WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• 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
• Publication Date: June 8, 1973
• Content Type: SUMMARY

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'ROW, I%W
Secret
WEEKLY SUMMARY
State Dept. review completed
Secret
8 June 1973
No. 0373/73
Copy N2 50
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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
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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
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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
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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
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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
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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.
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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
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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
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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."
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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
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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
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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
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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
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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.
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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.
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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
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'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.
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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
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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
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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-
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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.
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