WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010100020001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 47
• Document Creation Date: December 21, 2016
• Document Release Date: September 2, 2008
• Sequence Number: 1
• Publication Date: February 16, 1973
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
OSD review completed
Secret
16 February 1973
No. 0357/73
COPY N2 42
State Dept. review completed
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CONTENTS (16February 1973)
MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
OSD review completed
SPECIAL
REPORT
1 The Money Markets
3 France: Europe Mulls Election
10 USSR: Breaking the Ice
11 Sparring Over Spitzbergen
12 Paying the Piper
13 Trade Negotiations: Tough Task
13 Yugoslavia: Trimming the Top
14 European Labor: New Club
15 Iceland: Timely Reminder
18 Egypt: Questions, Few Answers
21 Portuguese Guinea: Rebels
22 Pakistan: Pressure on Wali
23 Uruguay: Bordaberry Gives In
24 Paraguay: Stroessner Wins
25 Dominican Republic: Calmer
26 Argentina: Prospects Dimming
27 Peru: Mercado Moves In
27 Andean Pact: Sixth Member
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OSD review completed
REACTING TO THE DOLLAR
IForeign reaction to the dollar devaluation
itself has been generally favorable, although some
skepticism over its long-term success is evident as
well as an undercurrent of concern over the man-
ner in which the US acted. When official currency
markets reopened Wednesday, the Bank of Japan
was forced to intervene heavily to hold down the
yen, but by Thursday the yen had been effec-
tively revalued by about 16 percent relative to the
dollar. The dollar showed a mixed performance in
European markets.,;
and businessmen are critical of the US action and
concerned about future US trade policy.)
iThe US decision to devalue was preceded by
discussions among the members of the EC of the
feasibility of a "joint EC solution." The Germans
proved more willing than before to consider a
split exchange rate and the French were less
opposed to a common float of EC currencies
vis-a-vis the dollar. These discussions thus brought
out a greater sensitivity to the need for EC soli-
darity than was evident in the money crisis of
1971(For several reasons, however, notably the
practical difficulties Bonn would have in admin-
istering a two-tier system and London's reluc-
tance to repeg the pound, neither "European"
solution was a viable alternative. The dollar deval-
uation thus spared the EC members another test
of their ability to cooperate. The floating of the
Italian lira in both exchange markets is a further
blow to the effort to narrow the exchange mar-
gins among EC currencies}EC finance ministers
met this week to consider the Italian decision and
its consequences for the Common Agricultural
Policy. The ministers also reaffirmed the EC ob-
The West Europeans have accepted the
dollar devaluation as the best solution under the
circumstances; some applauded it, although some
are cautious about long-term prospects for mone-
British officials have also been complimentary to
the US, but some of the French press, politicians,
jective of economic and monetary union. The
Benelux states still are distinctly unhappy that
the EC Big Four failed to communicate with
them during the decisive phases last week)
One result of the recent experience has been
to refocus attention on the connection between
the monetary and trade fields.
The US-
announced intention to su mi ra a egislation
to Congress in the near future will remove an
argument for foot-dragginq on the part of the EC
Finance Ministers Schmidt (West Germany), d'Estaing (France), Barber (UK) meet in Paris.
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as the preparations for these talks go forward.
Commentaries in the European press are already
expressing concern that some of the specific leg-
islation may raise new problems for the negotia-
tions.)
!Most of the less developed countries are
sitting tight. Many have not yet decided if they
will leave the gold parity of their currency un-
changed and thereby increase its value relative to
the dollar.)
Most major foreign currency markets were
cJ~sed n Mondav and Tuesday.
In Europe trading
was slow and steady on Wednesday. The mark
had gained in Frankfurt by about 7 percent rela-
Japanese Equipment for Export
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Page 2 WEEKLY SUMMARY 16 Feb 73
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FRANCE: EUROPE MULLS AN ELECTION
The Socialist-Communist alliance is generally
expected to make substantial inroads into the
huge Pompidou majority in the French National
Assembly in the elections next month. While the
reactions will, of course, vary with the strength of
the leftist showing, important repercussions are
likely only in Italy and to a lesser extent in the
Netherlands, which resemble France to some ex-
tent in their olitical fragmentation.
government since the elections last fall. Should
this interregnum extend into March, a strong
leftist showing in France might well embolden
Dutch Socialists in their bid for control of the
next government.,
Moscow, for its part, is decidedly cool toward the
prospect of gains for France's leftists.
A strong performance by the French Com-
munist Party, under its present condition of pro-
visional acceptance by the French electorate as a
democratic political party, would be of consider-
able interest to Italian political leaders as they
debate the possibility of full entry into the politi-
cal arena for the Italian party. The greatest im-
pact, however, may be on the Italian Commu-
nists.
A good showing by France's Communists in
,,the face of Soviet preference for the Pompidou
coalition might raise Italian party hopes that the
French Communists would be willing to join the
Italian and Spanish parties in insisting on domes-
tic policies independent of Moscow's direction.
The Italian party has long faced the nearly insolu-
ble problem of needing to retain its ties with
Moscow and the international movement while at
the same time moving toward a closer identifica-
tion with Italian national aims. A regional Euro-
pean grouping of Communist parties with loos-
ened links to Moscow might resolve this dilemma.
An effort at the time of the Czechoslovak crisis of
1968 to set up some such grouping, at least on an
ad hoc basis, stumbled over the docility of the
French party under Soviet pressure.
In the Netherlands, the impact of a strong
leftist performance in France might indirectly re-
inforce the present leftward drift in Dutch poli-
tics. The stable constellation of center-right par-
ties, which has governed the Netherlands for most
of the past 15 years, has given way to a more
fluid situation and an inability to form a new
Page 3
.,As seen from Moscow, cooperation between
Communists and Socialists runs counter to
Marxist ideology and, in more practical terms,
risks weakening Soviet control over the French
party. On the other hand, Moscow can only wel-
come developments that strengthen local parties
and in some instances, give them a shot at
becoming a part of the government. Under
present conditions, as the USSR cultivates a sense
of detente in Europe and maintains generally
good relations with the non-communist gov-
ernments of Western Europe, the Soviet interest
in encouraging popular front coalitions is
reduced. The very cool Soviet attitude toward the
leftist coalition in France is an outstanding
example. 25X1
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j,y \With the international truce teams still not
fully operational and both sides determined to
defend or expand their holdings, the fighting goes
on in South Vietnam for the third week after the
signing of the Paris agreement. Most of the mili-
tary action is concentrated in a few widely scat-
tered trouble spots, and much of it is the product
of South Vietnamese efforts to clear territory
seized by the Communists just before the cease-
fire. The Communists have also kept up scattered
small-scale shellings and light ground attacks
through much of the country
j-' On the Quang Tri battlefront, the two sides
continue to trade artillery fire, but neither has
gained much territory. Communist units in south-
ern Quang Ngai Province are resisting South Viet-
namese efforts to dislodge them from their foot-
hold in the Sa Huynh area. The South Vietnamese
regional commander has ordered the 2nd Divi-
sion, which has been reinforced with Ranger units
from the Saigon area, to clear Route 1 and retake
3 Sa Huynhp'at all costs."
j lin the highland provinces, the Communists
still have Kontum City isolated, although govern-
ment forces have opened a few more key roads.]
Trying to be Proper
JSaigon is making efforts to be cool but cor-
rect in dealing with the truce commissions; the
South Vietnamese want to minimize the com-
missions' contacts with the public. In one prov-
ince north of the capital, government officials
ordered a "no man's land" established around the
compound for the Communist members of the
Joint Militar Commission.
[At Ban Me Thuot last weekend an angry
crowd pushed through police lines and threw
rocks at Vietnamese Communist members of a
truce team. In the wake of this embarrassment,
Saigon moved rapidly to put a stop to such
incidents. The chief of the South Vietnamese
delegation, General Ngo Dzu, was promptly
sacked and replaced by the commander of the
Airborne Division, General Du Quoc Dong. Sai-
gon apologized for the incident and the South
Vietnamese prime minister issued orders directing
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Page 4 WEEKLY SUMMARY
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Looking
for
Peace
top: South Vietnamese
center: Truce Supervisory Team
bottom: Viet Cong
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South Vietnamese demonstrators
burn effigy of Madame Binh.
,all province chiefs to assure maximum security
for all international organizations. Nevertheless,
small demonstrations against Vietnamese Com-
munist delegations have taken place in several
other cities this week.)
Communist Resupply Efforts
The North Vietnamese are sustaining a high
1level of logistical activity
[The heaviest truck activity of the current
dry season is apparently under way in the border
area of North Vietnam and southern Laos.F-
The level
of truck traffic going from southern Laos to
South Vietnam's Quang Tri Province is also up.]
LKhmer insurgent forces throughout the week
demonstrated their resolve to go on fighting with
attacks against government positions in widely
scattered areas. On the east bank of the Mekong
River, the government base at Neak Luong and
nearby Cambodian positions on Route 1 were
harassed. North of Neak Luong, the insurgents
drove government troops from Banam and threat-
ened government outposts on Route 15 between
that village and the town of Prey Veng. Cam-
bodian Army reinforcements from Phnom Penh
made little headway in trying to regain the initia-
tive in this sector.
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Page 6 WEEKLY SUMMARY
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to the nomination within the National Assembly
and the progovernment Socio-Republican Party.
Matak's accession to the vice presidency would
result in more administrative efficiency and
would also raise the spirits of the isolated and
demoralized opposition politicians]
LThe slippery nature of deadlines in Laos was
displayed anew this week when the heralded
cease-fire dates passed without the promulgation
of an agreement ending the fighting. Despite the
delay, it still appears that a settlement is not far
off. As the official delegations to the Vientiane
peace talks went through the motions at their
formal negotiating session on 13 February, the
real hard bargaining continued between senior
Lao Communist negotiator Phoumi Vongvichit
and government plenipotentiary Pheng Phong-
savan
Cambodian Troops
On the Phnom Penh side of the Mekong, the
insurgents cut a short stretch of Route 1 about 15
miles from the capital and effectively resisted
government efforts to reopen the highway. To the
southwest, the insurgents harassed Route 2 and
once again closed portions of the road north and
south of the town of Takeo, perhaps to facilitate
the movement of their own supplies across Route 2.
In the north, the insurgents sustained the
pressure against government defenses ringing the
isolated provincial capital at Kompong Thom.
Despite air strikes, the insurgents drove the
remnants of a government battalion from a small
town just south of Kompong Thom and con-
tinued to shell Kompong Thom itself. Current
government strength there stands at 3,500 troops;
the insurgents have about eight battalions--most
of which reportedly still have Vietnamese Com-
munist advisers.
Enlisting the Political Opposition
After successfully enticing former Demo-
cratic Party chief In Tam to rejoin the govern-
ment as a special adviser to the President, Lon
Nol has been working hard behind the scenes to
secure the appointment of Republican Party
leader Sirik Matak as his vice president .f~Although
Matak has resisted repeated requests to accept
that office, there are indications that he is now
willing to go along with the President's wishes.
His new-found willingness to serve probably de-
rives from Lon Nol's efforts to quash opposition
Page 7
The major stumbling block to a cease-fire
centers around political rather than military con-
siderations. The Communists have refused to
accept Prime Minister Souvanna Phouma as the
head of the neutralist faction-claiming instead
that their "Patriotic Neutralist" allies are the only
"true" neutralistsJJBecause the ministers holding
the neutralist portfolios in a new coalition govern-
ment will control the balance of power between
the right and the left, both sides so far have
refused to bend on this issue. Once it is resolved,
the two sides should be able to surmount quickly
their differences on the modalities of a cease-fire
and produce a document for signature)
Second Wind in the South
LWhile the negotiations wound on, govern-
ment troops backed by heavy air support were
trying to regain territory in the south. On the
Bolovens Plateau, irregulars moved back into Pak-
song unopposed early in the week after intense air
strikes forced North Vietnamese troops to pull
back from the town, but the Communists are
resisting irregular efforts to gain control over hills
around Paksonq. l
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11 1 1In the central panhandle, bombing kept
elements of at least two Communist regiments
pinned down near Muong Phalane and enabled
irregular troops to move back toward the west
bank of the Se Sangsoy River which runs through
the town. Farther north, government troops from
Thakhek edged up Route 13 while other units
moved toward the Communist administrative cen-
ter at Mahaxay.7
;There was little change in the military
situation in the north. Communist troops put up
a dogged defense at Muong Soui and used artillery
and mortar fire to keep Vang Pao's troops from
encroaching on the Plaine des Jarres) Potential
cease-fire lines around the Plaine are likely to
hold, as the Communists seem capable of
withstanding current government operations in
%y yow mment
Paksong
23
Bolovens
Plateau
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Page 8 WEEKLY SUMMARY 16 Feb 73
LITARMEO
MI
4 h1' ~O*,ON
Continued jhtZE
H
v' r
halane
Sava nhakh9l y Ph
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Soviet Convoy Completes Winter Navigation of Northern Sea Route
The arrival in Murmansk on 29 January of a
nine-ship convoy from Dudinka, a port on the
Yenisey River, marks a milestone for winter navi-
gation in the Soviet Arctic. Five icebreakers,
including the nuclear-powered Lenin, and four
The navigation season in this area, the west-
ern portion of the Northern Sea Route, usually
lasts from early July to late October.
is years ex-
tremely late sailing date was possible because
unusually warm weather in the far north during
December slowed the formation of heavy ice. The
1,300-mile trip took 17 days-compared with the
normal five days in summer. The ships reportedly
had to contend with ice ridges up to 20 feet high.
Page 10
Soviet efforts to extend the normal naviga-
tion season play an important part in the eco-
nomic development of the Norilsk area. Moscow
has called for substantial expansion of mining and
metallurgical activities in the vicinity of Norilsk
and Talnakh. Adequate logistical support for this
complex, as well as for the lumbering center at
Igarka, requires improvement of bulk transport
facilities both on the lower Yenisey and along the
northern seas.
The USSR has long had an extensive pro-
gram to improve navigation in the western sector
of the Northern Sea Route. It includes a wide-
spread network of polar and weather stations, the
use of aircraft and helicopters to survey ice con-
ditions, and the continued construction of ice-
breakers. Five new icebreakers are now in various
stages of planning and construction. The Arktika,
the Soviets' second nuclear-powered icebreaker, is
scheduled for completion in 1974, and the keel of
another ship of this class, the Antarktika, is
expected to be laid this year.
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`Spitzbergen (the Svalbard Islands), a deso-
late archipelago well above the Arctic Circle, has
long been a problem in relations between the
'USSR and Norway. Spitzbergen, a Norwegian
possession, is of interest to Moscow because it lies
across the Barents Sea from the Soviet submarine
base near Murmansk and because the region may
contain important petroleum deposits.'
At issue now is Oslo's plan to start building
an all-weather airfield on Spitzbergen. The Treaty
of Paris in 1920 recognized Norway's sovereignty
over the islands, but required that the islands be
permanently demilitarized. For half a century the
Soviets cited this provision in opposing an air-
field. In 1971, however, Moscow agreed that one
could be built provided Soviet civil aircraft had
access to the field and Soviet servicing personnel
were stationed there..'
Bilateral talks on the details for such an
arrangement have not made much headway over
the past two years. The Norwegians have agreed
to extend the runway to accommodate Soviet
TU-154s, but are balking at the Soviets' desire to
station six people at the field. Oslo will accept
only four. The Soviets also want their own com-
munications equipment there, and the Norwe-
gians object to this as well. In the background are
Soviet hints that they may build their own air-
field; the 14 signatory states to the 1920 treaty,
On Spitzbergen: Coal Mining?
Page 11
200
Miles
including the USSR and the US, are given equal
commercial rights on the islands'
'Geological exploratory teams from the
USSR and the West believe there are vast oil
resources in the area. Several Western firms have
already started drilling in the Spitzbergen archi-
,pelago and its continental shelf)/ Norwegian at25X1
tempts to assert ownership of the resources in the
shelf apparently have aroused Moscow's concern;
)The 2,000-man Soviet community in
Spitzbergen is twice as large as the Norwegian and
has remained almost entirely independent of even
nominal Norwegian control. The Russians run a
coal-mining operation that began in 1925. The
coal is of very poor quality and is not mined on a
paying basis The 25X1
Soviet mining personnel presumably are on hand
for more than coal; they could take over the
archipelago rapidly in a crisis.
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Moscow is importing record quantities of
grain, and this has focused attention on its ability
to finance these purchases, to increase its imports
of Western machinery and equipment, and to
service its steadily growing debt to the West, now
over $2 billion. In 1973, the USSR will import
about $1.6 billion in grain, some $150 million in
sugar and the largest quantity ever of Western
plant and equipment.
Soviet exports are not keeping pace, and a
record hard-currency deficit, estimated at roughly
$1.8 billion, is expected. If additional grain is
needed this year, the deficit may go even higher.
To help cover this deficit the USSR is expected to
borrow heavily in the West, increasing its me-
dium- and long-term indebtedness by up to 50
percent. The USSR will utilize US medium-term
Commodity Credit Corporation credits for some
of its grain imports (about $400 million will be
available in 1973). The USSR also is likely to
utilize $500 million in net Western government
guaranteed credits to help pay for capital equip-
ment purchases. Gold sales may cover about $400
million of the deficit. The remaining deficit prob-
ably will be financed chiefly by short- and me-
dium-term non-guaranteed Western credits?
To help meet its large financing require-
ments during 1973, the USSR is likely to tap the
Eurocurrency market in a variety of ways. The
Foreign Trade Bank of the USSR has already
secured a $50-million Eurodollar medium-term
standby credit and undoubtedly will obtain
others. In this connection, its network of banks in
the West, especially the Moscow Narodny Bank in
London, will be useful--as in the past-in helping
the USSR attract Eurodollar funds as well as
undertaking some direct financing of Soviet
imports from the West. The USSR also has access
to the facilities of CEMA's International Bank for
Economic Cooperation.?
~ In 1972, the US emerged as a significant
creditor of the USSR, but is still a virtually un-
Page 12
tapped source of credit for Moscow. Last year,
more than $800 million in US credit facilities,
including the $500-million Commodity Credit
Corporation line of credit, were made available to
the USSR compared with less than $10 million in
short-term credits outstanding in any previous
year.
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r
The member countries of the General Agree-
ment on Tariffs and Trade have agreed to a tenta-
tive schedule for the multilateral trade talks to be
held in the fall, but the negotiations promise to
be long and difficult. The preparatory committee,
which was set up at the organization's annual
meeting in November, plans to discuss such
specific items as tariff reductions, elimination of
non-tariff barriers, and developing country partic-
ipation at the committee's next meeting in May.
The committee also plans a major session for July,
when it hopes to agree on an outline to present to.
the multilateral meeting in Tokyo in September.
At that time, a trade negotiations committee
probably will be established to begin formal
negotiations.;
The European Community's defensive atti-
tude toward the negotiations was again demon-
strated at the meeting last week of the Working
Party of the General Agreement on Tariffs and
Trade on Community enlargement. The EC
declined to associate itself with any method of
examining import duty schedules, which is crucial
in determining the protective effect of the
Common Agricultural Policy's variable import
levy. The Community also stood firm on its posi-
tion that no compensation is due third countries
as a result of EC enlargement. It argues that
increased protection for agricultural goods is
more than offset by lower tariffs on industrial
goods for new members.
The EC is reluctant to make any major con-
cessions on enlargement at this time, particularly
for grains, preferring instead to hold these bar-
gaining chips for the multilateral negotiations in
the fall. In another attempt to improve its bar-
gaining position, the EC council next week prob-
ably will ask for an investigation by the General
Agreements on Tariffs and Trade of the US
Domestic International Sales Corporation, a tax
device intended to stimulate exports. The French
have been pushing for action since last fall, but
the other EC members first wanted further con-
sultation with the US.
Page 13
rrPresident Tito, concerned over making his
political heirs effective after he is gone, has
ordered a streamlining of the party and state
hierarchies.,'
The collective state presidency, the supreme 25X1
six
The precarious balance of regional and et nic
representation on the collective presidency was
intended as a virtue but became an obstacle to
real effectiveness. Empowered to arbitrate dead-
locked issues, the collective presidency generally
failed to act quickly enough because it was too
cumbersome. Unimpressed by the body's per-
formance since August 1971, Tito has ordered
that it be revised during the next round of con-
stitutional amendments scheduled for passage this
fall.;
The change will probably be announced next
month and will cause a public stir. The two prov-
inces, Vojvodina and Kosovo, probably will lose
their direct representation on the presidency. The
northern republics, Croatia and Slovenia, will be
unhappy, suspecting that Serbia will more easily
dominate the new, smaller collective. Addi-
tionailly, a scramble for the six seats could upset
power balances within other republics..,
Party power may also be concentrated in
fewer hands. Last week the presidium passed a
"directive" on the party's operational command
structure during a war. No details are available,
but it is likely that central party authorities will
be given a greater measure of direct control over
the membership in case of war and during periods
of serious domestic instability. Tito will also have
to improve the party apparatus at the center. Like
the presidency, the party presidium, with 52
members, moves slowly. For example, it has
played only a minor role in Tito's drive to re-
centralize the party. Among the major centers of
power, only the military is capable of speedy and
efficient decision-making, and Tito wants the
party to be assured of control over the military in
any crisis.
/The fourth annual conference of the party is
scheduled for April and will examine the activities
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of the presidium and executive bureau. Tito will
probably press his lieutenants for more speedy
and efficient conduct of important business.
Personnel moves-five presidium seats are
').,empty-will add spice to the session. Stane
Dolanc, Tito's alter ego on the powerful executive
bureau, will probably stay on beyond the normal
end of his term. This may agitate some of the
iThe admission of unions from European
r _Free Trade Area countries as founding members is
also a British success: the British had insisted that
such unions be included to denote the goal of
broader European unity over the preferences of
the other EC members that the organization be
closely tied to the Community. Membership fees
were also significantly lowered as desired by the
British union.,(
!British dominance is not assured. The Ger-
man federation will oppose the British on nu-
merous issues. Because the Germans strongly sup-
port trade union involvement with the EC and the
British confederation continues for domestic po-
litical reasons to boycott the EC, relationships
between the new body and Community institu-
tions and between unions of EC and non-EC
member states are certain to be edgy. Feather's
tenure may also become an issue. He retires from
his own confederation this year, but may attempt
to stay the full three-year term on the new Euro-
pean confederation.[
,Leaders of 17 labor organizations from 15
West European states met last week in Brussels
and founded the European Trade Union Con-
federation. Representing 29 million workers, the
organization could become an important force in
dealing with multinational corporations and the
EC.!
The founding meeting culminated more than
a year of controversy over the new organization's
financing, structure, and scope. The meeting
itself, however, went relatively smoothly. Most
issues had either been hammered out beforehand
or were referred to the executive board. Even the
election of Vic Feather of the British Trade
Union Confederation as president came about
amicably after Heinz Vetter of the West German
Trade Union Federation withdrew.)
)The British confederation-the largest affil-
iate-scored several other successes at the
meeting. Over French and German opposition,
the word "free" was omitted from the organiza-
tion's title; the British and their supporters
wished to avoid that term as implying too close
an association with the International Confedera-
tion of Free Trade Unions whose European re-
gional organizations the new confederation re-
places.
)Despite such internal problems, European
trade unionism is at a new stage of development.
As the vehicle of labor's efforts to act on a
regional level, the European confederation will
force consideration of issues beyond, and often in
conflict with, the usually parochial attitudes of
the national federations.)
1rhe long-standing issue of relations between
the "free" unions and the Communist-controlled
unions of Eastern and Western Europe has been
put in a new light. Although the founding con-
gress took no action on Soviet labor boss She-
lepin's bid for East European membership, the
question of East-West meetings among the unions
will not disappear. Furthermore, the eligibilit)25X1
the large Communist unions in France and Italy
to affiliate with the new confederation has only
been set aside.
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ICELAND: TIMELY REMINDER
Emergency assistance by the US-manned Ice-
landic Defense Force during the volcanic eruption
on Heimaey Island coincided with the opening of
preliminary base talks in Washington. The US
response to the disaster served to remind Reykja-
vik of the many uses of the base.
Foreign Minister Agustsson arrived in Wash-
ington for preliminary talks about the base on 22
January, just a few hours before the eruption
began. The talks failed to draw out precisely what
the present Icelandic leadership proposes in con-
nection with a base agreement. Instead,
Agustsson, who is not badly disposed to the base,
requested further argumentation for maintaining
the facility. He appeared to be marking time,
perhaps aware that his government might be
ousted before summer if the Organization of Lib-
erals and Leftists were to bolt the coalition and
form a new government with the two parties now
in opposition. Such a development would elimi-
nate both Agustsson's party and the Communists
from the government. The new government prob-
ably would negotiate a slightly modified agree-
ment on the base. Agustsson would be spared the
onus of having negotiated such an agreement and
thus preserve his party's integrity by not having
to renege on an earlier promise to oust the Ameri-
can personnel from Iceland.
When Mount Helga erupted, nearly all of the
5,200 residents of the island were evacuated
within hours. The local fishing fleet accomplished
most of the evacuation, but US personnel airlifted
the sick and aged to hospitals on the mainland.
The US Embassy immediately made $25,000 in
disaster relief available, and both the embassy and
the base command at Keflavik have continued to
provide assistance. The latest measure involves
airlifting valuable fish-processing machinery to
the main island.
Eruptions continue and lava threatens to
close the harbor, the country's most important
fishing port and the only deepwater facility along
the southwest coast. If the harbor is destroyed,
about 17 percent of Iceland's fish-processing ca-
pacity will be lost.
Fish exports are important to Iceland, and in
1972 Heimaey Island accounted for more than 11
percent of the country's total. Because much of
the island's fish production can be landed at Rey-
kjavik and elsewhere, export earnings in 1973
may decline only five percent. Relocation of
plant facilities will be expensive, but the industry
is expected to recover. Government sources esti-
mate the disaster may reduce 1973 gross national
product growth by two or three percentage
points. Another big problem facing the govern-
ment is housing the refugees.
The stormy North Atlantic is adding to Ice-
land's difficulties. The loss of a fishing vessel
earlier this week caused a wide air-sea search
involving the Icelandic Coast Guard cutter Aegir
and the British trawler support ship Othello. Co-
operation of this type is not unusual during emer-
gencies, however, and it probably will not soften
Icelandic-British positions in the "Cod
War." 25X1
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VLVI lL I
FEDAYEEN: THE UNKINDEST CUTS
(,,I o far, 1973 has been a bad year for the
fedayeen. A series of mishaps added momentum
to the slippage in fedayeen fortunes, and a new
stridency has crept into their public pronounce-
ments, clearly indicating that they are worried.
c ,A serious blow fell in January when Damas-
cus, following heavy Israeli air raids in retaliation
for guerrilla attacks, restricted fedayeen opera-
tions in Syria, thus effectively cutting the guer-
rillas off from their last accessible staging area for
attacks into the occupied territories. Even Libyan
President Qadhafi,i)one of the fedayeen's most
UU vociferous supporters and a heavy financial
backer, criticized fedayeen disunity in a speech
on 1 January. )He has subsequently sought to set
the public record straight by affirming his com-
mitment to the Palestinian movement.
The unfavorable developments were capped
by the late January session of the Arab Defense
oi, Council, which highlighted the fedayeen's
growing isolation. The council meetings con-
).,"firmed fedayeen fears that the major Arab states,
particularly Egypt, have abdicated the role of
protector of the Palestinian movement; the
Page 17
defense council also furthered, however tenu-
ously, moves toward an Arab rapprochement with
the fedayeen's Arab archenemy, King Husayn.
The King's subsequent public rejection of any
reconciliation which would involve a return of the
guerrillas to Jordan added insult to the fedayeen's
mounting injuries.)
fedayeen spokesmen are lashing out, in
terms venomous even for the fedayeen, at this
treatment from the Arab governments. The feda-
yeen consider it a betrayal not only of the Pal-
estinian cause, but also of the whole Arab struggle
with Israel. What is really bothering the fedayeen
is that they fear a trend is setting in Arab coun-
tries toward negotiating a peace with Israel.]
w aThe fedayeen do not appear to have a clear
idea of what to do, and their own disunity, quite
apart from their difficulties with the Arab govern-
ments, are a restraint on effective action. Arab
prohibitions on operations into Israeli-occupied
territory leave them with little choice but to
continue terrorist operations abroad, as fedayeen
spokesmen have publicly indicated. Some of these
operations have been thwarted in recent weeks,
and the fedayeen leadership itself is divided on
the merits of international terrorism-1
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The fedayeen could also turn their attention
to targets in Arab countries like Jordan and Saudi
Arabia. In the fedayeen books, both are reac-
tionary. Even most fedayeen, however, recognize
that attacking Arabs does not further the larger
battle against Israel.)
IThe fedayeen are thus crippled-by the
restraint of their former Arab benefactors, by
their own disarray, by financial problems, and by
a variety of other ills. Crippled, but not dead, the
fedayeen will continue their terrorist operations.
Nevertheless, some of their recent statements
indicate that hopes are ebbing:QThey have been
i --taking up the theme that the tattle will not be
won in the near future. Victory must be left for
the next generation, said a fedayeen leader in a
recent interview; "We are content for now," he
added, to know that terrorist operations are ef-
fective enough "that Mrs. Meir has to make her
will" whenever she ttavels abroad.
EGYPT: QUESTIONS BUT FEW ANSWERS
Zayyat described the new stage of "political
struggle" and promised further international
action to promote progress in resolving the dis-
pute with Israel. Zayyat denied knowledge of any
US initiative and urged the five major powers to
new efforts to restore peace to the Middle East)
legislature on 12 February, Foreign Minister partly an answer to those charges. Cairo's search
Sadat
Seeking Victory in the "Struggle"
cessions it is willing to make. What Cairo is doing
is trying at a minimum to create the impression of
progress for Egyptians disheartened with the
prolonged impasse. If its diplomacy does help
push the impasse off dead center, so much the
better
Egypt for the coming "battle" with Israel. The / Prime Minister Sidqi, meanwhile, addressing
flurry itself is designed to show that he is doing the nation's legislature on 11 January outlined a
something about Egypt's prime problem and thus series of austerity measures he claimed were
impress the recalcitrant students, another of his necessary to mobilize the economy for the
many worriesT coming "battle.'.)(~n recent months Sidqi has been
"criticized for not adequately preparing the coun-
' 7 -L 1 {{In a review of foreign affairs before Egypt's try for war, and the belt-tightening steps were
7611n a recent spate of activity, President Sadat
has set afoot new diplomatic moves designed to
break the impasse with Tel Aviv and has intro-
duced new austerity measures designed to prepare
/~ _ VCairo has given no indication of the specific
goals in its current campaign or of any new con-
for additional Arab financial support may also
have played a role; the austerity measures could
be designed to convince potential donors that
Egypt deserves additional aid. The cutbacks may
also help remedy some economic problems.'
Egyptian students have been demonstrably
unhappy with the regime's lack of success in
dealing with Israel as well as its inability to cope
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with economic problems, particularly those which
directly affect the student population. These con-
cerns probably served to exacerbate student
discontent over arrests and restrictions on
freedom of expression, two of the more imme-
diate causes of the most recent student agitation.
).The protests, which were renewed short)
'after the universities reopened on 3 February,
have continued sporadically. The unrest i
centered in two major universities in Cairo, but
by 12 February minor incidents had spread t
~' d
apparently apparently have not uparticipated in the agitation
and have been content to watch the proceedings.
Although Egypt's labor groups have so far not
5 -come out in support of the students, the regime i
clearly concerned. In an attempt to head off such
a development, Prime Minister Sidqi addressed
group of workers on 12 February.
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GABON: BONGO COMES OF AGE
JPresident Bongo, who came to office in
1967 upon the death of his predecessor, will
assume the office in his own right after a national
election to be held on 25 February. The 38-year-
old Bongo and his legislative candidates are unop-
posed in the elections, which Bongo has moved
up 13 months in order, to cash in on his present
strong political position)
;bongo, representing one of Gabon's smallest
tribes, was hand-picked by his dying mentor,
Leon Mba, and the local French ambassador. In
the years since he succeeded Mba, Bongo has
grown in effectiveness and political strength, and
he seems at present to have the internal situation
well in hand. Bongo wants the elections over with
before tribal opponents can organize and in case a
politically important railroad project is not realiz- President Bongo
able. The single party last month accepted Bon-
go's nominees and endorsed his program for the investment as well as over $120 million in Ameri-
future. The national assembly has been increased can capital. Bongo is intent on some readjustment
from 49 to 70 seats, and the new list includes of Gabon's economic and cultural ties with Paris,
many of Bongo's younger and more dynamic pro- but he robably still needs French troops in Li-
teges) brevil leJ
Although Bongo's growing independence in- ~'"', LM ea n w h i 1 e, though unopposed, he has
dicates that his tutelage by the French ambassa- launched his presidential campaign with a display
dor is over, France's paramount position is hardly of government vigor. Bongo has frozen prices and
threatened. Gabon has important mineral granted a pay raise to public employees, a cate-
resources and has attracted substantial French ~;_gory that includes most wage earners. He has also
ceremonially opened construction of the first
mile of an ambitious "Trans-Gabon" railroad;
Bongo's post-election fortunes will hinge
largely on the fate of the costly railroad, for
which sufficient international financing has yet to
be lined up. The US has made a tentative commit-
ment of $20 to $30 million on which Gabon is
counting heavily. Bongo has staked his prestige on
the project, which is intended to open up huge
iron ore deposits and timber reserves necessary to
maintain Gabon's healthy growth rate. Bongo
could face a major political test should the rail-
road project collapse for want of funds.
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PORTUGUESE GUINEA: FIERCER REBELS
`' / ~ more aggressive insurgent movement may
emerge from the assassination of rebel leader
Amilcar Cabral. Guinean President Toure, in
whose country the Portuguese Guinea rebels are
based is trying to steer the movement in that
direction] 25X
'{ . \.Before his assassination, the pragmatic
Cabral had devoted much attention to cultivating
support among non-Communist states in the hope
that his independent government, when formed,
would receive broad backing. The effort had met
with some success. If the new leadership were to
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adopt a harsher ideological stance or closer ties to
its Communist supporters, it would jeopardize
those gains!
-- ;Aristide Pereira, the provisional rebel leader,
lacks the prestige and forcefulness to counter
Toure's guidance, which may be one reason he
was chosen. Pereira, who is a mulatto as was
Cabral, cannot be expected to heal the deep racial
divisions within the movement. He may be no
more than a temporary compromise until a
stronger figure with wider support emerges-pos-
sibly one of the more successful military com-
manders. This could take some time.
11. One of the first concerns of those now
guiding the rebel movement is to demonstrate its
continued viability. That was the purpose of a
rebel communique issued on 10 February, claim-
ing insurgent forces launched sweeping offensive
military operations inside Portuguese Guinea
beginning in late January,,'The rebels, no doubt,
ff would like to mount a more dramatic action,
something big enough to capture international
attention and reassure foreign supporters of insur-
gent capabilities and will to persevere. Hence, the
more aggressive posture toward which Toure is
pushing the rebels may first become evident
through military action. On the political side, the
communique said that preparations are being
made for the first meeting of the national assem-
bly elected late last year. No date was givenr
however, and the meeting is not expected soon.j
ably would like to see fewer insurgents in Guinea,
in part for his own security reasons. Moreover, he
probably will allow those who remain less opera-
tional freedom than was the case before abral's
death.
PAKISTAN: PRESSURE ON WALT -
President Bhutto has used the recent dis-
covery of clandestine arms in the Iraqi Embassy
in Islamabad as an excuse for his strongest action
so far against the opposition National Awami
Party of Wali Khan. On 15 February he removed
the provincial governors in Baluchistan and the
Northwest Frontier-the two provinces Wali's
party controls; Bhutto has imposed direct rule in
Baluchistan.
On 10 February Pakistani police
raided the Iraqi Embassy, seizing several
undred Soviet-made automatic weapons and
thousands of rounds of ammunition. Just what
the Iraqis intended to do with the arms has not
yet become clear, but the most likely of several
possibilities is that they were destined for dis-
sident tribes in Iranian Baluchistan. The Shah's
recurrent efforts to stimulate trouble among Iraqi
Kurdish minority may well have led Baghdad to
try to repay the Iranians in kind.
Officials of Bhutto's Pakistan People's Party
have charged that the National Awami Party was
planning to make the two frontier provinces
independent and that it was plotting direct action
against the central government. The National
Awami Party denied any involvement and charged
that Bhutto's party had been fomenting the
recent tribal unrest in Baluchistan Province.
The major real issue for the government may
be opposition to provisions in the proposed con-
stitution which the National Awami Party claims
unduly limit provincial autonomy. The gov-
ernment has the votes to adopt the constitution
in the session which begins on 17 February, but
may hope to limit the impact of National Awami
Party arguments-especially in the frontier prov-
inces-by tying the party to treason and foreign
conspirators.
In the past year there have been a number of
confrontations between President Bhutto and the
National Awami Party. All were resolved at the
last minute, but Bhutto is acting with less caution
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Uruguay
BRDABERRY KNUCKLES UNDER =} :~
The military has taken virtual control of the
government in Uruguay. President Bordaberry is
staying in office to avoid a complete collapse of
constitutional government, but remains at the
sufferance of the generals.
Bordaberry was forced to agree to govern
under the military's aegis after it became apparent
that further resistance to rebellious military of-
ficers could strengthen the hand of the "goril-
las"-those who favored a complete military
take-over. The "gorillas" indeed seemed to be
gaining the upper hand as the demands on the
beleaguered President escalated.
At first, the military simply asked
for the dismissal of the defense
minister, who had been ap-
pointed to curb military med-
dling in politics. Later, the de-
mands expanded to include presi-
dential acceptance of measures to
stamp out corruption in govern-
ment and business, to restore
vitality to a deteriorating
economy, and to institute several
Populist-style reforms. The re-
form demands apparently were a
calculated attempt to attract
popular support, especially if the
armed services were forced to
assume direct control of govern-
ment.
Whatever the exact terms of
the understanding between
Bordaberry and the military, it is
apparent that all meaningful
power now resides in the armed
forces. As a face-saving gesture,
the military has publicized only
the broad outlines of the under-
standing, apparently relying on
the President quietly to imple-
ment its demands by executive
decree.
Thus far the public has reacted cautiously to
the military's assumption of the power once held
by civilians. Leftist groups and labor unions have
Bordaberry: Manages to Stay, But Managed by Military
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adopted a wait-and-see attitude, apparently in
hopes that the military programs will coincide to
some extent with their own. The Blanco and
Colorado parties have been weakened by their
failure to support Bordaberry. Some of his own
political colleagues were actively seeking his resig-
nation to avoid a direct military take-over. The
military's desire to work for governmental
PARAGUAY: STROESSNER WINS AGAIN
!President Stroessner and his ruling Colorado
Party, as expected, won an overwhelming victory
in the elections of 11 February. Stroessner was
assured of a fifth term as president, and the
Stroessner
The Victor Again
changes within a semblance of a constitutional
framework will probably forestall any immediate
criticism of its new position. Given the failure of
Bordaberry and other civilian politicians to make
an aggressive attack on the nation's numerous ills,
Uruguayans may welcome what amounts to a
military coup d'etat.
Colorados held their dominant position in both
houses of the congress
_` In the nationwide balloting, Stroessner and
his party retained control of the government,
reaping an all-time high of about 83 percent of
the popular vote. This margin exceeded even the
expectations of party leaders, who had antici-
pated 75 to 80 percent. The Colorados won easily
because the Radical Liberal Party, the main oppo-
sition, is badly divided and led by lackluster
figures. Furthermore, the Colorado Party bene-
fited from its superior organization, control of
patronage, and the very real popularity of its
leader, President Stroessner.
\Prior to the elections Colorado leaders tried
hard to arouse public enthusiasm, largely without
success since the result was a foregone conclusion.
Colorado officials are widely believed to have
resorted to ballot stuffing, not to ensure re-elec-
(, tion but rather to pile up a record victory. Since
the opposition had no chance, the only real
victory the Colorados could seek was a best-ever
election triumph. Just what Stroessner and his
colleagues will do next time to achieve a still
greater victory margin is difficult to envision. The
US Embassy notes that it is bad form-and bad
mathematics-to exceed 100 percent.
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?')Government harassment of the major oppo-
si(ion party, generated by a belief that it was
involved in the recent guerrilla landing, had re-
laxed somewhat by week's end(
fr The strongest sign of this relaxation is the
public announcement that the search for Juan
Bosch, leader of the Dominican Revolutionary
Party, had been called off and that there is, after
all, no official order for his arrest. The govern-
ment did not go so far as to offer guarantees that
might persuade Bosch it is safe to emerge from
from its efforts to link him with the small in-
vading party. Despite this feeling, Bosch an-
nounced that the party would henceforth operate
"clandestinely" as a result of what he called the
government's "unjustified persecution." Bosch's
statement may have largely been rhetoric de-
signed to embarrass the government, both na-
tionally and internationally, by making it appear
that legal political activity cannot exist in the
Dominican Republic. The party has, in fact, con-
tinued to operate rather openly in Santo Do-
mingo and many members probably feel that
clandestinity could cost the party its legal status)
hiding, but it has released many of his followers [The executive committee agreed on 14 February
who had been detained after the landing.i to return to the talks with other legal opposition
JBosch's followers see the announcement as
an indication that the government is backing off
groups on pre-election strategy that had broken
up with Bosch's withdrawal on 29 January. This
would point to a decision to abandon "clandes-
tinity" rather quickly. but even so there is little
,
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likelihood for an early return to the once tolerant not getting what they bargained for when the
relationship between Bosch's party and the gov- election process was initiated. So far, Lanusse has
ernment)i been able to obtain support for a decree barring
y;` Peron from returning to Argentina before the
The government's growing confidence that" '" elections and for formally charging Peronist can-
the guerrillas will soon be captured has not caused didates with incitement to violence in the25X1
it to let down its guard. Security forces are still campaign.
very much in evidence in the capital, and the
university remains surrounded by troops. Govern-
ment spokesmen blame the guerrillas' ability to
evade the government dragnet thus far on rain
and fo
They probably cannot hold out much longer, but
the longer they do the greater the inspiration they
give the extreme left to embark on more daring
ARGENTINA: PROSPECTS DIMMING
' President Lanusse is advocating stronger
measures against the Peronists, leading many in
the government and military to speculate that he
is maneuvering to postpone the elections sched-
uled for next month and thus remain in power.
Lanusse reportedly is intent on preventing the
Peronists from regaining power even if it means
canceling the election. The President so far has
been unable to line up the support of his top
officers, most of whom continue to believe that
the election must be held.
The President has played heavily on the mili-
tary's growing fear of a Peronist victory in his
effort to convince the top generals that they are
Sentiment against holding the elections
surely exists within the military and is likely to
surface soon since the elections are only three
weeks away and time for the military to block the
Peronists is growing short. Hector Campora con-
tinues to lead the pack of nine candidates for
president and has even succeeded in turning the
government's harassment of his party into a cam-
paign advantage. His campaign rhetoric, which
prompted the charge of incitement to violence,
has cooled somewhat, but he has not retreated
from his strong anti-government stand. Campora
has even enlisted the support of his chief op-
ponent, the Radical party's Ricardo Balbin, in
attacking the government's court action against
the Peronists.
Some Peronists believe that they have an
unwilling ally in the person of General Lopez
Aufranc, second in command of the army, who
has led the opposition to any possible Lanusse
power play. Lopez Aufranc and his fellow senior
generals have no love for the Peronists, however,
and their commitment to elections could evapo-
rate rapidly if Campora's strength goes on grow-
ing at its current pace and if he persists in refusing
to play by the military's rules.
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PERU: MERCADO MOVES IN
On 1 February Edgardo Mercado Jarrin be-
came prime minister, minister of war, and com-
mander of the army, filling posts left vacant by
the retirement of Ernesto Montagne. Adjustments
in the government's decision-making apparatus
will follow and the all-important unity of the
armed forces could be strained in the process.'
Unlike Montagne, who never exercised
power commensurate with his lofty titles, Mer-
cado intends to play a dynamic role in the govern-
ment and his record suggests that he will. As
foreign minister, he had a major hand in shaping
Peru's aggressively nationalistic foreign policy. In
the four years since the coup that brought Presi-
dent Velasco to power, Mercado has done nothing
to cast doubt on the genuineness of his oft-pro-
claimed support for the regime's revolutionary
domestic reforms. ,
ANDEAN PACT: NOW THERE ARE SIX
;Venezuela has joined Bolivia, Chile, Co- hand, genuine technical obstacles may have
lombia, Ecuador, and Peru in the Andean been overcome by personal rapport between
Pact. Venezuela actually helped create this Caldera and Peruvian President Velasco
j economic group in 1969, but then changed its
mind about entering. President Caldera signed 1,2 (The consensus modifies the Andean for-
a "Consensus of Lima" on Tuesday and the eign investment code by liberalizing rules con-
Venezuelan flag was finally run up on the idle cerning the reinvestment of profits and makes
sixth flagpole reserved for it outside the pact's a number of other adjustments in pact poli-
headquarters, ties that Venezuela has considered important.
Planning for a regional petrochemical industry
and other programs held in abeyance can now
Last minute signs that Venezuelan entry move forward. While there could be pitfalls in
would not come about during Caldera's visit the process of incorporating the new member,
to Peru were probably part of a public rela- the pact has greatly expanded its economic
tions strategy designed to maintain the sus- base and consumer market, and its future
pense until the last moment. On the other looks promising.
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Through skilled use of his presidential pre-
rogatives, Velasco has been the key figure in
bringing balance to radical-moderate controversies
and making out of them generally pragmatic poli-
cies. A forceful move by Mercado to alter this
policy-making process drastically could bring on a 25X1
clash of two strong personalities that could dis-
rupt the military unity on which the stability of
the government depends.
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
France: The Race Is On
Secret
N! 39
16 February 1973
No. 0357/73A
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 FRANCE
the race is on
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On two successive Sundays next month, the
Gaullist party faces its first elections without De
Gaulle. It has been watching with gathering gloom
what the poll-takers have been telling about voter
preferences.
Since the campaign got under way last fall,
the government has been plagued by persistent
scandals, by internal dissension, and by lackluster
campaigning. Most of all, it has been handicapped
by inflation, on which it is plainly vulnerable. The
left, on the other hand, has put on a good show
of unity and has managed to capture the head-
lines on numerous occasions. As a result, the left
has surged into a substantial lead in voter-
preference polls.
These polls oversimplify the complex French
election system, and the structure of the election
districts favors the government. France has a
single-member district, two-round election
system-one which favors large, nationwide
parties like the Gaullists that can appeal not only
to the ideologically faithful but also to the un-
committed voter. The present election districts
are drawn to give less representation to urban and
suburban areas, where the leftist voters reside,
than to rural regions that usually support the
government coalition. This means that voter
preferences do not always translate into assembly
seats. Still, the elections on 4 and 11 March are
certainly going to reduce the size of the huge
bulge in assembly seats won by the Gaullist coali-
tion after the 1968 troubles. The losses will come
primarily from the Gaullist ranks because their
coalition partners are mostly running in safe
1972 1973
Oct. Nov. Dec. Jan. Feb.
Government Coalition
45
42
38
37
Leftist Alliance
Centrists
42
43
46
47
Special Report
35
47
districts. As matters stand now, the Pompidou 25X1
team stands to lose between 70 to 140 seats of its
present 365-odd seats in the 490-seat assembly.
The Pompidou Coalition
Since President Pompidou's ouster of con-
troversial Jacques Chaban-Delmas as premier in
favor of simon-pure Gaullist Pierre Messmer last
June, the Gaullists at least have enjoyed a greater
sense of cohesion, but rifts in the coalition remain
and sometimes come into the open. In December,
for example, it became clear that relations among
the secretaries-general of the three parties-the
Gaullist Union of Democrats for the Republic,
the Independent Republicans, and a small centrist
party-were growing acrimonious. Gaullist party
secretary Alain Peyrefitte came under heavy fire;
it was said he could not make decisions and
lacked vision in planning election strategy.
Pompidou was forced to intervene personally,
warning party leaders against the dangers of nar-
row partisanship in the face of growing public
support for the united left. Despite his admoni-
tion, it took weeks of semi-public wrangling
before the coalition members could agree on
single candidates for most of the election dis-
tricts. While the lion's share of those selected
were Gaullists, the lineup represents a more
equitable distribution than in previous elections.
More important, the agreement means the coali- 25X1
tion will pose a single opponent to the left in 25X1
some 433 of the 490 election districts. Neverthe-
less, serious problems remain.
Sticky charges of corruption among the
Gaullists have contributed to the friction within
the coalition. A series of scandals-the latest
broke in September-has rocked the party al-
most continuously since mid-1971, and each has
explicitly or implicitly involved Gaullists in fraud,
abuse of public confidence, influence peddling,
extortion, or outright theft. The government was
able to dampen publicity on the September
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incident, but taken together the scandals have
compromised the party's image after 11 untainted
years under De Gaulle.
The government is deeply in trouble over
inflation. Prices are increasing at the fastest rate
in ten years, and the French electorate tradi-
tionally votes its concern on bread-and-butter
issues. The government is, of course, aware of this
and announced new measures aimed at slowing
inflation. These measures are not likely to have
much effect-and in any case not before the elec-
tion. Pompidou feels he must avoid anything so
unpopular as wage controls, even though they
might be more effective. Government leaders are
attempting to minimize the impact of the price
increases by stressing that other industrialized
nations also suffer from inflation, some to a
greater extent than France, and that the com-
petitive position of French exports thus far has
not been imperiled. These explanations have not
impressed the voters, many of whom feel the
fruits of economic growth are not being equitably
shared. At any rate, the opposition is getting
considerable campaign mileage out of the
alarming situation.
The campaign has been dragging along since
early fall, and government and opposition alike
face a serious risk of overexposure. The govern-
ment-controlled television network has been
flooded with complaints about too much political
reporting during prime-viewing time. The surfeit
could well lead to voter apathy, which would be a
serious problem for the Gaullists and their part-
ners. The election this year will in no way be a
repeat of 1968, when public reaction to the
student and labor crisis helped swell the Gaullist
vote to record proportions. With no specter of
revolutionary chaos to confront them, French
voters are likely to revert to their more usual
voting habits. A high rate of abstention would
tend to hurt the governing coalition because the
leftists-the Communists in particular-are highly
efficient in getting their supporters to the polls.
So far, coalition forces have had a tough
time demonstrating the superiority of their
policies. This being the case, they have resorted to
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GOVERNMENT COALITION LEADERS
President Georges Pompidou
Economics and Finance Minister
Giscard d'Estaing
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the time-honored campaign theme of the leftist
menace. They reportedly suppressed a late Janu-
ary poll by a respected agency that showed the
Communists-but not the Socialists-had slipped
to an all-time low in voter preference. Although
government spokesmen loudly proclaim that only
an anti-Communist regime can maintain France's
special, but independent, relationship with the
USSR, polls show that the left no longer is a
bogey to the middle-of-the-road voter. For its
part, the opposition continues to attack the gov-
ernment for corruption, inefficiency and indif-
ference to the society's under-privileged. The
central theme of the government's campaign is
support for President Pompidou and his policies.
The election results will be regarded as a test of
voter sentiment and could affect his decision on
whether to try again for the presidency in 1976.
Communist Electoral Strongholds
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Primarily agricultural
*Areas of over 20% Communist vote of total registered electorate.
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The left in France is generally as fractious
and divided as elsewhere, but last June French
leftists got together on a precedent-setting "com-
mon accord for governing." While the accord got
off to a slow start, by November the leftists were
beginning to show that they could give the gov-
ernment a good run for its money. More tightly
organized than the government coalition, the
leftist alliance-the Communists, the Socialists
and the left-Radicals-has been better able
temporarily to submerge deep-seated differences
in the interests of the campaign. Many Com-
munists, for example, believe that their party
leaders compromised their ideals by agreeing to
the accord, and many Socialists feel impelled to
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counter allegations that they have become dupes
of their ally.
Although there appears to be no personal
rivalry between Communist leader Georges
Marchais and Socialist chief Francois Mitterrand,
most French Communists realize the latter hopes
to become the uncontested spokesman for the
left in preparation for a presidential bid in 1976.
To the French electorate in general, he is seen as a
shrewd opportunist who gave De Gaulle a close
run in the 1965 presidential race and who pulled
the disunited left together last year. Twice in the
past six months, Mitterrand has artfully grabbed
the spotlight. He convened a regional meeting of
the Socialist International in Paris on 13-14 Janu-
ary, attended by Israeli leader Golda Meir. The
meeting increased his stature as a national and
international figure. Earlier, in August, he pub-
licly traded insults with the Soviet ambassador
over Jewish emigration from the USSR and Soviet
policy toward Czechoslovakia. The Communists,
boxed in by their own ambiguous position and
conflicting loyalties, came off a poor second.
Regardless of the outcome of the election,
the prestige of Francois Mitterrand would be
significantly enhanced. He hopes that, by pres-
enting a credible leftist alternative to the present
government, he will, over time, be able to wean
away from the Communists a number of voters
who want fundamental change but who are not
ideologically committed to communism. Mitter-
rand's strategy calls for cooperating with the
Communists in attacking the government and in
defending the common leftist program, while dif-
ferentiating himself from the Communists on
questions of individual liberty, democratic proce-
dures, and certain foreign policy issues. Mitter-
rand has shown great skill in juggling these con-
flicting demands and has already emerged as the
foremost leftist leader. If under his stewardship
the Socialists win more impressive gains in the
elections than the Communists-and some polls
indicate that is possible-Mitterrand will be in a
strong position for 1976. In the 1965 presidential
contest, he forced De Gaulle into a runoff ballot
and won 44.8% of the vote on the second round.
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Moscow has long been an election cross for
the French Communists. Mitterrand is anathema
to the Soviets, who consider him a narrowly
ambitious politician. To Moscow, the alliance of
the French Communists with such a man illus-
trates the underlying inconsistency of their posi-
tion. The Communists feel they must keep their
ideological fences with Moscow in good repair; at
the same time, they must emphasize their willing-
ness to abide by the rules of French democracy.
They must maintain their opposition to the gov-
ernment coalition even though Moscow gives
them little help. The speech of Kremlin ideologist
Suslov at the French Communist Congress last
month implied Soviet reservations about the joint
leftist program. Marchais subsequently met with
Soviet party chief Brezhnev in Moscow, but
evidently got nowhere. On the contrary, by con-
tinuing to cite Franco-Soviet relations as a model
for other West European nations and by sched-
uling the Brezhnev-Pompidou meeting in mid-
January, Moscow has emphasized that it prefers
to deal with a Gaullist government.
piclou may attempt to exploit his Russian trip as
an indication of his government's ability to deal
with the USSR, but since the visit centered on
foreign policy issues-in which the French elector-
ate is notoriously uninterested-he may not get
much mileage out of it.
The centrist parties constitute a small but
pivotal grouping. They formed a coalition of sorts
some 18 months ago. Baptized the Movement for
Reform, it brings together what the Gaullists call
the left-overs of the Fourth Republic, i.e., leaders
and voters unable to find a place in the polarized
politics of the Fifth Republic established in 1958
by De Gaulle. The reformers are led by Jean
Lecanuet and Jean-Jacques Servan-Schreiber. The
Lecanuet faction is more conservative on eco-
nomic and social issues than many Gaullists, while
its partners are slightly left of center. The move-
ment agrees on the need to decentralize govern-
ment administration; to shift budget priorities
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from prestige projects like the Concorde to social
and economic projects at home; to move more
rapidly in developing European Community polit-
ical institutions. The two leaders differ on tactical
goals. Lecanuet is intent on blocking a leftist
victory and enjoys relatively good relations with
Pompidou and other government leaders. Servan-
Schreiber is committed to defeating the govern-
ment and is considered a bete noire by many
government supporters.
The Gaullists are losing ground, and Pompi-
dou could find himself in a situation after the
election in which he would have to negotiate with
the centrists-most likely with Lecanuet, who
wants to enter the government. Even if Pompidou
retains a working majority jn the new assembly,
he may still wish to develop a relationship with
some reformers. He would have the option of
formally inviting some of them into the govern-
ment or of developing an informal working rela-
tionship with certain deputies. Most reformers
would prefer to enter the government-a move
which would reunite the old centrist bloc. Some,
however, still have lingering hopes of translating
their dream of a true centrist regime into reality
and are hesitant about being co-opted into Pom-
pidou's fold.
System May Favor the Government
The French election system of single-
member districts and two rounds of voting favors
large, nationwide parties like the Gaullists that
can appeal both to the ideologically faithful and
to the uncommitted voter. French election dis-
tricts have been drawn to give less representation
to urban and suburban areas, which are predom-
inantly leftist, than to rural regions that support
the government coalition. Extensive gerry-
mandering and a substantial population shift from
rural to urban areas result in great disparities in
the number of voters represented in various dis-
tricts. On the average, it takes a little over 30,000
votes to elect a Gaullist deputy in rural France
but nearly 130,000 to elect a Communist in a
Paris suburb.
Few contests are settled on the first round
because a candidate must have an absolute
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majority to win right off. In 1968, for example,
only 154 out of 487 races were decided on the
first round. Those candidates who receive at least
10 percent of the vote on the first ballot can run
on the second. This requirement tends to elimi-
nate splinter parties and set up a head-on contest
between the left and right in most districts. After
the first round there will be a critical week of
bargaining as candidates decide whether and
under what conditions to run on the second
ballot. The government parties may gain more in
the runoff contests than the left, whose percent-
age of the vote has dropped between rounds in
every legislative contest except one since 1958.
The government parties have already agreed
on a single candidate to represent them in over
three-fourths of the election districts and hence
will not have to engage in potentially divisive
bargaining. The coalition may try to strike a few
informal agreements with opposition Reformist
candidates, whose presence in the runoff race
could draw votes from the government. In con-
trast, the left still faces critical decisions on which
candidates will represent it on the second ballot.
Although each of the leftist parties has theoret-
ically agreed that its candidates will withdraw in
favor of the one "best placed" to win, the for-
mula is subject to varying interpretations.
The question of withdrawal will be
particularly difficult in cases where the Socialist
candidate obtains fewer votes on the first ballot,
but is in a more promising position to attract
support from center-left voters in the second
The Communist stance on withdrawal will
be particularly significant because of differing
voter reactions when there is a choice between a
Pompidolian and a Socialist as opposed to a
decision between a Pompidolian and a
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Party Strength in the National Assembly
PCF-French Communist Party
IR-Independent Republicans
PDM-Progress and Modern Democracy
(includes former MRP and CNIP)
Parties in Government Coalition
tThe Gaullists and their coalition partner the Independent *Figures as of 1972.
Republican Party were two votes short of a majority but **Some of the PDM are considered part of the Government
on most issues could count on additional votes from the coalition.
PDM or the unaffiliated deputies. ***One seat in the Assembly is presently vacant.
Results of National Assembly Elections, 1967-1968
Percent of vote
Party or Federation
First ballot Second ballot
1967
Gaullists and affiliates
37.8
42.6
Socialists and affiliates-
21
25
Communists
22.4
21.4
Democratic Center
12.8
7.1
Others-
6
3.9
1968
Gaullists and affiliates
43.65
48.8
Socialists and affiliates
16.50
21.6
Communists
20.03
19.9
Progress and Modern Democracy
10.34
8.1
Others
9.48
1.6
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Communist. The middle-of-the-road centrists and
uncommitted voters, the latter make up some 30
percent of the electorate, will hold the key. Re-
cent polls indicate that centrist votes on the
ballot will split nearly seven-to-one in favor of the
Pompidolian who is opposed by a Communist,
but almost evenly if the contest is between a
Pompidolian and a Socialist. Other polls indicate
that two out of five Socialist voters would opt for
the government parties rather than vote for a
Communist on the second ballot. For the left to
make significant gains, then, Socialists rather than
Communists must lead the ticket after the first
round, or the Communists must withdraw in
unprecedented numbers even if their candidates
are out in front.
The depth and' breadth of the anti-Com-
munist reflex among the uncommitted voters has
never been tested. The fact that the French vote
in the first round against their grievances and in
the second against their fears should work in
favor of the government coalition, particularly if
it can exploit the latent, though evidently dimin-
ishing, public fear that a leftist victory would
radically change the French system.
Preferences measured in public opinion
polls, while generally quite accurate in predicting
percentages of votes in the first round, do not
reflect the makeup of the ensuing assembly. In
the election of March 1967, the Gaullists and
Independent Republicans won 42 percent of the
vote and 242 of the 485 seats, the left won 45
percent of the vote and 194 seats, while the
centrist parties won 13 percent of the vote and 41
seats. This was very close to the pre-election polls,
and current polls are similar to those in 1967.
Even if the voting pattern were repeated, it would
not necessarily bring about a parallel distribution
of seats. In 1967 there was a general swing to the
left throughout the country. Today, the left's
strength is less evenly distributed geographically.
The left is particularly strong in the south and
southwest and in the industrial suburbs of the
major cities, but relatively weak elsewhere.
Basically, the election this year could turn
out in one of four ways. First, the present coali-
Special Report
tion could emerge with a reduced but workable
majority in the assembly and lose some of its
Gaullist coloration. Second, the government
could lose enough seats to force it to broaden the
coalition by including some centrist opposition
elements. Third, the government's losses could be
so extensive that it would have to rally the right
wing of the Socialist Party as well as most of the
centrists now in the opposition. Finally, the left
could win a majority.
The first situation-a reduced but workable
majority-is still the hope of the governing coali-
tion. In this event, Pompidou probably would
make only minor changes in the government and
its policies. Because the Independent Republicans
may well gain seats and the Gaullists lose some,
power within the coalition would be more evenly
distributed. Valery Giscard d'Estaing would be
given a greater voice in formulating national
policy. While a government based on such a
division of power would not discard major
Gaullist tenets such as national independence, a
strong national defense and a distrust of suprana-
tional institutions, it would not be as wholly
Gaullist in outlook as the present government.
Giscard and his party hold slightly more favorable
attitudes toward the European Communities and
the Atlantic Alliance than the Gaullists, and are
generally less strident on the Middle East, Viet-
nam and other aspects of Gaullist foreign policy.
Perhaps the most significant aspect of this out-
come would be the personal implications for
Giscard d'Estaing. He has never concealed his
presidential ambitions, and opinion polls con-
sistently put him at the top of the list of French
politicians with a good political future. Giscard
clearly hopes the election results will enhance his
prestige and bargaining power within the coali-
tion. In certain circumstances, President Pom-
pidou might even consider offering him the prime
ministry.
In the second situation-losses heavy enough
to deny the coalition a working majority-the
President would be forced to change the composi-
tion of the government rather extensively. He
would probably seek a new prime minister, and it
is almost certain that the center parties would
insist on several portfolios, including a major post
for Jean Lecanuet. Pompidou could live with this.
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No Foreign Dissem
The immediate impact on government policy
probably would not be profound. He would still
remain in full command, and he might even take
the opportunity to absorb some centrists to dilute
Giscard's influence. Over time, however, the
influence of the centrists would undoubtedly be
felt, and both domestic and foreign policy would
undergo changes. Centrist forces have not clearly
spelled out the specific policy changes they
desire. It is reasonable to assume, however, that
the increased influence in such a government of
moderate political leaders-who are basically
more favorably disposed toward the US than
many Gaullists-would have a benign impact on
Franco-US relations. A government so composed
would be more cooperative within the Atlantic
Alliance, take a less intransigent stand in Brussels
on many aspects of EC relations with the US and,
perhaps over time, take a more positive line on
the Middle East and other foreign policy issues.
The degree of influence the centrists could exert,
however, would depend on how crucial their
support is and on what ministerial posts they
occupy.
In the third situation-even heavier Gaullist
losses-the President might well resort to the so-
called "Edgar Faure solution." He would turn to
Faure, who, though not a party member, is the
acknowledged leader of the Gaullist left wing.
Faure would be asked to form a government
whose support would range from the right wing
Special Report
of the Socialist Party through the center to the
left wing of the present coalition. Such a solution
would have some appeal to those Socialists who
feel uneasy in harness with the Communists.
Under such a government, if one could be formed
and survive for any length of time, fairly radical
departures in economic and social policy could be
expected. In foreign affairs, it would probably
emphasize to a much more pronounced degree
French independence from the US and "special
relationship" with the USSR. Still, the US would
probably be able to maintain a reasonable
working relationship with a Faure government,
but it is difficult to imagine that the cooperation
would be very close. There might be some
improvement, from the US point of view, in cer-
tain areas where Paris is at odds with Washington,
since a Faure coalition might perceive French
interests in a fashion different from the present
government and be less rigidly attached to certain
"Gaullist" principles.
The fourth situation-a leftist victory-
would bring a prolonged period of political and
institutional turmoil. There would be a pro-
longed hostile confrontation between the Presi-
dent and the parliament. The constitution of the
Fifth Republic provides no sure guidelines.
France, for example, now has a popularly elected
President endowed with significant powers, and
this fact makes it most unlikely that the old
predominance of parliament would be revived.
Giscard
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Although the assembly could refuse to pass
desired legislation, that would presuppose a con-
tinued unity of views on diverse issues in the
opposition. Moreover, the assembly no longer has
unlimited competence in the field of legislation.
Its rights have been restricted to more basic pieces
of legislation and to the budget, so that the gov-
ernment can often get along without assembly
concurrence. The executive takes the initiative in
proposing, most bills which eventually become law
and has rather broad powers to issue imple-
menting decrees and ordinances. There is even
authority for the cabinet to adopt an interim
budget if the assembly fails to act in time. Many
other detailed provisions of the constitution make
it easier for the cabinet to manage the lawmakers,
including the government's power to restrict the
active agenda of parliament, which is in regular
session less than six months a year.
The President has other options for dealing
with a leftist assembly. He could name a minority
government of his own supporters and challenge
the left to overthrow it by censure procedure. In
late December, Prime Minister Messmer stated
categorically that, regardless of the election
results, the President would pick one of his own
supporters to lead the new government. Pompi-
dou himself has hinted broadly that the appoint-
ment of Mitterrand-much less Marchais-is out of
the question. If the left doesn't like this, it will
find that censure is a difficult procedure because
a majority of all deputies-not just those present
and voting-is necessary and only a limited num-
ber of censure motions can be presented during a
session. A move for censure would immediately
test the cohesiveness of a left coalition which, in
the absence of a substantial majority in the assem-
bly, might find it difficult to impose the neces-
sary discipline on its heterogeneous troops.
If the left did manage to pass a censure
motion, the President would be obliged to dis-
solve the government. He would be in an unhappy
dilemma. On the one hand, he has acknowledged,
The authority of a state which does not rest on
the confidence of the French people and on
democracy would not be tolerated for long." On
the other hand, it seems highly unlikely that he
Special Report - 11 -
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would try to govern in tandem with a leftist
prime minister. Although Pompidou has not
specified what he would do if his coalition cannot
form a majority, he has said, in cryptic fashion, "I
will draw my conclusions" from a leftist victory.
He might instead dissolve the assembly and
call for another election. He would proceed
cautiously in this direction, since the left could
make further gains in a second election. The
leftists could call upon trade unions to harass the
government through strike activity and protests.
They would be constrained in such tactics, how-
ever, by their efforts to develop an image of
conformity to the norms of democracy and by
their recollection of how the government ex-
ploited the disruptions in 1968. In choosing
whether to push for a second election, the leftists
would also have to weigh the possibility that the
electorate might well have second thoughts when
faced with the reality of a strong leftist position
in the assembly.
Pompidou has a number of other weapons at
hand to block an attempt by a leftist assembly to
force a change in government. He could exercise
one of several presidential prerogatives in addition
to dissolving the assembly. Article 16 of the con-
stitution provides that the president may rule by
decree under extraordinary circumstances. He
alone decides when the situation is sufficiently
extraordinary to justify such rule and when the
circumstances have passed. Although the assem-
bly cannot be dissolved during this period, there
is no mechanism by which it can impose its will
on the president and thus virtually no constitu-
tional checks which set limits on the decisions of
the President. Pompidou would be likely to use
this power only if a leftist victory at the polls
were followed by a very serious breakdown of
public order.
Article 11 of the Constitution provides that
the President, on the proposal of the government
during an assembly session, may submit to the
people a referendum dealing with "the organiza-
tion of the governmental authorities." F_
16 February 1973
25X1
25X1
Approved For Release 2008/09/02 : CIA-RDP79-00927A010100020001-9
 Approved For Release 2008/09/02 : CIA-RDP79-00927A010100020001-9
SECRET
The President is prohibited by the Constitu-
tion from dissolving the assembly more than once
in a 12-month period. Therefore, if a leftist gov-
ernment were returned to power in a second
legislative election, Pompidou would either have
Special Report - 12 -
SECRET
to accommodate himself to it or resign from the
presidency. If he resigned, new presidential elec-
tions would have to be held within two months.
Only after all of these steps were taken and a 25X1
leftist candidate were elected president would the
left have "come to power." France is still far
from such an eventuality.
16 February 1973
Approved For Release 2008/09/02 : CIA-RDP79-00927A010100020001-9
 Approved For Release 2008/09/02 : CIA-RDP79-00927A010100020001-9
Secret
Secret
Approved For Release 2008/09/02 : CIA-RDP79-00927A010100020001-9