WEEKLY SUMMARY

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP79-00927A010300050001-4
Release Decision: 
RIPPUB
Original Classification: 
S
Document Page Count: 
25
Document Creation Date: 
December 21, 2016
Document Release Date: 
February 28, 2008
Sequence Number: 
1
Case Number: 
Publication Date: 
June 8, 1973
Content Type: 
SUMMARY
File: 
AttachmentSize
PDF icon CIA-RDP79-00927A010300050001-4.pdf2.53 MB
Body: 
Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Iq Next 1 Page(s) In Document Denied State Dept. review completed Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 'ROW, I%W Secret WEEKLY SUMMARY State Dept. review completed Secret 8 June 1973 No. 0373/73 Copy N2 50 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 NW The 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- fore published separately as Special Reports are listed in the contents. 10 USSR: Foreign Trade, L-.:nokhod-2 11 The Germanies: Treaties: 13 NATO: On to Copenhagen 13 Sweden: Down But Not Our 14 Finland: EC Treaty Stalled CONTENTS (8 June 197 ) 1 Argentina: The Lines Are Drawn 2 Japan: Civic Protest & Economic Boom 4 Greece: The King Is Out 5 International Money 6 Indochina 9 China: Higher Price; MIDDLE EAST AFRICA 15 'langladesh: Fading Dreams 16 Lebanon: Armed Truce 16 Iran: Act of Terror sm 17 The Yemens: End of an Affair WESTERN HEMISPHERE 18 Mexico: New Man in Treasury 19 Chile: A Harder Line Comments and queries on the contents of this publication are welcome. They may be directed to the editor of the Weekly Summary,l Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Rr t ^+s ca a ~' Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 ARGENTINA in his inaugural address, President Campora took particular aim at the "imperialists," but it has been the extreme left that has come under attack in the first two weeks of his administra- tion. The Peronists have formed a quasi-official vigilante organization that has put the Trotskyist terrorists and other "communists" on notice to lay down their arms or suffer serious conse- quences. Further evidence that the Peronist move- ment still contains many die-hard anti-commu- nists was provided when the Cuban and Chilean delegations hastily walked out of a labor con- ference after they were hooted and jeered at. Prior to his inauguration, Campora publicly called on the Trotskyist terrorists to observe a truce and to join in the reconstruction of the fatherland. In a follow-up effort, Trotskyists were included in the general amnesty. The terrorists refused to heed Campora's call and, after the Peronists were installed, the Peoples Revolu- tionary Army issued a statement charging that the new government represented bourgeois and capitalist interests. Finance Minister Gelbard was singled out as a "big-time capitalist," and the new labor minister was labeled just another "bureau- crat." At the same time, the terrorist group con- tinued to hold two kidnaped military officers and extorted a, million dollars from the Ford Motor Company.' .If this was not enough to spur the Peronists into action, Lorenzo Miguel, one of Argentina's most important labor leaders, warned Campora that the Trotskyists could gain control of large sectors of the labor movement by infiltrating Peronist ranks. Dealing with the terrorists and the "communist infiltrators" thus became the first big order of business for the new government. The labor and youth sectors of the Peronist move- ment were charged with organizing commando groups to fight the terrorists with their own tactics. On 31 May, the newly created Central Security Command of the Justicialista Movement issued a communique warning the terrorists to Rodolfo Galimberti Counter-terrorist Leader cease operations or face the loss of ten of their number for each fallen Peronist. To head the counter-terrorist operation, Peron picked Rodolfo Galimberti, who was sacked a short month ago for publicly advocating the formation of armed militias. His resurfacing in this context indicates that Peron may see the present circumstances as offering an opportunity to form the militias without drawing the wrath of the military or alienating political moderates., "t, ~he mounting pressure appears to have had some effect already. One of the two kidnaped military officers was released this week, and some Trotskyists publicly disassociated themselves from the hard liners. Despite this split, the main terrorist group still seems bent on challenging the Peronists, and the stage is being set for a bloody guerrilla struggle.1 (The military has been ordered to stay on the sidelines while the Peronists and the police battle it out with the terrorists. The odds definitely favor the Peronists, particularly since they can call in the army if things start to go wrong. The real danger, however, lies in the creation of a paramilitary organization of fanatics willing to enforce the tenets of Peronism by force. Such a group could be turned against other groups of heretics at a later date or even used against the government itself if it fails to live up to the revolutionary demands of the more radical Peronists. The potential for direct conflict with 25X1 the military also exists, as the armed forces have already declared their total opposition to the SECRET Page 1 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 i`"' SECRET JAPAN No longer content to accept the dictates of Tokyo, increasing numbers of Japanese are band. ing together in citizens movements to gain a hand. in decisions that affect their home towns. Al.. though the movements focus on local environ- mental issues, they are having an unprecedented impact on politics as the participants take a more critical look at the over-all performance of the ruling Liberal Democratic Party. This in turn is significantly strengthening the position of the Communists and Socialists in regional and national elections. -I ]Urbanization and industrialization have brought prosperity to Japan; they have also cre.. ated the massive environmental problems upon which these movements focus, and they have de?? stroyed the normal neighborhood and village bonds that were once the building blocks of cone servative party support.. Up to 3,000 citizens movements are flourishing. These groups are by no means associations of professional politicians; a large proportion of their leaders and members are housewives] j_More than half of the citizens movements are non-partisan in orientation. By the nature of Protest of industrial development plans in Tanaka's home constituency their protest activities, however, they are generally anti-government and anti-Liberal Demo- cratic Party in coloration. Most of those that do identify with a specific party line up with the Communists or Socialists. The two parties effec- tively exploited the issues and organizational strengths of the citizens movements in the elec- tion last year. Observing this, the Komeito, Lib- eral Democratic, and Democratic Socialist parties, each of which suffered losses in that election, are seeking closer affiliation with these groups. I ;- i /One group in Kagoshima Prefecture is wag- ing a well-publicized campaign against plans to locate a petro-chemical complex there. Spear- headed by a federation of ten groups, the cam- paign is similar to others throughout Japan and points up the growing resistance to Prime Minister Tanaka's blueprint for dispersing heavy industry to less developed areas. In Osaka, a large group has sought for four years to block construction of a new international airport. In Ehime Prefecture, citizens are protestin government plans for an atomic energy facility '`f TThese citizens movements rarely tackle prob- lems beyond the goals for which they were set up. Still, the Japanese voter casts his ballot in regional and Diet elections on the basis of such local issues rather than on broad national one4ln the Diet elections last year, Osaka, which followed the urban pattern of increased support for the Com- munists, moved sufficiently to the left to cost the Liberal Democrats a seat. The conservatives held on to seats in their rural strongholds of Kago- shima and Ehime, but, given the role of the citi- zens movements, the opposition parties are now within striking distance of winning seats in these two districts in the next election.) LOWER TRADE SURPLUS )Despite these problems, the Japanese econ- omy is surging ahead. Boosted by government spending, heavy consumer outlays, a high rate of housing construction, and rising industrial invest- ment, real gross national product rose an extraor- dinary 15 percent between the first quarter of 1972 and the corresponding quarter of this year. SECRET Page 2 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET NOW When the present boom began in the spring of 1972, there was substantial excess productive ca- pacity, but in recent months output in a number of key industries has approached capacity. This pressure on capacity is pushing price levels up sharply. Wholesale prices have been ris- ing rapidly for over six months and by May were about 12 percent higher than a year earlier. Con- sumer prices rose some 10 percent between May 1972 and May 1973 on a nationwide basis; the rise in Tokyo was nearly 12 percent. Wages also are soaring. A survey of 241 large firms shows that increases so far this year have averaged some 20 percent-well above the gains in labor produc- tivity expected for the year. Tokyo has taken a number of steps to slow the growth in demand. The discount rate was boosted three fourths of a point in early April and another half point in late May to 5.5 percent. Commercial banks have been ordered to limit business loans, and the government is postponing public works spending and accelerating bond sales. Japanese business leaders continue to plan large investment outlays, however, and a further tightening of fiscal and monetary controls may be required to cool the economy in the months ahead. The continuing economic boom is the major factor in the reduction of Japan's trade surplus this year. Rising production, primarily for the domestic market, is stimulating imports of raw materials. Imports during the first four months were up 44 percent over the same period last year. Meanwhile, exports grew less than 25 per- cent. The trade surplus for the period came to $1.8 billion-about $600 million less than in the first four months of 1972. About half of this decline is related to changes in US-Japanese trade. Japanese imports from the US rose by one third between January-April 1972 and the correspond- ing period in 1973, while exports rose less than 8 percent. If this trend continues, Japan's 1973 trade surplus with the US will be $1 billion less than the $4.1 billion figure reached last year. Real Gross National Product First Quarter 1971 through First Quarter 1973 (Index of seasonally adjusted data. 1970=100) SECRET Page 3 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Vow, SbGKE I Iftow GREECE THE KING IS OUT JPressures on Prime Minister Papadopoulos have eased, at least for a while, as a result of his decree on 1 June abolishing the monarchy and establishing a presidential republic. Supporter and critic alike will be pre-occupied during the next few months with constitutional questions? o far, ,there has been little reaction from the Greek public, which seems to have adopted a wait-and- see attitude/ /f The cabinet will meet frequently this month to prepare amendments to the 1968 constitution. These amendments will formalize the conversion of Greece from monarchy to republic, and if Constantine and Papadopoulos SECRET Page 4 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECIRET Papadopoulos holds to his timetable, they will be announced by 1 July and voted on in a plebiscite by 1 August. If the voters ratify the amendments, Papadopoulos has promised parliamentary elec- tions by the end of 19741 pressions o regret Jthat King Constantine has finally been deposed. Popular reaction has gener- ally been non-committal, even cynicall/Citizens in Greece's second largest city, Thessaloniki, are said to question whether an unrigged plebiscite is pos- sible and whether Papadopoulos will in fact honor his pledge to hold elections before the end of 1974 LNine former politicians have denounced Papadopoulos' move and may try to fan Greek skepticism into opposition. They do not have much chance of success) ;'; Meanwhile, Papadopoulos has ridden out the threat posed by the navy plot to unseat him and return the King. The prime minister is in complete control, and the weeding out of monar- chists in the military will certainly continue. Rather than open up more fissures by a wholesale purge, Papadopoulos may decide to use transfers and retirements to deal with royalists still on active duty./ I.'- )Papadopoulos draws his chief support from army officers who are anti-monarchist, and his abolition of the monarchy won their continuing favor. The same officers, however, oppose elec- tions or any change that would decrease their powerful positions. Therefore, when discussions on elections come up, military opposition is likely to reappear`? j "Changing the form of government, purging the military, and a pending cabinet reorganization are needed to perpetuate the regime, but these steps will not in themselves solve the serious polit- ical problems Papadopoulos still faces. Over the longer run, he must overcome the corruption and inefficiency that plagues his lackluster govern- ment. He must also find acceptable solutions to other problems like the church the students and Cyprus INTERNATIONAL MONEY ) , )After falling to a record low in major Euro- pean exchanges early in the week, the dollar ral- lied. Despite the comeback, it has depreciated more than 4.6 percent in terms of the mark since 28 May. The pound sterling has also risen sharply against the dollar, and gold reached a record high of $127 an ounce in London before declining. The speculative run on the dollar eased at mid- week when profit-taking bolstered dollar demand, at least temporarily'4 I G> )The new speculative surge was prompted by continuing political uncertainty in the US, and the jump in exchange rates was the sharpest since February and March`After holding fairly steady , since the beginning of the joint float on 19 March, all of the major European currencies have now appreciated against the dollar. The German SECRET US officials report few ex- mark has made the strongest gain, advancing 7.0 percent, and now stands at the top of the joint European float band. The Japanese yen, however, has appreciated only 0.3 percent since March, indicating that the informal agreement made in March to keep the yen at a higher level of appre- ciation than the mark has been allowed to lapse.) (] [Despite the substantial appreciation of the uropean currencies, there has been little central bank intervention. So far, only Ottawa and Lon- don have entered the market to slow the apprecia- tion of their currencies. For the present, Euro- peans generally are not too concerned about the 25X1 impact of their currencies' appreciation on their trade positions since domestic demand is ver strong. Page 5 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Part boss Le Duan and Premier Pham Van Dong arrived in Peking on 4 June for what was described as a "friendly official" visit. The pres?? ence of Le Duan, the top-ranked figure in the North Vietnamese hierarchy makes the visit unique; he has never before made this sort of trip to China. Moreover, amid all the protestations of solidarity, there are signs that Hanoi and Peking are not seeing eye-to-eye on some important issuesa The two sides will undoubtedly be reviewing the whole range of their relationship in the light: of the Paris accord and the Sino-US rapproche? ~~"ment. The current effort to make the accord more effective is also likely to come under dis. cussion. Hanoi has given a couple.of indications in the last two months that it is piqued over pressure from its big-power patrons to hew more closely to its commitments. Indeed, differences in nuance between Le Duan's and Chou En-lai's speeches on 5 June suggest that Hanoi remains skeptical and Peking enthusiastic about the benefits of a tighter, cease-fire agreement p `fib A good many other issues may come up. The inclusion in Hanoi's delegation of the men who negotiate both economic and military assistance with Peking indicates that aid will be one specific item. Chinese treatment of the Cambodian issue, coupled with the prominence accorded Si- hanouk's followers in the Chinese accounts of Le Duan's doings, suggests that the possible forms of a negotiated settlement in Cambodia have also received attention.? `M, [There is nothing official to indicate whether either Le Duan or Pham Van Dong is going on to other capitalsil~According to the diplomatic rumor mill in Hanoi, however, Dong is on the first leg of a swing thro gh all the countries that have as- sisted Hanoi?fLe Duan might go along at least as far as Moscow, if only to balance off his visit to Peking) SECRET While both sides worry about enlarging and consolidating the territory they hold in the coun- tryside through military action, the Thieu govern- /IAment is busily strengthening its administrative control at the grass-roots level. The government has been proceeding with village council elections throughout the country, and Thieu's Democracy Party has rolled up victories in most of the con- tests to date.1 SECRET Page 6 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 fjfv fhe party's success appears largely the result of the tight control exercised by local officials and the refusal of some independent and opposi- tion candidates to run. In some 200 elections held thus far in the delta, more aspiring candidates apparently were disqualified than in the past, and Democracy Party members won about 80 percent of the contests'1/Some elections were postponed because not enough candidates were on the bal- and others were canceled because officials believed that Viet Cong influence was too strong.1 ~I Many more local elections are scheduled in the coming weeks, and Thieu's Democracy Party is likely to run up more victories. Some local officials apparently are determined to ensure a sweep of the village council elections by the gov- Page 7 SECRET level., ernment party, although in at least one opposi- tion-oriented area, they are actively working for a more balanced outcome .I tJJ, [Political figures outside the government have thus far reacted mildly to the Democracy Party's successes. Some leaders of independent parties that have lost members to the Democracy Party profess to be unconcerned, believing that these defectors will remain loyal to their original par- ties. Some bitterness is reported, however, in areas where the government's election tactics have been especially heavy handed. For his part, Thieu appears willing to risk antagonizing his opponents further in order to strengthen the government's ability to meet the Communist threat at the local tl SECRET WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET - CAMBODIA: BACK ON THE ATZACK After a brief lull, Khmer Communist mili- tary activity has picked up again in the Phnom Penh area. The Communists shelled a number of government positions along Route 4 about 15 miles west of the capital. The attacks appeared to signal the beginning of a determined enemy carn- paign to interdict the highway. Although the Cambodians were forced to withdraw from sev- eral positions near Route 4, they did manage to mount some counterattacks and clearing opera- tions to try to keep the highway open. By mid- week, however, the situation along Route 4 was still uncertain, and truck convoys had been tern- porarily suspended. East of Phnom Penh, Khmer Communist combat activity along the Mekong River corridor was notably reduced. After five months of continuous fighting and resultant heavy casualties, primarily from air strikes, the Communists apparently have had to withdraw to rest and refit. But the insurgents nevertheless can be expected to continue to harass resupply con- voys on the Mekong. In a conciliatory gesture aimed at Sihanouk and the Khmer Communists, the ruling High Political Council released 46 members of the royal family and other persons imprisoned or placed under house arrest following the bombing attack on President Lon Nol's residence on 17 March. Among those freed were Sihanouk's mother and one of his sons. As a further indica- tion of its interest in peace prospects, the council dispatched former prime minister Hang Thun Hak to Paris as a special representative to follow the progress of the talks between Dr. Kissinger and Le Duc Tho. Hak was accompanied by former de- fense minister Sak Sutsakhan. Sihanouk, who arrived in Albania on 4 June for a private visit following a month-long tour of various African countries, is still taking a tough line. on negotiations. In Mauritania, he told the press that there would be no cease-fire in Cam- bodia until his forces "liberate" Phnom Penh. And in Morocco, the Prince called again for the exile of Lon Nol and the dozen traitors in power in Phnom Penh." SECRET Page 8 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET CHINA: HIGHER PRICES 'High prices for Chinese goods and favorable prospects for sales of US equipment were the highlights of the spring Canton fair in May. Peking claimed that attendance at the fair and the value of transactions topped all previous records. Because of higher prices, the value of contracts signed probably topped the $1.2 billion worth of business conducted at the 1972 fall fair. The Chinese apparently took advantage of rising demand for their goods to increase prices. Price hikes ranged from 40 percent for foodstuffs and light manufactures to more than 100 percent for luxury goods like antiques, silk, carpets, and porcelain. Not only were prices steep but the Chinese were reluctant to meet labeling, pack- aging, and other purchaser requirements. As a result, some would-be importers were discouraged and left Canton before the fair closed; others made only token purchases to maintain goodwill. The spring fair did find a record number of US businessmen in attendance, almost 150 in all. Contracts concluded by US firms probably sure passed the $20 million negotiated last fall. The Chinese invited a number of big US manufac- turers of capital equipment, particularly in the petroleum industry. Representatives from Mobil, Exxon, Caltex, Continental Oil, and US Steel's oil-well supply division were invited. Continental Oil was asked to prepare plans for seven petro- chemical plants, and three additional firms were invited to Peking to continue discussions on sales of plants and technology. Although talks with US firms should lead to increased sales to China, negotiations with the Chinese on major contracts have often taken a year or more to complete. The Japanese were again out in force, as some 2,800 representatives from over 300 firms attended. Business transacted by the Japanese reached about $230 million, a small increase over the fall fair but well below the $300 million they had predicted. The high prices and shortages of some foodstuffs held down Japanese purchases. 25X1 Price hikes by Japanese firms-averaging 40 percent for machinery, c h e m i c a l s . other goods-dampened their sales. SECRET Panes 9 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET Moscow had a hard-currency deficit of about $1 billion last year, the largest ever. Spurred by record imports of capital goods and grain, imports from the developed West rose to $4 billion, com- pared with $2.9 billion in 1971. Imports of West- ern machinery and equipment went up about one. third to $1.4 billion, and deliveries under the huge grain orders of last summer were valued at. about $600 million, compared with $158 million in 1971, To help finance this large deficit, the USSR last year sold significant quantities of gold for the fi first time since 1965. The sale of more than 150 metric tons of gold may have brought the USSR as much as $300 million. Credits from Western institutions also helped. Imports of grain worth $100 million were financed by three-year loans from the US Commodity Credit Corporation.. Western government-guaranteed medium- and long-term credits for machinery and equipment: imports probably totaled $500 million. The re.? mainder was apparently financed by Soviet jr borrowing on the Eurocurrency market. [This year, the USSR should end up with an 7' one goa o unokhod-2 was to reach the Taurus even larger hard-currency deficit-perhaps as high Mountains near the LeMonnier crater-a goal 411 as $2 billion. Grain imports on orders already apparently not achieved) placed are expected to be well above $1 billion, and machinery and equipment imports are ex. pected to rise as well. To help finance these imports, the Soviets have again been selling gold-- 93 tons in the first quarter of this year. These sales may have brought in as much as $250 mil. lion at the high 1973 gold prices. If the USSR were to sell all of its estimated current net pro?? duction of more than 200 tons, it could earn at present prices more than $600 million. Other sources of financing are expected to be Western credits for machinery and equipment, Eurocur?? rency loans, and Commodity Credit Corporation credits for grain. The last named will total about $400 million this year.J SECRET -() (Despite the large hard-currency deficits, Western financial institutions still consider the USSR a good risk and are continuing to offer it loans at prime rates. Substantial gold reserves (about 2,000 tons) and a history of prompt re- payment contribute to this confidence.1 %~ (e The most recent Soviet moon-rover, Lunok- hod-2, has ceased operating after some four months of activity. The manned vehicle was placed in the Sea of Serenity in January by Luna 21 and subsequently traveled more than 20 nauti- cal miles. This distance was about three times greater than that covered by the first Lunokhod, which operated for more than ten months from November 1970.1 ~A TASS announcement on Lunokhod-2 earlier this week provided no explanation of the vehicle's relatively short life span. It may be that the vehicle experienced a mechanical failure or 25X1 25X1 Page 10 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 cide SECRET "r on the treaty's coming into effect. This demand also dominated the Bahr-Kohl negotiating session on 30 May. Little of substance was discussed, largely because of the court case. Kohl later explained that although they would continue to meet, the court's review would "handicap" their discussions./ {While Pankow leaders explain the move to- ward better relations with West Germany as an element of peace and detente, they continue to warn their people not to expect "convergence." Honecker addressed a central committee meeting on 28 May, his first major statement since Brezh- nev's visits to Pankow and Bonn last month. Honecker made it clear that the policy of A bgren- zung (keeping apart) was unchanged. His remarks, intended primarily for a domestic audience, dis- appointed those Germans who had hoped that Brezhnev's visit might lead to a softening of pro- scriptions against contacts with other Germans. j 25X6 he West German constitutional court de- on 5 June not to prevent President Heine- mann from signing the ratification bill for the inter-German basic relations treaty. Heinernann signed it on 6 June, and the treaty could come into effect soon after 13 June, when the East German Volkskammer acts. The decision on 5 June, however, does not disperse all the clouds over the pact. The court still has to rule on the treaty's constitutionality next month. If Bonn and Pankow complete the formalities beforehand, the court's ruling would not affect the validity of the treaty, since international agreements already in force are beyond the court's competence. Bonn may still choose to await the ruling to avoid the appearance of acting opportunistically _f The court's action had to share public atten- tion this week with the surprise visit to Pankow on 30-31 May by Herbert Wehner and Wolfgang !' _ Mischnick, parliamentary leaders of the Brandt coalition. Wehner is one of Brandt's closest ad- visers, anti Honecker may have felt the need for another channel to Brandt in addition to Egon Bahr. It has been rumored that the East Germans are distrustful of Bahr because of his close co- operation with the Soviets; the Soviets seem to have little use for Wehner, who is one of the most prominent German defectors from communism.) )Ostensibly, the visit has been billed as a new stage in inter-German relations, the first in a series of exchanges between political leaders. It is more likely that Wehner's mission was to assess pros- pects for relations in the midst of confusion over the court deliberation on the treaty and to reas- sure the East Germans. After his talk with East German party chief Honecker, Wehner strongly implied to correspondents that he believed he had been successful. He said that despite a "certain irritation" in Pankow over the delay, the East Germans had agreed not to apply for UN mem- bership until Bonn is ready to do so7 1( `HHonecker, according to an East German commentary, pinned improvements in relations SECRET Page 11 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 25X6 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET NATO: OFF TO COPENHAGEN S-)) [The foreign ministers of the NATO countries realize that in Copenhagen next week they will t,'7 begin what amounts to a fundamental review of the alliance. They will be considering how NATO should respond to the US call for a "new At- lantic Charter"; they will also be looking into ways of relieving the balance of payments burden to the US of stationing troops in Europe and into an allied position for the force-reduction talks.) v 1i )Since Dr. Kissinger gave his speech on At- lantic relations in April, most NATO members have agreed that the time may indeed have come for a new "declaration of principles," but they fear that the effort to draft one might be tanta- mount to performing unneeded major surgery on the alliance. They admit that trade, monetary, and defense issues are related, but they are against the use of a single forum to resolve all these problems. . ( (The US has proposed that the allies pay a larger part of the balance of payments costs the 3 /US incurs from stationing troops in Europe. The - j proposal is likely to get a skeptical reception. A number of allies have questioned the precise dimensions of the US balance of payments prob- lem and have suggested that other countries incur costs in stationing forces elsewhere in Europe. Some feel that the US is asking too much of the alliance. The British have been sharply negative toward the new burden-sharing initiative. A For- eign Office spokesman said that he considers the proposal "one-sided" and that Britain itself should be the principal claimant for balance of payments relief. The most the US could hope for from the Copenhagen meeting, he continued, was a commitment to study the problem. In his opin- ion US efforts to obtain more might cause some of the allies to insist on cutting their own forces at the force reduction talks in the fall. '~3"S Such a stand would introduce new complica- tions in the effort to arrive at a common allied negotiating position for these talks. So far, the NATO discussions have not hit major snags, but they are still in the early stages. The ministers will consider, and perhaps approve, guidelines for detailed discussion this summer. With a few reservations, Washington is pleased with the guidelines as they exist now because they follow closely the US position paper.) The ministers may also discuss the relation- ship between force reduction talks and a Euro- pean security conference. If the Soviets are still being uncooperative about setting a starting date for the force-reduction talks, there may well be 25X1 discussion of how the allies should react and whether they should slow the a toward r it conference. SWEDEN: DOWN BUT NOT OUT Vprime Minister Palme's Social Democrats appear headed for defeat in the parliamentary elections next September, but disarray among the opposition parties may nevertheless offer Palme an opportunity to remain in power. Public opinion polls for May show the three non-socialist parties holding a steady 52.5 percent of the vote, five percent above their showing in the election of 1970. The Social Democrats, who rely on the Communists for their parliamentary majority, were supported by 40 percent in the poll, three percent off their January showing and down more than five percent from their 1970 SECRET Page 13 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET W c - (4_ election tally. This means that the Social Demo- crats failed in their carefully planned effort to use the spring session of parliament to win back voter sympathy. The May poll is significant, since 75 percent of Swedish voters normally decide four months before the election whether to vote and which party to vote for. FINLAND: EC TREATY STALLED [The Communist-dominated Finnish People's Democratic League handed the government an- Palme's problems si:em primarily from a gene other setback in its efforts to sign the draft free- eral public mood that it is time for a change. trade agreement with the European Communities. After 41 years in power, the Social Democrats can no longer win voter support simply by citing their record. Today, the public is more concerned over such issues as indiscipline in the classrooms, disorder in the streets, and a remote and bureauc- ratized government. Foreign policy issues do not loom large and, even here, the government may not have the edge. The Social Democrats at- tempted to appear moderate in the spring for- eign-policy debate, but were provoked into intem- perate remarks. The league blocked a motion on a bill in parlia- ment last week that would have facilitated pas- sage of one of four items of domestic legislation, which the Social Democrats have set as prerequi- sites for the signing. The Communist move, on the eve of the parliamentary summer recess, could delay the signing until next fall unless the Social Democrats can be persuaded to forgo the domes- tic legislation requirement/ (~ j/ he market disturbance bill that was de- feated on 1 June would have given the govern- The opposition parties, pledged to attempt )[L/ment power to regulate imports. Its government to form a non-socialist government, began the sponsors had hoped to get parliament to label the year by announcing a joint economic program intended to show they represented a viable alter- native. Their united front held up through parlia- ment's general economic debate on 4 June. The opposition also remained united against the gov- ernment's program for depressed areas, another key election issue but has been unable to agree bill "urgent," which would have circumvented debate and assured quick passage. A bill cannot qualify as urgent unless five-sixths of the mem- bers of parliament approve; the league controls 37 of the parliament's 200 seats, three more than necessary to defeat such a motion? on a program of their own. Cohesion has com- In addition to the market disturbance bill, pletely eluded them in many other policy areas.e Social Democrats have been insisting that bills In April, the Moderate Party (conservatives) sided' regulating capital investment and providing with the government on foreign aid, in May the counter-cyclical control of the economy must Center voted with the government on pension also be enacted. The fourth bill, which regulates matters, and in late May both the Center and rents and prices, was approved in April? Liberals supported the government's defense budget. This disarray stems from the basic fact that( the opposition parties compete against each other, as well as against the Social Democrats. The gains of the Moderate Party on the right have sent waves of anxiety through the Center and Liberal parties. Parochial interests may yet, therefore, frustrate these parties' efforts to form a coalition government, even should they together poll a majority. The Center or Liberal parties might even come to see an advantage in forming a ~, The Communists are the only Finnish party opposed to the EC agreement and, while badly split on most matters, are united on this one. Their action last week could cause problems for the Social Democrats, the major party in the four-party coalition. Nearly all other Finnish parties would rather sign the EC accord as soon as possible and straighten out the domestic legisla- tion issues later. The Social Democrats are there- fore likely to come under pressure in the weeks ahead to forgo the legislation and sign the treaty. SECRET 25X1 25X1 Page 14 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 5k:UKL I tially urban-oriented in a largely rural nation.( Nonagenarian oppositionist Maulana Bha- siani, leader of a peasant-oriented and pro-Maoist party, recently gained the spotlight with an eight- day hunger strike protesting government inaction on econo is problems and alleged political harassment.)Bhashani may have attracted added support for his long-held view that Bangladesh's troubles stem in large part from Indian exploita- tion and interference.? fEven within the ruling Awami League, dis- sidents have begun to speak out against the gov- ernment. So far, these divisive elements in the party have been subdued, but defections from the party are potentially a serious problem. 7) In this atmosphere of growing political tur- bulence, the US has again become the target of allegations by spokesmen for both government and opposition that Washington is engaged, along with Pakistan and China, in an anti-Bangladesh 2 r_conspiracyl J'Although there are anti-US elements in the government, the attacks from this quarter may in part be an effort to divert attention away from Bangladesh's domestic problems. Mujib is well aware that the US is Bangladesh's largest aid donor and he can be expected to limit such criticism.1 (,, j'! Despite the growing discontent, Mujib is still enormously popular and remains firmly in control 7of the government.kHe has taken measures to ' check corrupt practices in business, has made some administrative changes, and has arranged for food imports] The pressure on Mujib will almost certainly grow, however, and he may seek relief by taking action against his opponents, usin the increase in political violence as his excuse. Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 t Disillusionment and discontent are spreading of well-attended rallies. Some of these rallies have in Bangladesh as a result of the failure of Prime resulted in clashes with government supporters. Minister Mujibur Rahrnan's government to meets Recently, the group spearheaded a general strike popular expectations and deal effectively with that paralyzed Dacca for eight hours. At this such burgeoning domestic problems as: time, however, the party remains small and essen ? rising prices; ? shortages of food and clothing; ? shortages of power and fuel plaguing an already sagging economy; ? corruption in government, political as- sassinations, general lawlessness, and black- marketeering; ? lack of qualified administrators and planners, both in government and industry; ? growing anti-Indian sentiment.' /Opposition parties, while still too weak to be a serious threat to the government, have taken advantage of the confusion and disaffection to step up their activities and criticism of Mujib's leadership. The most energetic of these critics are the young leftists of the Jatiya Samajtantrik Dal, who have pledged a "bloodless" struggle to over- ,)throw the government,j They have staged a series Mujib Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 5hUKIb I '7'j)The shooting stopped in Lebanon some three weeks ago, but the level of tension and distrust between the Lebanese and the fedayeen remains high. For the moment, neither side seems anxious to resume the fighting, but each is pre- paring for another round. i,3 } An army attempt to move armed fedayeen or {heir heavy weapons out of the Palestinian refugee camps near the big towns w uld probably set off another round of fighting.~;')The guerrillas are smuggling additional arms in from Syria,! 9I1 lUnder the terms of the agreement reached on 17 May, fedayeen units are slowly leaving villages in southeastern Lebanon to take up posi- tions in uninhabited areas away from the Syrian and Israeli borders. The feclayeen are not, how- ever, about to move out of urban areas, especially Beirut and Trip encampments oli- to isolated in the countr side: ' )The truce could be upset in other ways. } Although the main fedayeen organizations are `exercising restraint, extremist elements could `touch off another clash at any time. There was a close call on 27 May when members of the Popu- lar Front for the Liberation of Palestine kidnaped three soldiers. A similar provocation triggered the fighting in early May, but army action was avoided in the more recent incident when feda- yeen leaders forced the release of the hostages.'; The Franjiyah government is not anxious for another flare-up and has ordered the army to delay implementation of the more sensitive pro- visions of the agreement. Some in the military, however, are impatient to move the guerrillas out =s~ The assassination on 2 June of Lieuten- ant Colonel Hawkins, a US Army adviser in Gy :Tehran, by two terrorists was probably the work of local radicals; the assassins may have been trained abroad.'publicity given the event ,;:focused attention on US-Iranian cooperation at a time when regime critics are deploring the Shah's $2.5-billion arms deal with the US. The timing of the attack may also have been related to the execution of eight terrorists a week earlier or to the trial-now in progress- of seven guerrillas charged with attempting to kidnap the US ambassador in 1970. t (Hawkins was almost certainly chosen because he was an easier target than the heavily guarded ambassador or embassy staff. As one of about 580 US military advisers in Iran, he was representative of the expanding US role in building up the Shah's armed forces. Within the year, an additional 500 US advisers are expected in the country to train Iranians on the new equipment the Shah has ordered. Although the Iranian Government reacted quickly and bolstered security around American installations, another attack like the one on Hawkins is certainly a possibility. Over the past five years, Iranian security has made vigorous efforts to curb such violence, but it is all but impossible to prevent small and determined groups from such actions. SECRET Page 16 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 ..~ 5 t (.; I-{ t I of the capital and, sooner or later, another test of strength seems all but inevitable. Against this day, the Lebanese are strengthening their armed forces by stepping up recruitment and procuring mili- tary equipment, including armored vehicles and helicopters to increase the army's mobility.; The Syrians have kept pressure on Franjiyah by keeping the border closed, which puts a damper on the Lebanese economy. Damascus reportedly hopes that the closure will aid its own economy by instigating new trade arrangements that would direct ship traffic away from Beirut to }lt The union agreement signed last November y Despite the bloodletting, both Yemens are by the presidents of Yemen (Sana) and Yemen maintaining the fiction of good relations..Sana (Aden) is for all practical purposes dead. Desul?? o '-,has not publicly linked Aden with the killin s and tory negotiations on the merger are breaking sabotage, and Aden, which would disclaim them down as a result of a steadily growing campaign in any case, offered to send a high-level represent- of sabotage and terrorism that Aden has been ative to Uthman's funeral;Athe offer was refused. conducting against the Sana government for sev Nonetheless, neither side seems likely to maintain eral months. ~P1 )Playing on the anti-government sentiments of Sana's southern Shafai tribesmen and other disaffected elements, Aden has established an ex- tensive network of saboteurs and terrorists in many of Sana's principal cities:(The operations of these agents increased after Sana arrested and tried a large group in late April and early May. Since then, over 25 people have been killed in actions initiated by these Adeni-backed elements./ Among the victims were Muhammad Ali Uthman, a highly respected member of Sana's ruling Re- publican Council , nd three of Sana's local mili- tary commanders the fiction to the point of continuing the unity talks. Indeed, Sana had decided that further nego- tiation would be fruitless even before Uthman's murder.] tinue the trials of Adeni saboteurs, however, and Aden is expected to continue its own subversive campaign. Under the circumstances, the prospects 25X1 25X1 SECRET Page 17 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 'Wale SECRET MEXICO: NEW MAN IN TREASURY 1741 Sirhe number-one topic in Mexico's economic One of the reasons Margain gave way is that and financial circles this week was the new man at he found himself more and more out of line with the finance ministry. The new head of the minis- President Echeverria and a group headed by the try is Jose Lopez Portillo, a close associate of the socialist-leaning Flores de la Pena. This group, nationalistic secretary of national properties, which has gained the upper hand in economic Horacio Flores de la Pena. Lopez replaced Hugo 91f policy, advocates greater government control over Margain, a fiscal moderate who holds conservative private industry, more money for social develop- views on national development through private ment, and redistribution of wealth. Flores de la investment and who is respected by the business Pena, a long-time critic of Margain, has been one community. Some businessmen feel that Mar- of the chief exponents of Echeverria's moves to gain's departure will bring an abrupt shift to the 77restrict some foreign investmen He has buil loft in Mavico's financial affairc while others )formidable team of cuinnnrterc 25X1 - believe that few changes in policy will occur. 25X1 Neither extreme is likely. The most probable re- sult will be further steps by the Echeverria gov- ernment toward more involvement in the econ- "2O omy, more spending on social development pro- Margain reportedly was frustrated by his in- [ grams, and a more rigid application of the new ability to control government spending and was restrictions on foreign investment than had been concerned that the money being poured into expected. social welfare programs was increasing Margain and Lopez The old and the new SECRET Page 18 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET inflationary pressures. His authority to say where money should be spent was being eroded steadily. His ministry's role in coordinating economic plan-` ning was shifting to the President's executive staff. His ministry's control of the financial activi- ties of state-owned agencies, such as Petroleos Mexicanos, had been taken over by a commission chaired by Flores de la Pena. Margain was dis- turbed, too, that political considerations were dic- tating economic decisions. Obvious examples of this were the recent over-ambitious trade agree- ment with China and the give-away credits to Chile for petroleum sales.] IThe new secretary's first public statements indicate that he will be more in step with Eche- verria's economic desires. He said his ministry will lead the fight against inflation, supply more credit to rural farmers, support the growth of small and medium firms, and, internationally, give con- tinued support to the "third world." He says he plans to emulate Echeverria's approach, by taking off his coat and tie and going out where the problems are] rift I Margain's departure and his replacement by a political disciple of Flores de la Pena are viewed by the financial community as an indication that its ability to influence economic policy is dimin- ishing. Since the new minister will have a major role in investment policy, the change will increase the concern of potential investors over how the recently promulgated laws on foreign investment and technology will be imnlemPnterl CHILE: A HARDER LINE ~, /Influential Communists and Socialists re- portedly now believe that President Allende's lack of firmness is damaging the Popular Unity gov- ernment. Since the two dominant parties in the coalition seldom agree on anything except that they must hang together, Allende will have dif- ficulty ignoring their insistence on a tougher stance against the opposition/ I/- [The El Teniente strike, now in its eighth week, has repeatedly erupted into violence and has cost an estimated $50 million in foreign-ex- change earnings, Chile's most urgent economic need. On 4 June, the government bowed to real- ity and suspended most copper shipments sched- uled for this month as well as a large part of those for July. Although some workers have abandoned the strike, a growing sympathy strike at the Chu- 25X1 quicamata mine will strongly test the govern- ment's determination to hold out against the con- SECRET Page 19 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 SECRET S 4,y I. The UN Security Council debate on the Middle East began on 6 June with strong statements from both Egypt's Foreign Minis- ter Zayyat and Israel's UN Ambassador Tekoah. Zayyat led off the debate with the standard Arab demands for a total Israeli withdrawal from the occupied territories and for recognition of Palestinian rights. At one point in his speech, Zayyat, alluding to Is- rael's demand for direct negotiations without preconditions, noted that Egypt would agree to talks were it not for Israel's refusal to agree to a complete withdrawal-a positi n that the Arabs regard as a precondition Egypt has consistently refused direct talks, and Zayyat's comment was thoroughly qualifieand made in the context of criticism of Israel.( Ithough Cairo has portrayed the UN debate as its final effort toward peace, it has apparently not yet charted a definite course for the debate. The Egyptians will probably play developments by ear; they appear now to be inclined toward a long debate. The session is expected to proceed slowly during the pe- riod before the US-USSR summit talks begin on 18 June. The council will probably ad- journ during the summit and reconvene in late June or early July. SECRET Page 20 WEEKLY SUMMARY 8 Jun 73 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 25X1 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4 I"W Secret Secret Approved For Release 2008/02/28: CIA-RDP79-00927A010300050001-4