-Catholic groups, but many
politically active Catholics have joined the govern-
ment's Democracy Party. The largely southern-
based Progressive Nationalist Movement wants to
maintain a "constructive opposition role" and
hopes to qualify for legal status by gaining the
adherence of other groups.
The An Quang Buddhists continue to worry
about Communist pressure after the fighting
stops. One An Quang monk recently told US
Embassy officers that the Viet Cong, expecting a
cease-fire last October, had sent cadres to many
pagodas, even in Saigon, to demand cooperation
on pain of punishment. The monk said the Bud-
dhists are accelerating efforts to tighten their
organization to counter anticipated Communist
subversion. Some An Quang leaders still favor
cooperating with the government to meet the
Communist challenge, but most remain unhappy
over Thieu's recent decree on political parties.
The back-and-forth nature of the war in
Laos was evident again this week, as both sides
jockeyed for position on several fronts. In the
north, the government made the first tentative
steps toward recouping its losses along Route 13
south of Luang Prabang, the royal capital. Two
irregular forces, landed by helicopter in the hills
Sam Neua?
Bouam
Laag
Luang Prabodl Muong r
b Government-held location
? Communist-held location
0Saravane
VIETNAM%
Muarig
9
o van na khO
/ CAMBODIA
Itolovens ?
Plateau Areop
east of the Sala Phou Khoun road junction late
last week, have now moved north to disrupt the
flow of Communist supplies along Route 7. Gov-
ernment commanders hope that Lao Communist
units along Route 13 will withdraw in reaction to
this threat, and that Lao Army units will then be
able to clear the road north and south of Sala
Phou Khoun. Some enemy units are pulling back
on Route 13, but harassing attacks kept govern-
ment troops stalled well north and south of the
road junction.
In the south, the North Vietnamese picked
up the pace of the fi htin around Muong
Phalane. captured in the
central panhandle claims that elements of a new
regiment have reinforced the North Vietnamese
29th Regiment east of Muong Phalane, and that
troops from both regiments took part in recent
attacks on government positions near the town
and along Route 9 farther east.
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Near the Bolovens Plateau, troops of a
3,000-man government force made little progress
in a planned counterattack against the provincial
capital of Saravane. Lead elements of the force
are still bogged down several miles south and west
of Saravane.
On the Peace Front in Laos
With key members of the Lao Communist
negotiating team still in Sam Neua for consul-
tation, the session of the Lao peace talks in Vien-
tiane this week produced only another round of
polemics. Although the senior Communist dele-
gates are scheduled to return to the Lao capital
on 26 January, Prime- Minister Souvanna Phouma
apparently intends to leave on the following day
for New Delhi. There he will seek Prime Minister
Indira Gandhi's backing for an International
Control Commission role in supervising the
implementation of a Lao cease-fire. Souvanna will
also spend several days conferring with Thai
leaders in Bangkok before returning to Vientiane,
but he should be back in ample time to orches-
trate the government's response to any new
Communist overtures presented at the 30 January
25X1 session of the talks.
SOUTH KOREA: PULLING THE STRINGS
President Pak Chong-hui has few worries
about his political future these days now that his
government reform has put him firmly and in-
definitely in control of the nation. The 55-year-
old leader is, nonetheless, taking no chances that
the last of these reforms-the election of a
National Assembly late next month-creates dif-
ficulties. President Pak has the authority to
appoint one third of the 219 members of the
assembly, and he is concentrating on bringing into
line the political forces that will contest the other
146 seats. His objective is to ensure that the new
legislature, while exhibiting the trappings of
democracy, does what he wants it to.
In a tough New Year's statement, Pak
sharply criticized the inefficiency and corruption
of earlier assemblies and served notice to all
politicians that they will be vigorously punished
for violating the restrictive election laws or for
not living up to their responsibilities once in
office. He is, in addition, bringing a variety of
pressure to bear on the country's existing political
parties. The ruling Democratic Republican Party,
which is expected to win close to a third of the
assembly seats, has not escaped. In early January,
Pak amended the party constitution to tighten
discipline. The amendments make individual can-
didates completely dependent on party support
and establish an "inquiry committee" of men
rigidly loyal to Pak. The committee is empowered
to expel or punish any member who deviates
from the Pak line.
The New Democrats are also being whipped
into shape. Followers of the outspoken former
opposition presidential candidate, Kim Tae-
chung, have been arrested as a warning that the
government will brook no opposition from that
quarter. Pak has also moved to undermine even
further the factionalized New Democrats. He has
urged the creation of new parties to eliminate the
"excesses" of the old two-party system. One op-
position leader, probably with regime encourage-
ment, has formed a new splinter party, and the
remaining leadership gives every sign of being
prepared to knuckle under.
With the situation so well in hand, Pak has
relaxed the rigid press censorship in force since
martial law was instituted last October. The
government is permitting some carefully modu-
lated criticism to appear in the press and is
pointing to the criticism as evidence that demo-
cratic institutions are not dead in South Korea.
25X1
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CHINA-JAPAN: TRADE GROWS
The recent visit to Peking of Japanese inter-
national trade minister Nakasone was low-keyed.
Agreement was reached to hold economic talks
on a regular basis and to step up preparations for
the conclusion of a trade pact between the two
countries. Even without such a pact, Tokyo some
time ago regained the position it held before
World War 11 as China's leading trade partner.
Furthermore, Japan has become the chief source
of foreign technology and may be the first to
benefit from a shift in China's policy on accepting
foreign credit to finance plant purchases.
Sino-Japanese trade has increased sharply in
recent years and probably topped $1 billion last
year. Although the China market is small from
the Japanese Government's point of view, exports
last year of over $600 million were concentrated
in items important to several Japanese industries.
For example, 60 percent of Japanese chemical
fertilizer exports are sent to China. Peking's de-
liveries to the Japanese last year probably ex-
ceeded $400 million.
Japan has been willing to cooperate with
China in reducing the trade imbalance, and Peking
may have had this in mind when it recently an-
nounced its readiness to deliver 200,000 tons of
low-sulfur crude oil to Japan this year. Japan is
anxious to secure long-term commitments of oil
and is a likely market for a major share of the 10
million tons China is expected to have available
for export annually within the next five years.
This, of course, is only a drop in the bucket for
Japan, which imports a total of 200 million tons
of oil a year.
Peking has given some indications, first in
discussions with the Japanese and more recently
with Western Europeans, that it may make some
major purchases on credit; it would be the first
time Peking bought industrial plants on credit
since before the Cultural Revolution. In discus-
sions last year with the president of Nippon Steel,
Chou En-lai indicated that Peking's current trade
deficit with Japan could be reduced by "deferred
payment arrangements." Similarly, China's min-
ister of foreign trade, Pai Hsiang-kuo, reportedly
told his British hosts during a recent visit that
British Minister without Portfolio Lord Drumalbyn
greets Chinese Foreign Trade Minister Pai Hsiang-kuo.
Peking would be making "deferred payments" for
industrial plant purchases instead of conducting
virtually all of its trade in cash.
China has, in fact, nearly concluded negotia-
tions for the purchase of an ethylene plant from
Japan on credit. The negotiations had been hung
up for some time over Chinese demands for a low
interest rate. The Japanese reportedly have now
agreed to provide a combination of 80-percent
Export-Import Bank and 20-percent commercial
financing at an average rate of 6 percent for five
years. Because of the prevailing higher com-
mercial rate, the Export-Import Bank will have to
provide financing below 6 percent.
Peking's willingness to purchase plants on
credit would open up possibilities for some trade
expansion. Peking, however, has shown no sign of
a real change in the basic policies of self-suffi-
ciency and conservatism in financial matters that
it has pursued since 1949. In any case, China is
likely to monitor closely the use of credit. China's
debt to the non-Communist countries through the
1960s never exceeded $500 million, of which
about $200 million were medium-term credits for
whole plants and the remainder short-term credits
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Now that the Soviets have made new sub-
missions, all elements-East, West, neutral, and
nonaligned-have indicated what they want on
the agenda for a Conference on Security and
Cooperation in Europe this summer. The Helsinki
conferees must now sort out the mass of pro-
posals and begin to construct the actual agenda.
Several agenda revisions introduced by the
Soviets on 22 January are designed to appeal to
Western and neutral participants in the prepara-
tory talks. For the first time, Moscow indicated
that it would be willing to accept a reference to
"confidence-building" measures in the agenda
item on security. Though these measures were not
spelled out in the proposal, one of the chief
Soviet delegates said privately they might include
advance notification of military movements and
exchanging observers at exercises.
In a bow toward Western interest in freer
exchanges of people and ideas, the Soviets ac-
cepted a separate agenda item on "contacts
between organizations and people." Previously
they wanted to lump this item together with
economic and scientific matters. A wide gap still
exists between the East and West on this item, as
the Soviets have made clear.
? on security, including principles to gov-
ern relations among states and certain military
aspects such as advance notification of
maneuvers;
? on human contacts, i.e., freer movement
going beyond cultural exchanges;
? on cooperation in economic and en-
vironmental matters.
The allies still oppose any agenda item on post-
conference machinery. If the conference does
create some new bodies, the allies want them lim-
ited in scope.
The neutral and nonaligned participants have
generally subscribed to Western positions, and
some of their ideas have gained favor; some have
not. The larger Western countries, as well as the
Soviets, strongly oppose the Austrian proposal to
add the Middle East to the agenda. The Austrian
idea has backing from Spain, Yugoslavia, Switzer-
land, Malta, Greece, and Turkey. Most of the
Western powers have reservations about the Swiss
proposal to establish a system for peaceful settle-
ment of disputes. All the neutrals want to in-
crease the security content of the conference, and
most of them support the Dutch suggestion that
declarations on force levels and troop reductions
be considered. The Swedes have proposed that
the conference address broader disarmament
questions.
The Soviets also amended their proposal
for a permanent organization to be established
by the conference, suggesting that the organiza-
tion be called a "consultative committee."
Romania's insistence on a strong permanent body
may have helped convince the Soviets that a sim-
pler consultative body would be more advisable.
By adjusting its proposals, Moscow was try-
ing to discourage the West from pushing for
detailed agenda mandates. The Soviets are con-
cerned that negotiation of such mandates for each
agenda item could drag out the preparatory talks
into a "pre-conference."
Last week the West made its case for its
preferred agenda items. These were:
After a week or two of further debate on the
various agenda proposals, the talks will recess
again, this time for about ten days to allow for
behind-the-scene consultations. If the participants
continue to share a general will to hold the con-
ference, they should be able to mold an agenda
out of the proposals now on the table.
The Soviet and East European responses to
the Western invitations to begin force reduction
talks in Geneva on 31 January have raised dif-
ficult questions.
In notes delivered on 18 January, the War-
saw Pact countries, while accepting the list of
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participants and starting date proposed by the
West, added that "other European states who
indicate an appropriate interest should have the
right to participate." Subsequent statements have
made it clear that this formula could include
neutrals. The Pact countries proposed Vienna as
the site for the preparatory talks.
A variety of factors probably influenced the
Soviets. Annoyed by the slow going of security
conference preparations at Helsinki, they may
have hoped to delay force reduction talks so that
they would not get ahead of the Helsinki delibera-
tions. Moscow probably was also sensitive to
Romanian insistence that force reduction talks
should not be on a bloc-to-bloc basis. Besides
placating the Romanians, the Soviets could antici-
pate that the proposals would score points with
the neutrals. The responses were also designed to
appeal to French sensitivities and leave open the
possibility of eventual French participation in
force reduction talks. In addition, Moscow may
have felt that opening force reduction talks to all
security conference participants would reduce the
likelihood of a debate over military security at
Helsinki.
It is doubtful that the Soviets sought to
sabotage the talks. While they have always been
lukewarm on force reductions, neither of the Pact
proposals was stated as a precondition to talks. In
particular, Pact media have not touted the pro-
posal of Vienna as a site, a tactic suggesting that
this is not a rigidly held position.
The Eastern response occasioned a lengthy
and, at times, acrimonious debate in NATO. The
FINLAND: KEKKONEN TILL '78
Recent parliamentary approval of special
legislation extending President Kekkonen's
term four more years should enable Finland
to sign a free trade agreement with the EC.
The current presidential term was to have
ended on 1 March 1974. Kekkonen, in office
since 1956, will be 77 when his extended
term expires in 1978.
Opponents of the presidential legislation,
although outvoted in parliament, have not
US proposed that the West reluctantly accept
Vienna and attempt to put off debate with Mos-
cow over participation until after the initial talks
are under way. Most of the allies agreed that
Moscow should be held to its agreement to open
talks on 31 January, but argued strongly that the
initial Western response continue to favor Geneva
and clearly oppose broadened participation.
Many of the allies-in particular the Dutch-
suspect that the East's proposals were designed to
delay or disrupt the negotiations. US willingness
to agree to Vienna led the Dutch to suggest
darkly that Washington and Moscow had worked
out a prior agreement to locate the talks there.
Some allies also felt that the Austrians, in their
eagerness to host the meetings, had damaged their
impartiality. Nevertheless, the allies finally agreed
to a response that did not rule out Vienna and
suggested that additional participation could be
discussed after NATO and Warsaw Pact delega-
tions begin the initial talks.
Moscow's response on participation now is
the key to whether the discussions open on time.
The NATO allies would rather delay the talks
than have neutral and nonaligned states attend.
The allies are willing to let Romania and Bulgaria
attend. If Moscow thinks that it has scored suf-
ficient points with the neutrals and is willing to
back off, the negotiations could gel: back on
course. If not, a number of NATO allies will press
again for linking progress on force reductions to
been silenced. They feel that the move is
blatant appeasement of Moscow, which wants
Kekkonen to remain in office as a guarantee
of continuing close bilateral relations. While
the obvious coupling of the President's term
with EC signing does tend to corrupt Finnish
"neutrality," the extension of his term will
put Helsinki in a better position to maintain
strong economic links with Western Europe
after Kekkonen departs the political
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The EC states, which have managed to speak
with one voice at the Helsinki talks, are about to
branch out in other directions. As if in response
to China's enthusiastic boosting of the EC, the EC
decided last week to set up a Far East working
group in the context of their political consulta-
tions. This move by the political committee, long
advocated by West Germany, was, in fact, precipi-
tated by the anticipated visit next month of
China's foreign minister to Western Europe and
by the Europeans' desire to coordinate what they
say to him. Except for Ireland, the Nine recognize
China, and their ambassadors will now be en-
couraged to confer regularly in Peking.
The new working group is charged also with
considering "questions posed by the relations of
the member states with North Vietnam and the
contribution that Europeans could make on
behalf of all of Vietnam once hostilities are over."
The Europeans probably see a general oppor-
tunity for a larger role in Indochina and may, in
particular, want to concert efforts in order to
compete with Japan in the area. A precedent for a
community aid program not linked to association
arrangements with the EC exists in the aid to
Palestinian refugees.
Interest in having the new working group
discuss the EC's relations with Japan has also
been expressed, in particular by Britain. Such
consultations would presumably furnish a politi-
cal context in which to explore the thorny com-
mercial problems characterizing EC-Japanese rela-
tions. The member states are in complete dis-
accord over the best way to protect themselves
against mushrooming Japanese exports, and the
EC Commission faces an uphill fight in trying to
establish control over the various protectionist
devices that each now uses.
These departures in the EC's foreign policy
discussions are in line with the wishes of the new
members, especially the UK, to concentrate on
areas where a common position is both "possible
and desirable." Since there is little basis for any
new initiatives in the Middle East, this area has
for the time being been dropped from the agenda.
Although the opportunities for cooperation with
China may only be marginal, the Europeans may
hope that the prospect of a community role vis-a-
vis Peking might stimulate Moscow to take more
favorable attitudes toward the EC.
The introduction of Indochina into the
political talks would be linked to the EC's delib-
erations on commercial policy. The community,
desiring to encourage a regional rather than a
country-by-country approach, established
machinery last year for periodic trade consulta-
tions between the EC and the five countries form-
ing the Association of Southeast Asian Nations-
Indonesia, Malaysia, the Philippines, Singapore,
and Thailand. Some EC circles envisage eventual
enlargement of these consultations to include at
least some of the Indochina states. These con-
sultations may also be balanced by trade arrange-
ments-also non-preferential-with India that
might also apply to Bangladesh, Pakistan, and Sri
Lanka. With Britain in the EC, India now has an
advocate analogous to the Netherlands' brief for
Indonesia and France's for Indochina.
The nation's three largest parties have agreed
after five weeks of difficult negotiation to form a
broad coalition government. The compromises
needed to reach the agreement are so delicate that
they probably will not long withstand continued
intercommunal and intra-party stresses.
The key issues addressed by the three par-
ties-the Socialists, Social Christians, and Lib-
erals-are those which brought down the Social
Christian - Socialist coalition of Prime Minister
Eyskens two months ago. The issues are the delin-
eation of linguistic boundaries between Flemings
and Walloons, implementation of decentralizing
reforms, and the relationship between state and
church school systems.
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The compromises have alienated powerful
elements in all three parties, casting doubt on the
long-term viability of the new coalition. The
greatest concessions appear to have been made by
the Socialists, doubtless under prodding by their
ambitious and pragmatic leader, Edmond Lebur-
ton, who will be prime minister in the new coali-
tion. Many Socialists believe they yielded too
much on public financing of Catholic schools and
on government participation by the conservative
Liberals. Dutch-speaking Social Christians remain
wary of Leburton, while many French-speaking
Liberals are fearful of the restrictions that may
be put on the predominantly French-speaking
Brussels area.
In order to reach agreement at all, particu-
larly contentious matters were relegated to a par-
liamentary commission with the understanding
that they be resolved by 15 July. Should the
commission fail, a distinct possibility, elections in
the fall would probably be inevitable despite the
shared aversion to early elections which has been
acting to bring the coalition partners together.
Party leaders expect to complete formation
of the new government by the end of the month.
The Leburton cabinet is unlikely to seek major
departures from recent Belgian foreign
policy.
I he Heath government's sweeping Phase-11
program to halt rampant inflation over the next
three years enjoys broad support from the public
and is almost certain to receive parliamentary
approval. Although the Prime Minister would
f?ave preferred to rely on voluntary controls to
,:urb inflation, he is well aware that his continu-
jnce in office will depend in large part on
whether the government keeps price and wage
increases within reasonable bounds.
I he total wage-price freeze, in effect since
November, will be extended for another two to
three months. The freeze was prompted by a
!-percent rise in consumer prices and an 11-per-
cent rise in wages and salaries over the first ten
months of 1972, coupled with the collapse of
attempts by the government, business, and labor
to arrive at voluntary controls.
Under Phase II, the government will replace
the freeze with a system permitting limited in-
creases in wages, prices, and dividends. The gov-
ernment now intends to keep pay increases this
year to a pound (now worth $2.35) a week plus 4
percent over the previous year's base pay and
allow manufacturers to raise prices only enough
to cover unavoidable cost increases. Increases in
dividends are to be limited to 5 percent a year,
and profit margins on domestic sales will not be
permitted to exceed the average percentage in the
best two of the previous five years. Heath's deci-
;ion to formulate a tough Phase-II program stems
from a worsening trade balance in recent months,
heightened fears of greater European competition
as UK-EC tariffs are dismantled, and price in-
creases resulting from Britain's implementation of
the value-added tax and adherence to the EC's
common agricultural policy.
The business and industrial community qen-
erally approves the program, despite some reserva-
tions regarding price and dividend controls. The
Labor Party has been critical, but relatively re-
strained in its initial comments. Only the trade
unionists have reacted with bitter hostility.
Although the government failed to obtain a
;)ledge of cooperation from the unions, they are
unlikely to wage the type of all-out opposition
that could paralyze the economy and precipitate
political crisis. Trades Union Congress General
Secretary Victor Feather condemned the anti-
inflation plan, asserting that it is "slack on
prices," provides inadequately for low paid work-
ers, and is likely to prove ineffective. Moreover,
spurred by more radical elements, the Trades
Union Congress' economic committee has recom-
mended total opposition to the Phase-II pro-
posals. The congress itself has not, however,
called for general strikes, probably because many
member unions are financially strapped after sev-
ooral years of paying out heavy strike benefits.
This does not, of course, rule out industrial ac-
tions by militant affiliates. Workers already have
staged a half-day protest walkout at one Ford
plant where unions are demanding pay hikes far
exceeding the government's proposed ceil-
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Parliament has reopened, confronting Italian
Prime Minister Giulio Andreotti with a series of
new problems to go along with his old ones. The
restiveness of rival leaders in his Christian Demo-
cratic Party complicates the Prime Minister's
problems, although no key figure is openly
seeking an immediate change of government.
In the next week or two, the government
will have to do battle in the Chamber of Deputies
over a controversial bill on agrarian rents. Earlier
legislation in this area contributed to the
spectacular neo-fascist gains and Christian Demo-
cratic losses in the local elections of 1971. Con-
sequently, political leaders are especially jumpy-
and some are stubborn-about the shape and
impact of this bill.
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25X1
25X1
racy are stirring up controversy over replace-
ments. The appointment last week of a suspected
member of the Mafia to a government anti-Mafia
commission is especially subjecting the govern-
ment to attack.
Economic conditions provide no cushion for
the Andreotti government. The rise in Italian con-
sumer prices has been one of the highest in
Western Europe. Year-end figures on the
economy showed a growth rate of 3 percent, a
considerable improvement over 1971, but still
well below Italy's postwar average. The impos -
tion of a two-tier exchange system to stem capital
flight points to widespread uncertainty about the
economy. Official reserves as of mid-November
stood more than 12 percent below those of a year
earlier.
The principal figures waiting for Andreotti
to stumble on one of these hurdles are ex - prime
ministers Rumor, Amintore Fanfani, and Aldo
Moro. Of the three, Rumor is in the best position
tactically at this time because he and his faction
of the Christian Democratic Party seem closest to
Rumor envisages resumption of a Christian emo-
cratic coalition with the Socialists similar to the
coalitions of the 1960s and early 1970s. F__
25X1 WEST GERMANY: TEMPERATE TALK
In his inaugural address on 18 January,
Chancellor Brandt promised no major changes in
the foreign and domestic policies of his first
administration. His business-as-usual generalities
contrasted with his 1969 inaugural promises of
sweeping reforms. Those unkept promises had
caused much strife in the Brandt coalition along
with some public embarrassment. Social Dem-
ocrat Brandt and the Free Democratic leaders
have obviously failed to resolve differences on
several issues, such as worker participation in
industry; this may have prevented the Chancellor
from making specific commitments.
Brandt, despite strong pressure to criticize
the US bombing in Vietnam, said that he did not
consider it right to join the vociferous protests
because they had "a false ring about them." He
did promise that his government was prepared to
grant aid for the reconstruction of both Viet-
nams. On other foreign affairs issues, Brandt said
that the essential conditions for detente had been
established and that, with "tenacity and a sense
of purpose," detente would become a reality. He
said Bonn would continue to seek improved rela-
tions with the Bloc countries. Citing the treaties
signed with East Germany during his first admin-
istration, he noted that relaxed travel restrictions
between East and West Germany had eased frus-
trations, but that the road ahead would be "long
and stony."
Brandt emphasized the need for better rela-
tions with Western Europe and sad that a pri-
mary goal was the establishment of a full
European political union. He gave the usual
endorsement to the Western Alliance and reiter-
ated West European dependence on the US for its
security. He promised that West Germany would
continue to do its part in defending Western
Europe.
B r a n d is moderate address received an
equally temperate rebuttal from Christian Demo-
cratic leader Barzel. Aside from Ostpolitik, he
approved of the government's foreign policy. The
opposition leader criticized the government's will-
ingness to negotiate with East German tyranny;
he warned that the result of Ostpolitik could be a
West less free and humane rather than an East
more so. Barzel criticized the lack of specifics in
the government's domestic program. Christian
Democratic moderation could well continue as
long as the ruling coalition proposes no major
changes.
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StUKt I
USSR: MORE AIRCRAFT DELIVERIES
Moscow continues to be a major supplier of
military aircraft to Third World countries. Last
year, 309 aircraft-including 60 turned over to
Egypt when the Soviets were expelled-were ship-
ped, compared with 257 the previous year. The
value of the aircraft delivered in 1972 is estimated
at more than $300 million. Most of the deliveries
consisted of jet fighters, including the first SU-17
swing-wing jet fighter-bomber exported to a de-
veloping country.
The Middle East, as usual, received the bulk
of Soviet aircraft deliveries; Cairo alone obtained
almost half. Egypt became the first non-Commu-
nist country to receive the SU-17 (Fitter B) -t
e fitter can to e o an an
in less space and is more maneuverable at low
speeds than the Fitter A, but it does not have a
significantly greater combat capability. Egypt also
acquired 64 MIG-21 Fishbed Js, the current ex-
port model and nine SU-7s; in addition Egypt got
the 60 MIG-21s that had been flown by Soviet
pilots until they returned to the USSR. Helicop-
ter deliveries consisted of five 65-passenger MI-6s
and one 24-passenger MI-8.
Syria received 37 jet fighters, three AN-12
transports, and nine helicopters ordered under
arms accords signed in late 1971 and May 1972.
Iraq received 15 MI-8 helicopters and a small
number of fighter aircraft under a 1971 arms
agreement. More fighters, possibly even including
the Fitter B, are probably scheduled for delivery
this year. Moscow supplied Yemen (Aden) with
four IL-28s, its first light jet bombers. Aden also
received four MI-8 helicopters and two KA-26
multipurpose helicopters; it was the first Arab
country to get the latter.
Besides aiding New Delhi's indigenous
MIG-21 production program by shipping subas-
semblies and parts, Moscow delivered 23 MIG-21s
to replace losses in the 1971 Indo-Pakistani War.
India received 33 MI-8 helicopters, ordered last
year to provide increased mobility for the army.
Four helicopters were delivered to Afghanistan.
Guinea and Somalia were the primary Afri-
can recipients of Soviet aircraft. Guinea, in addi-
tion to receiving four MIG-17 jet fighters, became
the first black African country to receive an
AN-12 transport. Deliveries to Somalia included
two MIG-15s, three MI-4 helicopters. and one
Soviet Military Aircraft Deliveries
To Third World Countries
Unit
s
Type
1971
1972
Bombers
TU-16 medium jet
10
I L-28 light jet
---
Jet Fighters
MIG-21
122
185
MIG-15/17
24
13
SU-7A
24
10
SU-17
---
12
170
220
Transports
AN-12
2
5
AN-26
---
1
Helicopters
M 1-8
68
57
MI-6
5
5
M 1-4
---
15
KA-26
2
2
75
79
TOTAL
257
309
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S EUK E
LIRA AND SWISS FRANC AFLOAT
The international currency markets were
shaken last week by the float of the Swiss franc
and the introduction of a two-tier foreign ex-
change system by Italy. Bern and Rome moved
for different reasons: the Swiss were concerned
with a large accumulation of dollars; the Italians
with capital leaving the country. Rome is support-
ing the lira in trade, tourism, and other current
account transactions, but not in capital transac-
tions. France and Belgium have similar arrange-
ments. Including the pound sterling and the Cana-
dian dollar, there are now six major currencies at
least partially afloat.
The Italian move illustrates the difficulties
surrounding EC efforts to move toward economic
and monetary union. Italy's continued support
for the commercial lira maintains the integrity of
the community's Common Agricultural Policy,
which depends on fixed commercial parties for
trade. The float of the financial lira, along with
that of the financial French and Belgian francs,
however, increases the difficulties facing an
attempt to unify the EC capital markets. Ironi-
cally, the latest floats occurred as currency
reform negotiators-the Committee of Twenty
Deputies-met in Paris to discuss long-term world
monetary stabilization.
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JCI.t'IC I
ARGENTINA: CAMPAIGN TACTICS
The official campaign for the elections on 11
March is just getting started, and already tensions
are rising. Abandoning the rhetoric of coopera-
tion, the Peronists have challenged President
Lanusse and the military in so unbridled a fashion
that they are open to charges of trying to
sabotage the elections. At the same time, Ricardo
Balbin, the Radical Party candidate for president,
is seeking to put distance between himself and the
government in an attempt to attract anti-govern-
ment votes that would otherwise go to the
Peronists. For their part, the armed forces are
reassessing the electoral prospects with a view
toward taking action to prevent a Peronist
victory.
The Peronists have been ruthless in re-
imposing party discipline after the infighting over
the naming of candidates. Dissident political and
labor leaders have been threatened with the loss
of their posts. Indeed, one of them, Rogelio
Coria, was ousted as chief of the construction
workers' union after his withdrawal from the
Peronist union bloc. Several dissident Peronists
have also been the targets of assassination teams,
presumably drawn from Peronist-oriented ter-
rorist groups. As a result, many Peronist leaders
have swallowed their objections and are following
the party line. The most prominent defector,
Raul Matera, has been brought back into the fold.
Juan Peron, who carefully watched his
words while in Argentina, opened up on Lanusse
and the military after returning to Madrid. He
accused the government of setting a trap with
elections that will be "the most fraudulent in
Argentine history." He seemed to exhort youth
to violence when he said that if he were 50 years
younger, he might be planting bombs. Hector
Campora, the Peronist presidential candidate, has
continued in the same vein with a campaign
speech that directly challenged the armed forces.
The military has insisted that it must retain con-
trol of the anti-subversive effort under the new
government, but Campora said he would end this
role and free all political prisoners.
The military has forbidden radio and televi-
sion to carry any further statements made by
Page 13
Hector Campora, (1) With Running Mate Vincente Lima
Peron in Spain and has initiated criminal pro-
ceedings against him for inciting violence. The
charge could mean a jail sentence for Peron if he
attempts to keep his promise and come back to
Argentina to campaign. This could, in fact, have
been one purpose behind Peron's statement. With
criminal charges outstanding, he could excuse
himself from returning and risking his prestige.
The military, believing that it has nothing to gain
and everything to lose from another Peron visit,
appears ready to oblige him.
The solidifying of Peronist support for
Campora and the belligerence that is accom-
panying it has caused a resurgence of the long-
held military fear of a Peronist return to power.
Rumors have circulated widely in Buenos Aires
that President Lanusse will resign and that elec-
tions will be canceled. Fear of a "leap into the
void" is rapidly gaining strength in the military,
but it seems likely that the generals will seek
other ways of assuring a favorable outcome
before abandoning the elections they have
worked so hard for since Lanusse took Do
March 1971. F_ we7 25X1
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President Jean Claude Duvalier's 21-month-
old regime had to cope with its biggest interna-
tional incident early this week when gunmen
seized the US ambassador and US consul and held
them hostage for the release of a number of
political prisoners. There was considerable
backing and filling by the Haitian Government
during the incident. It opens the government to
criticism by disgruntled elements for its handling
of the incident. They will blame the incident on
the growing state of permissiveness that has arisen
as a result of squabbling within the Duvalier
family.
Pulling and hauling between the Presideni
and Madame Duvalier, his powerful mother, for
supreme authority have produced a new series of
high-level personnel changes. More officials are
likely to be replaced before a new power balance
is achieved, and in the current fluid political
atmosphere there is a risk that governmental
stability will become seriously and perhaps criti-
cally strained.
The round of changes began on 16 January
with the replacement of Roger Lafontant as min-
ister of interior and defense. Lafontant's appoint-
ment in mid-November as Cambronne's successor
was opposed by Madame Duvalier, who was on a
visit to the US when Cambronne-long a favorite
of the elder Duvaliers-was fired. Lafontant's sub-
sequent efforts to influence the President to rid
his administration of the corrupt officials and
sycophants left over from his father's regime were
too much for Madame Duvalier. She moved deci-
sively to oust Lafontant from the cabinet. He was
named ambassador to Brazil, evidently to get him
out of the country so he could no longer influ-
ence Jean Claude. The new interior minister is
Breton Nazaire, an old Duvalierist political hack.
Madame Duvalier clearly has the upper hand
at the moment. She seems to be making the key
political decisions, but her control is far from
consolidated. Indeed, there are powerful forces
that might in some circumstances be arrayed
against her. Not the least of these is her son, who
despite his youth (22), his apparent weakness as a
leader, and his lack of interest in statecraft, does
have the title of president and occasionally at-
tempts to act the role. In a showdown with his
mother or other old-guard Duvalierists, Jean
Claude would probably receive support from
younger elements in the military and other groups
who might find him a convenient figure around
whom to rally in the quest for change.
Important elements within the military are
watching current political developments with con-
siderable misgiving. Some fear the consequences
should the intra-family squabble over power con-
tinue much longer. Others oppose the return to
the status quo ante for which Madame Duvalier
I was becoming increasingly
irritated with a ame Duvalier's efforts to
persuade her son to permit the widely disliked
Cambronne-now in self-assumed exile in the 25X1
US-to return to Haiti. a number of
other military officers detest Cambronne, and his
return-or that of the President's controversial
sister, Marie Denise Dominique-to an influential
role in the government could provoke consider-
able turmoil.
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o ,r r 1
MEXICO: THE INVESTMENT CLIMATE
Despite an upsurge in government criticism
of foreign investors last year, foreign firms con-
tinued to find Mexico highly attractive. Plant and
equipment expenditures by US firms climbed a
healthy 26 percent in 1972, and Japanese
investors are displaying increased interest in the
country. There is considerable concern, however,
about two bills on foreign investment law and
foreign technology, both of which will probably
be enacted sometime early this year. The meas-
ures as written would limit foreigners to less than
majority interest in new ventures and institute
new controls over the flow of modern technology
from abroad. This could dampen foreign enthu-
siasm for Mexico's investment. In practice, how-
ever, the climate will be kept sound by continuing
assurances from the government that the new
laws will be interpreted "flexibly" and by the
basic strength the economy is showing.
Mexican leaders feel they must react to
domestic political pressures by denouncing for-
eign economic influence. The government is well
aware, nonetheless, that it must not seriously
impede the capital from abroad that contributes
greatly to economic development and helps
finance Mexico's substantial trade deficit. The
government is vigorously soliciting new invest-
ment by firms that promise to spur exports-or
otherwise help to further national development
priorities. It has even been willing to allow
100-percent foreign ownership in some cases. In
1972, the government also moved to expand the
highly successful Border Industry Program, which
will be exempt from the proposed restrictions.
Aiding last year's strong investment per-
formance was the good showing of the economy
as a whole. Mexico's real gross domestic product
rose by an estimated 6.3 percent, considerably
above the 3.7 percent registered in 1971, while
inflation was held under 2.5 percent. A 25-
percent gain in exports, due in large part to sales
of manufactured goods, was particularly
encouraging. Even though the trade deficit rose to
slightly over $1 billion, up $100 million over
1971, it remained below the record deficit
reached in 1970.
The outlook is good for continued growth in
1973. Demand for new construction and con-
sumer durables will provide a strong stimulus to
the economy as will an expansionary government
spending policy. The federal budget calls for a
26-percent rise in expenditures, mostly for
development projects. Echeverria is firmly con-
vinced that economic growth rather than income
redistribution is the best way to satisfy the needs
of his people. 25X1
PERU: TUNA OFFENSIVE
Peruvian naval patrols once again are ar-
resting US tuna boats operating within Peru's
claimed 200-mile territorial sea without Peruvian
licenses. At least 19 vessels have been appre-
hended since 12 December. Fines and license
fees-for which the boat owners will be reim-
bursed under the US Fishermen's Protective
Act-are over the half million dollar mark.
Peru ignored the US tuna fleet during the
1971-72 fishing season, but the passage last fall of
a largely procedural amendment to the Fisher-
men's Protective Act focused Peruvian attention
on the sensitive issue of maritime sovereignty.
There was much official invective and anti-US
demonstrations sponsored by the government.
When Peruvian fishermen spotted US competitors
offshore, they demanded action. The Peruvian
Navy responded, but it would not have done so
without a prior decision at the highest levels of
the Velasco regime. The military government does
not allow popular demands-least of all those
created by its own actions-to dictate foreign
policy.
The prospect of US military sales being
interrupted just as Peru was on the verge of its
first major purchase ($20 million worth of A-37B
aircraft) since the expiration of a previous sales
suspension, as well as incipient negotiations with
the US on new fishing rules, failed to serve as a
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deterrent. On the contrary, these factors may
have helped bring about the renewal of seizures.
Lima may have reasoned that the seizures will
make the US more amenable to a compromise
close to Peru's expectations. Peru could well be
convinced that the US will not allow the fisheries
issue or the boat seizures to interfere with its
wider political and commercial interests.
As far as military equipment is concerned,
however, Peru believes it is in a buyer's market,
and Lima wants to be sure Washington knows
this. There has been no attempt to conceal the
fact that the Soviet Union is under active con-
sideration as an alternative source of supply, and
there have been hints that credit and legal restric-
tions make the US an undependable seller in
Peruvian eyes.
PANAMA: A RANGE OF OPTIONS
The initial euphoria in government circles
over getting the UN Security Council to meet in
Panama City in mid-March is being tempered by
indecision over what tactics to follow on the
canal issue during the sessions.
The Council will be meeting to consider
"measures for the maintenance and strengthening
of international peace and security in Latin Amer-
ica in conformity with the provisions and prin-
ciples of the UN Charter." This formulation is so
general that it will allow the introduction of a
wide variety of topics. Panama has already sug-
gested that the Council discuss the idea of a Latin
American Nuclear Free Zone, remnants of colo-
nialism in Latin America, and national control
of natural resources. These subjects would permit
a number of Latin American countries to air their
bilateral problems with the US.
Panama is, of course, most concerned about
the canal issue. It has been vacillating about the
kinds of pressure that should be put on the US
during the week-long meeting. Recent reports
have indicated that Torrijos may be receiving con-
tradictory advice on this point.
Some of his aides apparently believe that
Panama should conduct itself with maturity and
refrain from using the meeting to create "an inter-
national scandal for the US." Others are urging
that the government make full use of the meeting
to denounce the "colonialist enclave in the Canal
Zone." Torrijos reportedly would like to combine
the two-a vigorous presentation of Panama's case
against Washington on the Canal issue "in an
atmosphere of dignity and tranquility."
The government-controlled media are likely
to continue the propaganda campaign against the
US, but it may be modulated from time to time.
Last week some of the language in the press and
on the air-"Yankee imperialist aggression," "US
plundering and trampling"-sounded straight out
of Radio Havana. After US officials objected, the
language was toned down, but the softer tone
may not last long.
Just how far Torrijos will go in confronting
the US in March will depend in large part on the
amount and type of foreign support: that Panama
receives, particularly from Latin American gov-
ernments. Panama has invited the foreign minis-
ters of all Latin American nations to attend the
Council meeting. The presence of the foreign min-
isters would not only lend prestige to the Council
session, but it would also encourage Panama to
interpret their presence as solidarity with its posi-
tion on the canal issue.
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%,7LL r_1 I_- I
The USSR apparently made it clear when
President Allende was in Moscow in December
that it would not pick up the $450-million tab for
food imports in 1973. On the contrary, the USSR
reportedly urged Chile to mend its fences with
the West and thus strengthen its credit rating. The
only new aid the Soviets offered seems to have
been $30 million worth of commodities, mainly
foodstuffs.
Although Moscow is chary of taking on an-
other Cuba, it has extended Chile $238 million in
long-term aid, all but $56 million since Allende
came to power in November 1970. Little of this
aid has been used, and during Allende's Moscow
visit, contracts were signed allocating earlier cred-
its to specified projects. The Soviets also agreed
to examine new projects and eased the terms of
some previously extended aid. The Chilean Senate
was told that Soviet aid will be used primarily to
develop fishing, the iron and steel industry, rail
and port facilities, and power plants. Although
there are at least 140 Soviets in Chile looking into
project and technical assistance, only one proj-
ect-a pre-fabricated housing plant-is under way.
During the year, Allende will be hard pressed
to find enough short-term commercial credits for
essential imports, and he will continue to use a
$50-million commercial line of credit held at
three Western-based Soviet banks. In July 1972,
Moscow agreed to supply Chile with an additional
$20 million in commercial credits, and $7 million
for each of three years beginning in 1973. Allende
tried unsuccessfully to have the credits increased
last month. The three Soviet banks are unlikely to
help Chile out on their own since they have
complained that the Chileans abuse the terms of
the credit line.
Trade between Chile and the USSR is con-
ducted within the framework of an agreement
concluded in 1967. A protocol signed last June
set total annual trade at approximately $170 mil-
lion. Chile, however, does not have sufficient
goods available to sell to Moscow and presumably
could not meet its export commitment this year
Industrial Plai
velopment ($
its plant ($15
edit (added to 1967 credit
machinery andetuimmnnt
edit (added to 1967 credit for
industrial plants) .
-thermal power plant, Tecopiil.
-cement plant
-assembly and repair plant for
Commodit
-wheat
-pork
cotton
-butter
except by exporting copper or other minerals.
Until now, Chile has resisted exporting copper to
the USSR because copper is still Chile's major
hard currency earner.
COMPROMISES AND CAMPAIGNS
Military leaders' concern over the govern-
ment's politically slanted plan for distributing
basic commodities has been allayed by a typical
Chilean compromise. As a result, the military will
reportedly remain in the cabinet at least through
the congressional elections set for 4 March. Under
the compromise, ranking officers from the three
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Soviet Economic Relations with Chile
(as of 31 December 1972)
Long-Term Economic Aid
(Credits and grants with repayment over five years or more)
(In Millions US $)
Projects Amount
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SLUKL I
military services and the national police have been
involved in the new distribution secretariat under
Economy Minister Millas, a Communist leader
who was recently impeached as finance minister.
Interior Minister General Prats has rejected oppo-.
sition claims that the government-sponsored
neighborhood supply boards are illegal political
instruments and has instructed police to back up
the authority of the boards over food distribu-
tion. This is in line with the demands of the
extremist Socialist administrative chief of San-
tiago, whose replacement allegedly was one of the
military ministers' demands on Allende.
The President rebutted the complaints of the
military leaders over their circumscribed role
since joining the cabinet in November by remind-
ing them that they had been well aware then that
his was a Marxist government
His qualified concessions to
military objections were good politics; at one and
the same time they reassured the armed forces
and put experienced supply officers in the highly
sensitive food distribution business. He also made
two speeches, widely publicized, that criticized
the inefficiency and self-interest of his followers
and his bureaucracy. He established presidential
offices in a textile mill in the Santiago slums, one
of several gestures meant to emphasize to the
military his strong support among the lower
Zambia-Rhodesia
HARD BARGAINING AHEAD
Late last week Zambian President Kaunda
made an overture in private to Rhodesia that
could be the first step toward easing the stalemate
between the two countries. According to the
British, Kaunda on 18 January forwarded an ur-
gent message to Prime Minister Smith via the
British high commissioner in Lusaka.
In the message, Kaunda disavowed support
for the current upsurge of terrorism in northeast-
ern Rhodesia and offered to restrain black Rho-
desian paramilitary preparations in Zambia if
Smith would call off his blockade. Kaunda appar-
ently made his approach in the belief that Smith
was about to announce a military mobilization
classes. He has also told his political colleagues
that they must improve the performance of lag-
ging nationalized industries or suffer the political
consequences.
The prescribed 45-day campaign period for
the elections began last week with government
and opposition accusing each other of inciting
violence for political advantage. Allende's Popular
Unity coalition charged that rightists are stirring
up labor unrest-like the recent costly copper
strike-and planning a "managerial strike" similar
to the massive shutdown last October. The oppo-
sition Democratic Confederation coalition claims
that the Popular Unity wants violence as an
excuse to force cancellation of elections it is sure
to lose. Although polling is a more uncertain art
in Chile than elsewhere and is especially vulnera-
ble to purposeful distortion, the Communists'
own polls to date have twice led them to con-
clude that the elections will not constitute a
repudiation of the Allende government. The
Christian Democrats' surprisingly good showing in
this week's election among national health work-
ers raised opposition hopes of a greater share of
union votes in March and will probably spur the
Communists to step up their already vigorous
campaign activity.
against Zambia and cut off a major source of
hydroelectric power for Zambia's copper in-
dustry. The power comes from the jointly owned
Kariba Dam, the generators of which are on the
Rhodesian side.
The Zambians may have panicked. There
was some minor subversive and sabotage activity
along the border shortly after the blockade began,
and the Zambians seem to have concluded that
these incidents were a prelude to a serious Rho-
desian military and paramilitary campaign against
them. They feared the Rhodesians might be able
to enlist members of an opposition political party
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Zambian Access to the Sea
Primary route
Alternate route
46041-1
IO RT.1
outlawed last month when Zambia became a one-
party state.
In a radiobroadcast after receiving Kaunda's
message, Smith reasserted his determination to
maintain the blockade until the Zambian Govern-
ment dissociates itself "from the indiscriminate
warfare being waged against us from Zambian
soil." He made conciliatory gestures, however,
including implicit assurances that he would not
cut Zambia's share of power from Kariba. Smith
also disavowed Rhodesian complicity in recent
land mine explosions in Zambia, offered direct
negotiations with Lusaka, and said that a crippled
Zambian economy would be a liability for Rho-
desia also. Smith recalled that it was Kaunda who
had decided to stop Zambian copper shipments
through Rhodesia, which sharply increased the
costs of the blockade to both countries.
Smith presumably recognizes how difficult it
would be for Kaunda to renounce publicly Zam-
bia's support for Rhodesian "freedom fighters."
Ndola
ZAMHI
Buju tbura
BURUNDI
The Rhodesian representative in Pretoria report-
edly implied to a British diplomat that Smith
might accept "half assurances" that Kaunda
would attempt to restrain guerrilla incursions.
This approach, like Smith's speech, reflects Salis-
bury's desire to regain the foreign exchange earn-
ings it forfeits by maintaining the blockade.
On the other hand, Smith's broadcast
stressed that the small guerrilla bands currently
active in Rhodesia are getting significant support
from local tribesmen. New regulations authorizing
stiff fines for whole villages when an inhabitant is
suspected of aiding guerrillas indicate a belief
among white Rhodesians that they face a serious
insurgency. Such considerations could compel
Smith to maintain the blockade, regardless of
cost, as long as guerrilla incursions persist. Al-
though no early end of the blockade is in sight,
both Smith and Kaunda seem ready for private
talks aimed at an eventual, if limited, accommo-
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Portuguese Guinea - Guinea
REBELLION IN ABEYANCE
Amilcar Cabral's assassination in Conakry on
20 January has almost certainly stalled the anti-
Portuguese insurgent movement he headed. It also
has plunged nervous President Toure into a new
frenzy of defensive activity motivated by concern
both for the rebel movement and his own regime.
loure, who had given the insurgent forces
under Cabral wide latitude in Guinea, has acted
quickly to control the situation. While Toure rais
against imperialist plots, the Guinean military has
moved to disarm insurgent elements throughout
Guinea and taken control of the Conakry installa-
tions of Cabral's organization. Rebel personnel in
the capital reportedly have been divided into
small groups and placed under the control of
Toure's party.
No conclusive evidence identifying Cabral's
killers is available as yet, although Toure has
announced that the commander of the rebel
'"navy" has confessed. Toure predictably has
placed basic responsibility on the Portuguese,
who have, just as predictably, denied all responsi-
bility. In a radio interview on 22 January, Toure
charged that most of the assassins were members
of the Portuguese colonial army who had pre-
tended to desert to the rebels. On 23 January,
Toure claimed the commander and "others" had
been captured by the Guinean Navy the day after
the assassination while fleeing to Portuguese
Guinea in commandeered rebel boats. Tow
claimed they had several hostages, including a top
Cabral aide, Aristide Pereira. Toure also has as-
serted that a move is under way to "uproot" a
"fifth column" within the rebel organization.
Toure's public treatment of the affair is in-
tended, above all, to refute the damaging explana-
tion, offered by Lisbon and widely accepted in
press accounts, that Cabral's murder resulted
from factionalism within the rebel movement. In
fact, available evidence points in that direction
and also suggests that Toure's prompt control
measures were motivated by concern that warfare
might break out between the factions, presenting
a security hazard to his own regime as well as
further weakening the nationalist cause.
Toure's take-charge attitude, plus rebel de-
pendence on the Guinea base, means that the
Guinean President will have a strong say about
the insurgents' future leadership and direction.
No successor to Cabral has emerged, and Toure is
in command. The two most likely successors are
Luiz Cabral, Amilcar's brother, and Pereira. Luiz
headed the rebel office in Dakar and Pereira the
Conakry office. Toure's restrictions on the insur-
gents during the sorting-out period makes rebel
military initiatives unlikely and can only ad-
versely affect their stated intention to declare an
independent rebel government.
Meanwhile, Toure, despite his concern over
the various problems raised by the assassination,
is clearly bent on exploiting the event to prop-
agate the nationalist cause and enhance Guinea's
prestige. He evidently intends to stage another
spectacular funeral like the one he put on last
year for Nkrumah.
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INDIA: THE UNMAKING OF A STATE
A common language may not be enough to
hold together the southeastern state of Andhra
Pradesh. Ironically, the Telugu speakers in this
area provided the impetus for a massive reorgani-
zation of India's states along linguistic lines in
1956. Today in Andhra Pradesh, economic griev-
ances have led to a bloody dispute between the
comparatively well-off inhabitants of the coastal
Andhra region and the residents of Telengana, the
poorer interior part of the state.
The latest outburst was touched off by a
Supreme Court ruling in early October upholding
the constitutionality of employment regulations
(the Mulki Rules) that have reserved a vast num-
ber of civil service jobs for the Telengana
minority since 1918, when Telengana was part of
the princely state of Hyderabad. The Andhrans
had gone along with the preferential scheme for a
number of years but, hard hit by rising unemploy-
ment, their resentment of the Telenganans'
monopoly of government jobs has been rising,
particularly in the state capital, Hyderabad City.
Prime Minister Gandhi tried to lower
tempers by proposing an extension of the Mulki
Rules on a limited scale, but neither side was
satisfied, and the drive for separation grew more
virulent, particularly in Andhra. Rioting, the de-
struction of government property, especially rail-
way stations and trains, and some 30 fatalities
finally led New Delhi on 18 January to suspend
the state assembly and impose President's Rule.
Political and caste considerations enter into
the dispute. The formerly dominant Reddy caste,
which includes ex - chief minister Brahmananda
Reddy and various political parties, whose power
was sharply trimmed by Mrs. Gandhi's election
successes, discovered they had something in
common. They succeeded in bringing about the
resignation of Chief Minister P. V. Narasimha
Rao, her hand-picked replacement for Reddy. As
a result, Mrs. Gandhi's image as a skilled political
manipulator has suffered, raising doubts about
the future of her appointed lieutenants in other
states. Many of them face difficult economic and
political problems, lack personal power bases, and
are resented locally. New Delhi is concerned that
the situation in Andhra Pradesh may set an
unhealthy precedent for other states afflicted
with similar tensions.
The breathing spell provided by President's
Rule could allow cooler heads in Andhra Pradesh
to look squarely at the long-term economic dis-
advantages of separation. At this juncture, how-
ever, the betting favors the formation of two
separate states and perhaps more changes in
India's internal boundaries in response to a con-
stantly varying mixture of linguistic, ethnic, and
economic pressures.
CYPRUS: MAKARIOS VS. GRIVAS
Divided loyalties within the Greek Cypriot
community have led to open strife between the
supporters of President Makarios and General
Grivas. Bombings, student demonstrations, at-
tacks on the police, and thefts of weapons and
explosives have heightened tensions.
In calling presidential elections for 18 Febru-
ary, Makarios was aware that Grivas would cause
trouble, but the President wanted to renew his
mandate from the Greek Cypriot community. A
new mandate would, he thought, help him cope
more effectively with his critics and strengthen
his hand in the current intercommunal talks.
Grivas has opposed the elections for the
same reason. Grivas fears, in particular, that if the
Archbishop is overwhelmingly re-elected, he will
feel free to accept an intercommunal settlement
that would foreclose Grivas' major goal-union of
Cyprus with Greece (enosis). It appears likely that
recent outbreaks were not isolated incidents but a
calculated campaign by Grivas aimed at undercut-
ting Makarios and demonstrating pro-enosis senti-
ment among the Greek Cypriots.
No candidate has yet appeared to challenge
Makarios. If an opponent comes forward by the 8
February filing deadline, Grivas probably hopes
his terrorist tactics will deprive Makarios of a
large affirmative vote by discouraging voters from
going to the polls. Makarios seems confident that 25X1
he can contain the Grivas forces even though the
General's followers are capable of even more
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The government's decision to keep the na-
tion's universities closed until 3 February reflects
its continued uneasiness over student unrest.
Following student demonstrations in ear y
January, all Egyptian institutions of higher
learning were closed a week ahead of the normal
mid-year break. Classes were originally set to
resume on 27 January, but the regime needed
more time to cool the situation.
Student grievances are still alive. Some
students remain under arrest, one of the reasons
for the earlier protests, and little has been done o
answer other student complaints. For example,
the students wanted more done to prepare for the
battle with Israel. President Sadat has made a
show of further preparations, but his efforts prob-
ably will not mollify the students.
Support for the students reportedly has
come from a group of prominent Egyptian intel-
lectuals who privately sent a petition to Sadat
calling for leniency for students held by the gov-
ernment. The intellectuals pointed out that the
demonstrations, far from being the handiwork of
a small group of agitators as the government has
claimed, stemmed from the broad discontent that
exists at all levels of Egyptian society. The signa-
tories represented a broad ideological and philo-
sophical spectrum, and the request is an unusual
manifestation of unhappiness with the regirie
from the nation's intellecitual community.
A fact-finding committee appointed by the
government is to present a report on the recent
troubles to the legislature, but the report is not
likely to assuage student grievances. More
warnings on the need for national solidarity will
be issued, but Egypt's security forces will have to
be on the alert for further trouble when the
universities do eventually reopen.
For the past two weeks, Syrian leaders have
been engaged in a major diplomatic campaign to
point up to their Arab brothers that Syria is
fighting Israel alone and needs tangible as well as
moral support. At the same time, the Damascus
radio has been calling on the "Arab masses" to
join the battle and for Arab armies to "take their
natural position" on the front line. The intensive
campaign was doubtless prompted by the recent
disastrous Israeli attacks on Syria, which resulted
in hundreds of casualties and heavy damage to
key military installations and equipment.
Damascus' appeal for help has been spear-
headed by Foreign Minister Khaddam, who
toured the Maghreb states, and by Deputy Prime
Minister Haydar, who visited eastern Arab na-
tions. The seriousness of the Syrian appeal was
underscored by the personal letters they carried
from President Asad. The concurrent, sustained
press campaign contains the implicit reminder to
Egyptian leaders that they could renew hostilities
along the Suez Canal. At the very least, the
Syrians may hope to generate greater financial
assistance. Reports that Syria might withdraw
from the Confederation of Arab Republics unless
more aid is forthcoming have been denied.
Although the initial public response has been
accompanied by expressions of praise and pledges
of support, there has been little evidence that
significant tangible aid is currently being con-
sidered. The naming this week of Egyptian War
Minister Ahmed Ismail as commancler in chief of
the Syrian, Egyptian, and Libyan armies, like
similar steps in the past, is intended to create an
impression of greater Arab unity. In another
probably futile effort, Arab defense ministers are
scheduled to meet in Cairo on 27 January to
discuss common defense plans. But, despite assur-
ances that they are behind Damascus all the way,
none of the other Arab states seems ready to join
Syria in another "war of attrition" against
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Secret
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DIRECTORATE OF
INTELLIGENCE
Secret
WEEKLY SUMMARY
Special Report
Shah of Iran: Royal Revolutionary
Secret
N9 46
26 January 1973
No. 0354/73A
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Shah of Iran
ROYAL REVOLUTIONARY
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,Five thousand representatives of Iranian organizations gathered in Tehran this
week for a national congress marking the tenth anniversary of the White Revolution,
the device by which the Shah has brought Iran into the 20th century. The
celebration is referred to locally as the sixth of Bahman, the date on the Iranian
calendar when in 1963 the Shah's package of land reform and other related
programs was endorsed in a referendum.
In the intervening ten years, the Shah has grown into a supremely self-con-
fident ruler, who has to his credit an impressive list of successes. Although Iran is
theoretically a constitutional monarchy, in practice all branches of the government
are dominated by the Shah, who holds absolute power and makes all decisions. The
right to form political parties and hold free elections has been narrowly circum-
scribed by the Shah, who closely controls even the most parochial of political
processes.
Conscious of his own mortality, the Shah is in a hurry to establish Iran
economically, politically, and militarily as. the most powerful and prestigious coun-
try in the Middle East. Virtually every thing that has been achieved in Iran is directly
attributable to the Shah's dynamism and his taking "this king business" seriously.
This is both a major strength and weakness. The Shah alone supplies direction and
coherence to the government. As long as he reigns and remains flexible enough to
make necessary changes, Iran should thrive. Without him, the stability and pros-
perity he has established will become extremely vulnerable.
Ten Years of Social and Economic Progress
Mohammed Reza Shah Pahlavi was only 21
when British and Soviet forces occupied Iran in
1941 in order to open transit routes for war
materiel. This move by the wartime allies forced
his father's abdication and his own accession to
the throne. At first, the new monarch seemed a
pale reflection of his tough, aggressive parent, and
for almost 15 years his rule was in many respects
secondary to that of the old time politicians com-
peting for personal political power. Not until the
mid-1950s, following the overthrow of the erratic
nationalist Mohammed Nlossadeq, did the Shah
begin to tighten his grip on the power structure.
By the end of the decade, he had brought the
government entirely under his authority, but in
the process he suffered a sharp decrease in per-
sonal prestige. The Shah was blamed for the
persistence of near feudal economic and social
conditions. Similar regimes were collapsing else-
where in the region, and few observers believed
the Shah was capable of the reforms needed to
save the monarchy.
That the Shah and the monarchy did survive
was due to a fortunate confluence of circum-
stances, the force of his personality, and a fair
measure of luck. Since 1963, the Shah has trans-
formed his image. The reactionary conservative
has blossomed into a royal revolutionary and
social reformer. The vehicle for this transforma-
tion has been his White Revolution, which began
in 1963 as a reform program designed to undercut
his opposition and gain support from the people.
; ; The Shah recognized from the start that
m'ajo'r reforms would be risky, but he correctly
reasoned that the support of the traditional
aristocracy alone was of diminishing importance.
It could be replaced by a new elite ihat included,
in addition, the growing middle class. He saw
much to be gained from establishing a public
image as a progressive ruler both at home and
abroad, but he was also moved by a genuine
concern for the average Iranians' well-being.
Only two aspects of the program have met
active opposition: land reforim-the most
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w
significant element of the original program-and
giving women the vote. Opposition to these
proposals culminated in riots in Tehran in June
1963, but by that time the Shah was too com-
mitted to back down. If anything, the disorders
strengthened his resolve to press forward, though
sometimes at a pace and in a manner.more
tailored to the sensibilities of those affected/
Reform and Development
(In general, the White Revolution has been
more a political than an economic success, and
this is true of land reform in particular. Virtually
without bloodshed, nearly all of the 90,000
square miles of arable land formerly owned by
the Shah, the state, and landlords (constituting
about 1 percent of the population) has been
transferred to the ownership of the peasants
(about 45 percent of the population). The only
exception was a small percentage of land farmed
mostly by machinery and some orchards)
1
(Although many problems are still to be
smoothed out, the agricultural economy did not
suffer during the transfer, and the new peasant
owners work the land more productively than
before the revolution. The annual growth rate of
agricultural output is about 3 percent, an achieve-
ment that many developing countries would envy,
but short of the 4.4-percent goal set by Iran's
planners. Land reform provided very little for the
large numbers of laborers employed on the farms.
IThe reform movement, in general, has main-
tained its momentum even though some specific
programs have lagged. The bolder and more
imaginative programs have periodically given fresh
stimulus to the movement as they entered new
stages; land reform, for instance, has gone
through three such phases. The Literacy Corps,
the Health Corps, and the Extension and Develop-
ment Corps were designed to bring groups of
draft-age Iranians to the countryside to improve
education, health, and living standards. These
groups have been able to work effectively in a rural
environment and have benefited from the
changing landlord-peasant relationships. These
programs are expanding.
Special Report
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The White Revolution
On 26 January 1963, the initial six points of the
Shah's program for reform and development-the
White Revolution-were approved by popular refer-
endum. They included land reform, electoral reform,
the Literacy Corps, the sale of government factories,
nationalization of forests, and workers' profit sharing.
Three more were added in 1963: the Health Corps,
the Extension and Development Corps, and the vil-
lage court system. Two years later the list was in-
creased to 12 with the addition of a program of
administrative and educational reform, a program to
promote regional development, and the nationaliza-
tion of water resources.
Land reform and the Literacy Corps have un-
doubtedly had the most impact and have been the
most successful programs. The Health and Extension
Development Corps have also enjoyed some success,
not the least of which has been the establishment of a
government presence and channels of communication
in remote villages usually ignored by Tehran. At least
3,500 Houses of Equity and nearly 200 Arbitration
Councils have been opened as part of the moderniza-
tion of the village court system to accelerate the
settlement of cases.
Other parts of the 12-point program have had
less impressive results. The nationalization of forests
and water, relatively unspectacular and implemented
fairly slowly, has made little impression. The sale of
government factories did not generate much enthu-
siasm and, despite continuing government efforts to
sell off some of its uneconomical factories, it has had
little success. The workers' profit-sharing program,
still very much publicized, is unlikely to meet its
lofty goal. Election law reform has streamlined the
mechanics of holding elections, reducing to one day a
process that at times had taken more than a week,
but has not resulted in the development of any real
political contests. Any advances under the program of
administrative reform, which is still viewed with
skepticism, have been marginal and often coinciden-
tal. The Iranian bureaucracy has an almost legendary
ability to absorb the waves of reform and the cries of
outraged citizenry while still continuing as before.
26 January 1973
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I The reform movement has had its greatest
impact in rural areas. Despite the Shah's efforts to
convey the impression of a social revolution
changing both rural and urban Iranians, the
benefits accruing to the urban population, with
some exceptions, have been more the result of the
country's economic progress than of specific
reform programs. The key to that economic
progress has, of course, been the substantial in-
crease in Iran's income from oil revenues and the
skillful handling of foreign credits.
Oran has developed to the point where it has
the largest gross national product in the Middle
East, more than twice that of either Egypt or
Israel, and is growing at a faster rate than that of
any country in the region. Since 1964, Iran has
enjoyed an average annual growth in real Gross
National Product of 11 percent, a rate ap-
proached only by Israel in the Middle East. This
growth rate is the result of large-scale public and
private investment, supported by increasing
amounts of foreign financial and technological
assistance.!!
'Iran's rapid economic expansion is heavily
dependent on oil revenues which, at $2 billion in
Special Report
1971 and an estimated $2.4 billion in 1972, ac-
count for 85 percent of export earnings and
about 60 percent of annual government receipts.
The importance of oil to Iran's economy is
demonstrated by the fact that the Shah takes
personal charge of negotiating all oil agreements.
He has repeatedly pressed the consortium-a
group of Western companies that extracts and
markets roughly 90 percent of Iran's oil-for
more rapid growth in production and for higher
revenues. Last June, after hard bargaining, the
Shah tentatively extended the consortium's con-
cession to 1994 in exchange for its nearly
doubling production and transferring some of its
assets to the government-owned National Iranian
Oil Company. He changed his mind when
neighboring Persian Gulf countries subsequently
received what the Shah considers to be better
terms from their concessionaires. He is now re-
negotiating his earlier agreement. ;%
+fi jlran's economic successes have not been an
unmixed blessing. Rapid growth has given rise to
a number of economic and social problems.
Massive population shifts have strained urban
community services. There is unemployment and
underemployment on a wide and visible scale.
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The country's new-found wealth has been un-
evenly distributed; upper and middle income
groups have benefited enormously while some
lower income groups have benefited slightly.
Economic planners have had to cope with infla-
tion and with shortages of trained personnel to
manage and man expanding industries. These
problems will have to be addressed if the Shah is
to sustain the image of Iran as a reforming as well
as a prospering country.
?k 'The Shah dominates Iranian political life.
His successes over the past decade, and particu-
larly the country's extraordinary economic
growth, have made him a supremely self-con-
fident ruler. He considers himself the best in-
formed man in Iran, but has a voracious appetite
for more knowledge. He surrounds himself with
loyal, educated, and politically sophisticated
advisers whose talents he uses to manipulate the
national and local bureaucracies and the legisla-
ture. To oversee the entire system and maintain
control, the Shah employs an omnipresent secu-
rity network.?
)The Shah usually works seven days a week,
spending from about 0900 to 1330 and from
1600 to 1930 in his office. During these hours, he
receives a steady stream of visitors, including top
officers of the Iranian Government and the armed
forces. Although most important officials see the
Shah on a fairly regular basis, there are a few that
enjoy a much readier access to the monarch-
these are the 10 to 15 most important court,
government, military, and security officials.[
The Shah's work schedule is somewhat less
r`igorlous than in the past, but he still turns over
only the less important business to subordinates.
On routine Pahlavi Foundation matters, for
example, he is more likely now to turn to its
administrator, Senate President Sharif-Emami,
than he would have done in the past, when he
personally used to approve or disapprove appli-
cants for the 3,000 scholarships administered by
the foundation. On more weighty matters, he has
not lost his taste for detail. He directs or at least
reviews all significant actions by the ministries, he
Special Report
personally appoints a host of civilian officials and
all military officers down to the rank of major, he
parcels out diplomatic assignments, and he passes
on individuals running for legislative seats.1
{o )It is a taut system the Shah has established.
He delegates little, and his awesome personality
inhibits his advisers, who may tell the Shah what
they think will please him instead of what they
believe to be the truth. The Shah recognizes this
and frequently zeroes in with astute questions. In
recent years, the Empress, who has a reputation
for candor, has been used by some to reach the
Shah with unpleasant news. She is reportedly not
afraid to criticize if she feels criticism is neces-
sary. f
/The most prestigious position next to the
,-Shah is that of minister of court, who serves as
.director of the Shah's executive office and may
,director
used by him for unofficial and unattributed
activities. The incumbent, Amir Assadollah Alam,
is especially close to the Shah and has been since
they were schoolboy chums. Alam has served the
Shah effectively in a wide variety of important
posts and was prime minister at the inception of
the White Revolution.
7 The current prime minister, Amir Abbas
Hoveyda, is a close adviser to the Shah by virtue
of his office. He has held the post for a record
seven years. Not all prime ministers have had the
confidence of the Shah, but Hoveyda has; and the
position is, therefore, one of real influence.
Hoveyda's blend of humility, tact, and affability
has made him an important asset. Nonetheless,
Hoveyda has made it clear that he acts only at the
direction of the Shah. The prime minister knows
that he, like other officials in the cabinet, serves
only at the monarch's pleasure, and that any
lapses-or any success in building a personal fol-
lowing-would cost him his job.)
The Shah and the Military
J [The military is central to the Shah's plans
for his country. He wants to make Iran the most
powerful and prosperous Middle East country and
bring it significant influence on the world scene,
and he believes the military must play a key role
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in this endeavor. He has lavished money on his
armed forces-already stronger than any Arab
neighbor-in an effort to provide the latest, most
sophisticated weapons and the trained men to
operate this equipment. Not surprisingly, in view
of the military's historic leadership of coups in
these countries, the Shah holds this increasingly
well armed force under close control. Since much
of his own education and training was oriented
toward the military, the Shah is commander in
chief in fact as well as in name. As with the
cabinet, military officers have been arbitrarily
moved around and dismissed to keep any one
man from becoming a rival. Meanwhile, the Shah
makes certain that military pay and perquisites
are generous:)
'Military officers head the security networks
fundamental to the Shah's control. The National
Intelligence and Security Organization (Savak)
has permeated every facet of Iranian life. From its
headquarters in Tehran, it monitors developmerits
throughout the country by means of a field
organization paralleling that of the provincial
bureaucracy. Not only does Savak collect
intelligence on political opposition, suspect firms
and organizations, students, foreigners, tribes, and
minority groups, but it also investigates and ap-
proves candidates for election and scrutinizes gov-
ernment implementation of the Shah's programs.
Savak's methods are often ruthless and include
harsh interrogation, indiscriminate search and
seizure, and prolonged imprisonment of suspects
without hearings-all of which arouse popular
resentment. It is run by General Nasiri. His
reputation for ruthlessness was probably the
reason he was appointed to replace General
Pakravan, after the assassination in 1965 of Prime
Minister Mausur. Nasiri's appointment also served
notice that the Shah would brook no opposition. I
;General Nasiri's deputy at Savak, Lieutenant
General Hossein Fardust, heads the Special Intelli-
gence Office, established in 1959 as the Shah's
personal security and intelligence network. Al-
though Nasiri is one of the Shah's important
advisers, Fardust is even closer to the monarch.
He is empowered to conduct special investiga-
tions. He screens the press and monitors broad-
casts, controlling the content of all public infor-
Special Report
mation media as necessary. His power derives not
from his position as Savak deputy but from his
long and loyal friendship with the Shah.;
The Shah and the Legislature
". Historically, parliament in Iran is opposed to
the monarchy. The Shah, like his father, has,
therefore, found it necessary to keep both houses,
the Majlis and the Senate, under tight control.
The Shah approves all candidates for parliament,
and in some cases he specifies who is to win. The
constitution requires him to appoint half of the
Senate. By these means, the Shah is assured of a
legislature that will be responsive to his wishes.
He is also able to ensure that a cross section of
Iranian life, including representatives of groups
such as women, make it into parliament.
Given this tight control, it is not hard to see
why parliament's performance often lacks con-
viction. Most bills are dutifully approved by both
houses with little more than a semblance of
debate. Occasionally, there are sparks of life, for
Women were given the vote in 1963.
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instance, when the Shah's position on draft legis-
lation is not clear beforehand, but these are few
and far between. Little legislation gets that far
without the Shah's imprimatur.
i (Even so, the Shah does not ignore the legisla-
ture, and on occasion has mollified the Majlis by
amending some provisions of draft legislation
found by the Majlis to be offensive. In this sense,
the legislature serves as a sounding board for
proposals that might be badly received by the
populace. In 1969, for example, a land-reform bill
requiring small landlords to sell rather than lease
their land caused considerable dissatisfaction
among the large number of small landholders. The
bill was criticized in the Majlis. The Shah agreed
to allow the landholders more latitude in ex-
changing the vouchers they received for their
land, but maintained the essence of the legisla-
tion-that the land had to be sold. More fre-
quently, however, when Majlis deputies object to
proposed legislation or the way it is presented,
they will debate and delay until the clear intent
of the court is made known. Once that is done,
they quickly succumb, cease further discussion,
and approve the bill. I
The Shah and the People
The Shah pays lip service to the philosophy
that Iran needs a real constitutional monarchy in
which the people participate in national affairs
through their political parties. For the present,
however, the Shah, in his paternalistic treatment
of the people and in his manipulation of the
election process, gives no sign that he plans to
move in a democratic direction. He is probably
sincere about the need for a functioning con-
stitutional monarchy in the distant future, but he
is so confident that he knows what is best for Iran
that he himself is unlikely to relinquish any of his
authority.
`In fact, the Shah's relationship with his
people is a one-sided affair. He tells them what he
thinks is best for them, working through an
elaborate provincial government organization. It
is, however, a paternalistic system, one in which
the lines of authority do not always correspond
neatly to the formal organizational charts. Some
Special Report
senior officials in Tehran have preserved links
with their home areas and, in some cases, the
local Savak chief wields more power than the
provincial governor-general. Occasionally, the
various councils and officials also pass back to the
Shah the wants and needs of the people, but this
is not their primary mission:
When the Iranians learn to behave like Swedes, I will
behave like the King of Sweden. The Shah in answer
to a query as to why he did not become a constitu-
tional monarch.
/ ?)' jElections are a good example of the way
Tehran manipulates the people's participation in
government. Publicly, officials describe the proc-
ess as a training exercise to aid the people to
make the transition from a basically feudal soci-
ety to a modern constitutional monarchy. Pri-
vately, officials admit that a facade of democracy
has been deliberately constructed, based on a
number of elaborate laws honored only in the
breach and on a two-party system that is com-
pletely artificial. For example, in elections for
city, district, and regional educational councils in
October 1972, the vast majority of votes were
cast by messengers who collected signed blank
ballots from voters and delivered them to party
workers who marked them as instructed before
depositing them in the ballot box.%
1 Iranian political parties, subject to the
Shah's absolute control, have the form but not
the function of Western political parties. Iran
Novin, the ruling party, owes its position to
imperial favor and continued "massive victories"
at the polls. The Mardom Party, a poor second,
has no real standing even among its own mem-
bers. Election results, even the party breakdown
in the Majlis and in provincial councils, are all
preordained by the Shah.'
In addition to controlling the political
paarties and elections, the Shah's government
maintains tight control over the media. Every
morning, representatives from the prime minis-
ter's office, the Ministry of Information, and
other ministries wait at the newspaper offices for
the first copies of the papers, which they take to
their superiors for perusal. If these officials find
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anything objectionable, they can order the presses
stopped and prevent distribution of copies al-
ready printed. Writers of material deemed of-
fensive may find their jobs in jeopardy. Two
reporters were recently suspended because of a
story that upset the Shah by depicting a terrorist
sympathetically..+
The people's direct contact with the Shah :s
necessarily limited. Most hear about his prograrrs
through local bureaucrats or from the press or
radio. Although pictures of the Shah abound--
either alone or accompanied by Empress Farah cr
sometimes the crown prince-relatively few
people get to see him in person. Several times a
year he will visit various parts of the country, but
these are largely ceremonial occasions and involve
mostly government officials. Prime Minister
Hoveyda and other functionaries make many trips
on the Shah's behalf, however, and, occasionally,
Empress Farah has gone into the country to
represent him.
"Despite the fact that the Iranian system al-
lows a minimum of popular participation, the
people appear reasonably satisfied. With material
conditions steadily improving, the Shah's manipu-
lation of the political process produces more
apathy than resentment. Groups that might other-
wise have reason to be unhappy, such as dis-
possessed landlords, have made money elsewhere,
and the burgeoning economy has opened up
opportunities for a new managerial elite. There is
evidence, however, of a growing hostility among
intellectuals. Sporadic acts of terrorism and
occasional student disorders attest to the exist-
ence of pockets of discontent. This could increase
if unemployment rises.
'The prospects for Iran's continued economic:
progress are good as long as the Shah remains in
power. Oil production is expected to grow con-
siderably and, whatever the details of the settle-
ment with the consortium, Iran will receive sub-
stantially more of the earnings than in the past.
These large increases will not be enough, however,
to cover Iran's ambitious public expenditures, and
Special Report
continued external financing will be necessary for
the next few years.
Although the Shah in the past decade has
concentrated his efforts and those of the govern-
ment on improving the domestic situation, he
seems now to be developing an international
policy aimed at increasing Iran's importance in
the Middle East and the world. In the last year,
the Shah has visited or been visited by the chiefs
of state of the UK, US, and USSR; in September,
the Empress paid a highly publicized visit to
China. In line with his expanding view of Iran's
defense responsibilities, the Shah has dramatically
increased his air and naval weapons procurement,
with some emphasis on developing longer range
military capabilities.."
#-'1There is little chance of a coup d'etat, and
the ~hah appears to be in good health. He is,
however, known to be careless of his personal
security. Should he be removed from the scene,
there is some doubt that the succession mech-
anism would work to assure the accession of
12-year-old Crown Prince Reza Cyrus Ali /More-
over, Regency is untried in modern Iran, and in
this case the regent would be the Queen-a choice
only recently sanctioned by law but long for-
bidden by Iranian custom. It is doubtful that the
Empress would be the paramount power in any
post-Shah government, however, because she can-
not count on the permanent allegiance of the
coterie that has built up around her and because
she has not so far been involved in major policy
decisions. Her present power is hers as the wife of
the Shah, not as a person of influence in her own
right; still, her challengers would have to reckon
with her wide popularity and her constitutional
position.'
,'. ;Assuming the Shah remains in power for a
good many years, and that is the likelihood, little
will change in the way the country is run. There is
always a possibility of terrorist disturbances,
though, and occasions such as the sixth of
Bahman celebrations provide a natural stage for
such activities. Nevertheless, the Shah has been
able to control dissent in the past, and he should
be able to do so in the future.
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