WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010400080001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 21, 2016
• Document Release Date: July 29, 2008
• Sequence Number: 1
• Publication Date: August 24, 1973
• Content Type: SUMMARY

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%W VVW
Weekly Summary
Navy review
completed.
State Dept. review
completed
Secret
Secret
24 August 1973
No. 0384/73
Copy N4 40
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CONTENTS (24 August 1973)
I
3
Indochina
The Nonaligned Meet Again
4
Chile: Dead Center; Price of Strikes
6
Western Europe: What To Say
EAST ASIA
PACIFIC
7
South Vietnam: Saigon Prepares
8
for Sweep
South Korea: Links to Japan
9
China: More Meetings
9
UN: Combating Air Terrorism
10
CEMA: Roads to Moscow
10
Yugoslavia: Looking Ahead
11
France: New Look in Aid
12
Law of the Sea: Stagnant Waters
12
Romania: Ceausescu to Latin Ame
rica
MIDDLE EAST
AFRICA
13
Egypt: Sadat in Motion
14
Syria-Lebanon: Open Borders
1.4
Yemen: Iryani Makes a Move
t5
the Opposition
Eliminatin
ria
S
15
g
:
y
Greece: Guided Democracy
16
Pakistan: Disaster; Crackdown
WES
HEMISP
TERN
HERE
18
in Baluchistan
Argentina: Off and Running
19
Cuba: Breaking Isolation
20
Venezuela: Catch-up Politics
21
Bolivia: Banzer Thwarts Foes
21
Trinidad-Tobago: Political Stirrin
gs
22
Nicaragua: Opposition Opportuni
ty
22
Soviet Navy in Caribbean
SPECIAL
REPORT (Published separately)
Comments and queries on the contents of this
publication are welcome. They may be directed to
the edltar
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25X1
INDOCHINA
iburing the past wee m en con-
tinued to brace for anticipated Communist at-
tacks. Although little significant fighting has
occurred since the bombing halt, major Khmer
insurgent forces remain within striking distance
on at least two fronts-the Routes 2 and 3 sector
and the Mekong River corridor.
Despite Sihanouk's recent claims to the con-
trary, the insurgents are likely to attempt some
sort of initiatives in the near future, but it is
doubtful whether it will be an all-out effort
against the capital's defenses. Many Communist
units in the Phnom Penh area were battered by
the last round of US bombing and have had only
a short period to rest and refit. Rainy season
flooding is probably hampering resupply efforts.
Even a modest series of attacks, however,
will provide an early and important test for
Phnom Penh's defenders. The psychological
impact of the cessation of US air support as well
as the Cambodian Army's ability to make effec-
tive use of the artillery recently provided by the
US for Phnom Penh's defense should rapidly
become apparent.
In the meantime, Cambodian Army leaders
have been distracted by the insurgent threat to
the provincial capital of Kompong Cham, 45
miles northeast of Phnom Penh. A number of
units from the capital's defense force have been
sent north to bolster the defenses around Kom-
pong Cham. Several outlying positions around
that provincial capital were overrun during the
week, others were evacuated, and Communist
gunners are now threatening to close the city's
airstrip. At week's end, Kompong Cham's defend-
ers were manning a perimeter between two and
five miles from the city's outskirts. While Kom-
pong Cham does not appear in danger of immi-
nent collapse, a prolonged insurgent siege does
seem likely.
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Page 1 WEEKLY SUMMARY 24 Aug 73
Kompong Cham
Prey Veng
eak Luong
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pleting a Lao settlement. In the early hours of the
(*coup attempt, the US charge voiced his strong
opposition in conversations with the plotters and
with key right-wing political and military leaders.
The collapse of the coup was due in no small
measure to this action. More important, it put the
rightists on notice that the US is firmly behind
Prime Minister Souvanna and his efforts to form a
General Ma
' iThere is no evidence to link rightist political
Wand military leaders with Ma's plot. Ma, however,
The collapse of General Ma's quixotic putsch -7 almost certainly acted in the hope of attracting
rightists have been dissatisfied with the draft
agreement worked out between Souvanna and the
Communists. Souvanna suspects that the plot was
backed by the Thai Government and was
intended to restore former right-wing strong man
Phourni Nosavan to power. Phoumi has been in
exile in Thailand since 1965 and may well have
been involved, but there is no evidence of Thai
new coalition government with the Communists.1 Government complicity
'f General Ma's latest attempt at a coup was
even more poorly organized than his previous
effort in 1966. Ma, who had been in exile in
(9 Bangkok since that failure, crossed the Mekong
with only about 60 supporters and reportedly was
joined by some 200 others in Vientiane. His move
completely surprised the Lao Army commanders,
and he managed to seize control of the capital's
radio station and main airfield. Within seven
hours, however, these installations were re-
captured and Ma was executed.?
45 fter he clears away the fallout from this
episode, Souvanna will move quickly to urge a
speedy end to right-wing opposition regarding the
draft accord. The rightists may again broach their
familiar arguments, which just before the coup
provoked a threatened resignation from Sou-
vanna, but they now must realize they are in an
even poorer position than before to oppose
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Page 2 WEEKLY SUMMARY
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The Nonaligned Meet Again
ID [Representatives from more than 60 self-
styled nonaligned nations will meet in Algiers
from 2 to 8 September. They hope to demon-
strate to the great powers that the nonaligned
movement is a force not to be forgotten in to-
day's changing world. In reality, the concept of
nonalignment has been losing momentum in re-
cent years, and the trend is not likely to be
reversed by the Algiers meeting, which will be
marked more by rhetoric than by accomplish-
ment
10 CThe nonaligned movement was a stepchild of
the cold war, and it has lost its original purpose
and thus its cohesiveness. A crucial issue the dele-
gates will have to face is what, if any, role their
movement can play in the multipolar world of the
1970s.7
0 (Major changes have also taken place within
the movement. Of the four original promoters of
nonalignment-Nehru, Sukarno, Nasir, and Tito-
only Tito is still living. Since the third nonaligned
summit in Lusaka in 1970, states like Algeria have
taken the lead in efforts to keep the movement
alive]
el (The first two days of the meeting will be
voted to consultation among foreign ministers,
de
at which time the questions of seating and most
conflicts concerning draft resolutions will be re-
solved. Prince Sihanouk's delegation and one
from the Provisional Revolutionary Government
of South Vietnam are expected to be seated. The
heads of state will meet from 5 to 8 September?
9 (The agenda is broad enough for all partici-
pants to accept and will yield a wide assortment
of resolutions. The assembled nonaligned leaders
will:
? condemn Israel and call for more sup-
port of the Arab cause;
? denounce the Portuguese, Rhodesian,
and South African governments and call for
more support of African liberation move-
ments;
? castigate US policies in Indochina;
? call for closer economic cooperation
among nonaligned states;
) c iMost delegations will prefer resolutions that
reflE!ct consensus, and this desire will help moder-
ate them. The tone of the final declarations will
depend, in large measure on how forcefully these
voices for moderation are raised and whether the
moderates are well enough organized to deal with
constant pressure from radical delegations. The
resolutions will almost certainly be presented to
the UN General Assembly in October, but there is
Selected Delegates Expected To
Attend The Nonaligned Conference
Algeria
Cambodia
(exile gov't)
Chile
Cuba
Egypt
Ethiopia
India
Indonesia
Ivory Coast
Kuwait
Liberia
Morocco
Nigeria
Saudi Arabia
Sri Lanka
Syria
Tanzania
Tunisia
Yugoslavia
Zambia
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Page 3 WEEKLY SUMMARY
President Boumediene
Prince Sihanouk
President Allende
President Dorticos
President Sadat
Emperor Haile Selassie
Foreign Minister Singh
Foreign Minister Malik
President Houphouet-Boigny
Amir Sabah
President Tolbert
King Hassan 11
General Gowon
King Faysal
Prime Minister Bandaranaike
President Asad
President Nyerere
President Bourguiba
President Tito
President Kaunda
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no assurance that all nonaligned states will sup-
port them there
9 [Algerian President Boumediene, who has de-
voted much time and effort to the preparations,
believes Algeria's role as a leader among develop-
ing nations and his own stature will be greatly
enhanced by the meeting. He has dispatched
numerous special envoys to attract the largest
possible attendance by heads of state. A large
number of Algerian ambassadors have been called
home to help with the meeting, and the entire
protocol office of the Foreign Ministry has been
assigned to assist. Algeria's total expenditures
may run as high as $25 million.
CH/LE
C-11 * I,.. 0 + t 4)
tThe return of military officers to President
Allende's cabinet, far from easing Chile's unhappy
situation, has added to the tensions both among
civilians and in the armed forces. Divisions within
the government, the opposition, and the military,
however, have thus far checked cohesive or deci-
sive action. Right now, leftist extremists, in-
cluding increasing numbers of Socialists, appear
to be best prepared to exploit the confusion.
When General Ruiz resigned in frustration
on 17 August as minister of public works and
transportation, Allende maneuvered him out of
his post as air force chief as well. There was
immediate pressure from within the navy and air
force to defy Allende's latter move, but Ruiz'
own confusion over what had happened delayed
and ultimately defused any military response. The
President responded by finding two other air
force generals to take Ruiz' jobs and by refusing
the resignations proffered by the navy and army
chiefs.
Resentment of Allende's self-serving manipu-
lation of the military's dedication to constitu-
tional government is spreading rapidly in the
armed forces. Mistrust and jealousy still split the
services, however, and even the officers most
anxious to act are uncertain of support and fear-
ful of what would follow an unsuccessful coup
attempt. Allende has been adept at culling out of
the service officers who might become effective
opponents.
Poor timing and deep divisions also fritter
away the chances of the many political, eco-
nomic, and professional groups that oppose the
Allende government for varying reasons. Protest
stoppages by retailers, doctors, and others were
piecemeal and largely uncoordinated and were
not even called in Santiago until a month after
the truckers' strike began. The National and
Christian Democratic parties vie to write ineffec-
tual legislation in the wistful hope it will stiffen
the military resolve. Squabbling among the Chris-
tian Democrats gives Allende an opening to culti-
vate the party's leftist stalwarts. Further revela-
tions of the irresponsible antics of rightist extrem-
ists are another government advantage.
Women are beginning to play a larger role on
all sides of the struggle. Among the most active
are many radical Socialists like Senator Maria
Elena Carrera. Along with the Movement of the
Revolutionary Left and many other Socialists,
these radical women are trying to force Allende
into a harder line against the opposition and the
military malcontents. They would like him to
abandon his obsession that his moves to socialize
Chile must have a legalistic facade. The leftist
extremists have been concentrating on organizing
and arming workers, and the Communists are
using the same methods to compete for major
labor influence. These methods also carry a grow-
ing threat of more serious violence, and this
deeply concerns the armed forces, which so far
have done little about them.l
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17 [Already plagued by the world's most rapid
inflation rate, by proliferating black markets, and
by widespread shortages, Chileans now face new
privations brought on by the transport strike. For
four weeks, the bulk of the nation's trucks have
been sidelined; food, fuel, and raw material short-
ages are becoming serious and are forcing many
factories to close. The Allende government has
done better in organizing other means of trans-
portation this time than during the truckers'
walkout last October, but stocks of many essen-
tial materials were much lower when the latest
strike began. As a result, construction activity is
grinding to a halt, and seed and fertilizer deliv-
eries to farm areas are lagging.?
Ifs trhe strike could be working to Allende's
advantage by giving him a ready excuse to explain
away many shortages that would have occurred in
any event. This may not do him much good, since
more severe shortages of foodstuffs, particularly
bread, and other essential consumer goods appear
inevitable. Even though Buenos Aires has now
agreed to honor its commitments to provide
wheat, the delay caught Chile with inadequate
stocks and the country could run out of grain
before Argentine shipments begin to arrive.
17 [The truckers' strike will make Chile's short-
age of foreign exchange even more critical. As of
March, Chile was $360 million in the red, and net
reserves have since fallen further. Record copper
prices this year offered some prospect of im-
proving Chile's trade deficit, but strikes have
sharply reduced copper shipments. An 11-week
walkout by miners at the large El Teniente mine
forced Chile to renege on most of its contracted
deliveries for June, July, and August. Copper
output was just beginning to recover when the
truckers' strike intervened to prolong the re-
cove!ry period]
116 ~ecause of this shortfall in export earnings,
Chile reportedly has been desperately seeking fi-
nancing for irnportsrlntil now, Chile's creditors
have been remarkably forebearing, but they ap-
pear to be adopting a more hard-nosed attitude.
The Paris Club denied Chile's request for debt
refir ancing. Although Allende may be able to
delay severe import constraints for a few months
by further borrowing, a severe curtailment of 25X1
imports combined with the drop in domestic out-
put makes a period of severe belt-tightening
inevitable.
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WESTERN EUROPE:
WHAT TO SAY
,11 [Four months after the US call for a fresh
look at the Atlantic relationship, Europe has
lingering doubts that a "declaration of principles"
will be ready for the expected fall visit by Presi-
dent Nixon. The political committee of the EC
agreed in July to work out US-European dis-
cussion topics for the ministerial meeting on
10-11 September, but no progress will be made
until working groups meet at the end of this
month. Meanwhile, NATO has been looking at
various draft declarations and will meet again on
27 August. The Europeans may in the end prefer
two declarations: one from NATO covering
defense issues and another from the EC dealing
with trade and monetary problems.]
IS rThe Dutch offered a draft NATO declaration
in late June. It was a comprehensive document
calling for common defense but emphasizing an
Alliance commitment to social justice and human
rights, particularly in the developing world. The
draft also aimed at safeguarding a "European
personality" within the Atlantic relationship."
;4 the British early this month offered a
shorter, more general draft to NATO. London
did, however, go beyond defense questions to
suggest eliminating conflicts in economic policies
and encouraging economic collaboration7Lon-
don's effort may raise objections from others
among the Nine that the draft has an insufficient
"European" focus. Despite an earlier reluctance,
Rome is now developing its own ideas for early
submission in NATO.
19 ton 16 August, the West Germans circulated
at NATO a wide-ranging draft declaration. While
noting the contribution that the EC "as a separate
entity" can make to international politics and the
""special endeavors" of the European members of
NATO for an increased common defense effort,
the German draft insists that the presence of US
forces in Europe is indispensable for maintaining
a balance of power. The draft calls on the US to
reaffirm that it will keep its forces in Europe and
make reductions only within the framework of
mutual reductions with the Warsaw Pact. The
declaration also calls on the NATO allies to give
priority to the issue of burden-sharing, with par-
ticular reference to US forces in Europe.?
IIQ tThe French, obviously surprised at the Ger-
man initiative, commented that the drafting
process had proceeded more rapidly than Paris
had anticipated. The German move may add to
the recent, widely publicized French anxieties
over German foreign policy. French concerns
appear to be based in part on Bonn's readiness to
support US initiatives. Thus far, however, Paris
has given little inkling of how it intends to
respond, except to raise questions about the
North Atlantic Council's authority to draft a
document on Atlantic relations' the Paris press,
22rneanwhile, has taken the position that reports of
President Nixon's European trip and a prior visit
to Brussels by Dr. Kissinger are intended to force
the pace of European discussions on a set of
Atlantic principles.
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SOUTH VIETNAM: SAIGON SET FOR SWEEP
2-3IThe Senate election, to be held on 26 Au-
gust, is virtually certain to result in an impressive
victory for the Thieu government. Four slates of
candidates are competing for 31 of the Senate's
60 seats. The slate composed of members of Presi-
dent Thieu's Democracy Party and one headed by
former foreign minister Tran Van Lam, also
closely identified with the government, are
heavily favored.!
:Ltij VThe two nongovernment slates consist of
little-known figures. One of these lists, however,
has enlivened an otherwise lackluster campaign by
demonstrating considerable vigor and, while its
prospects of winning are poor, it could cut into
the government's margin. It has focused on eco-
nomic and financial issues, attacking government
corruption and inefficiency.]
2. 1lbespite the apparent certainty of the out-
come, Thieu and his advisers are taking no
chances and are running a tightly controlled cam-
paign. The campaign has been scheduled in such a
Y
Zr
way as to allow the candidates relatively limited
have cropped up prior to virtually all recent na-
tional elections, but the balloting has almost
always gone off quietly. The government report-
edly believes that some An Quang Buddhist lead-
ers are trying to persuade their followers not to
take part in the election. The Buddhists and other
opposition groups chose not to run candidates in
the election, but there are few signs that they are
doing much to block the government effort to
dominate the election
'DESPITE THE APPARENT CERTAINTY OF
THE OUTCOME, THIE U AND HIS AD-
VISERS ARE TAKING NO CHANCES....
THIEU WANTS A CLEAR PRO-GOVERN-
MENT MAJORITY IN THE SENATE....
contacts with the voters and with the press. Thieu 3 On 21 August, North Vietnamese gunners
wants a clear pro-government majority in the launched their heaviest artillery and mortar bar-
Senate, which has been almost evenly divided i' rage since June. The attacks against government
between pro- and anti-government forces, so that positions south and west of Hue were intended to
he can strengthen his position by putting through3 1 discourage the government from strengthening its
certain constitutional amendments. Moreover, he ,& defenses in the area. South Vietnamese troops
wants a large turnout in order to demonstrate his have been trying to secure mountain-top observa-
strength throughout the country? 3 'tion posts that overlook Communist infiltration
23 fit seems unlikely that either the Communists
or non-Communist opposition groups will make a
4' major effort to disrupt the election or to embar-
rass the government. Reports from scattered areas
r indicate that the Viet Cong will try to persuade
voters not to go to the polls or to cast blank
J ballots if they are forced to vote. Similar reports
routes, and engineering units have been pushing
to complete all-weather roads to the posts before
the monsoon rains start in October. Although this
action shows that the Communists are prepared
to react sharply to government operations that
they consider a threat to their security, there is
no evidence that they are ready to resume any
large-scale operations.
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SOUTH KOREA: LINKS TO JAPAN
am Japan's involvement in South
Korea's economy is growing as trade,
aid, and investment activity expand.
The trend is not likely to be altered
either by Japanese moves to expand
economic ties with North Korea or by
the reaction in Japan to the kidnaping
in Tokyo of a Korean opposition
leader.
Japan has overtaken the US to
become the leading foreign investor in
South Korea; indeed, during the first
half of the year, Japan accounted for
nearly all of the record $170 million
in new foreign investment approved
by Seoul. Almost all Japanese invest-
ment has been in export-oriented in-
dustries, notably electronics, textiles,
and toys. In fact, of the 95 firms
admitted to the Masan Free Export
Zone, a new industrial complex, 76
are Japanese and another 11 are joint
ventures by Japanese and Korean
firms. Recent currency realignments,
which make it difficult for producers
of light manufactured goods in Japan
to compete with low-cost Korean sup-
pliers, have encouraged Japanese to
shift operations to South Korea.
Japanese-owned firms now pro-
duce about one fourth of South Ko-
rea's exports of more than $2 billion a year. A
large share of these-40 percent-go to the US
market, but the portion being shipped to Japan is
growing. Last year, roughly 25 percent of South
Korean exports went to Japan and the figure
could exceed one third this year. Japanese sales
reached almost $1 billion in 1972. A large part of
these are intermediate products, such as synthetic
fabrics and fibers, which are processed in South
Korea into finished goods for Japanese use or for
export to the US.
South Korea now obtains about 40 percent
of its imports from Japan. Although Japanese
sales to South Korea are increasing rapidly, Japan
is losing ground to the US, partly as a result of
the currency adjustments that have strengthened
the US competitive position. Moreover, Seoul is
actively encouraging purchases from the US by
sending out special buying teams.
So far, Seoul has shown few reservations
about its heavy economic reliance on Japan and,
in fact, is looking to Tokyo as a prime supplier of
aid funds during the next several years. The South
Korean Government is seeking $3 billion in trade
credits, export-import loans, and development
loans. Although Japan's offer of funds usually
falls short of what Seoul requests, large sums
should be forthcoming. Seoul's recently an-
nounced Heavy and Chemical Industry Develop-
ment Plan presupposes large-scale investment
from both Japan and the US.
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33r hina's leaders continue to meet nightly in
small sessions, as they have since early August.
3y Peking has maintained a tight clamp on the pro-
ceedings, but some Central Committee members
from the provinces have probably participated in
the sessions. However, other members, including
one Politburo member, have remained in their
respective capitals, raising doubts whether a Cen-
tral Committee plenum has been in session)
33 Party congresses require extensive prepara-
tions, and these meetings are probably prepara-
tory to a congress this year. Moreover, the current
propaganda debate over a number of side issues
indicates that agreement on the major problems
will not be easy and that the preliminary work
now in progress could well be protracted. False
UN: COMBATING AIR TERRORISM
39 the International Civil Aviation Organiza-
tion, a non-political agency of the United Na-
tions, is embroiled in two of the UN's most dif-
ficult political issues: air terrorism and the Middle
East conflict. This week the council of the
international civil aviation group met in extra-
ordinary session and condemned Israel for its
hijacking of a Lebanese airliner and requested
that the organization's assembly consider "meas-
ures" against Tel Aviv. The assembly-which
begins a scheduled three-week meeting in Rome
next week-is likely to apply sanctions against
Israel and approve broader powers to takE: such
actions in the future. 39
# IThe problem of air terrorism has long dead-
locked the political organs of the UN. For more
. than a year the General Assembly has failed to
agree on any steps against terrorism, and the
Security Council was able last week to condemn
the Israeli hijacking only because it referred the
more difficult sanctions issue to the non-political
aviation group
gathering.
alarms can also be expected, such as occurred last
weekend when several thousand people met in
Peking's Great Hall of the People. This particular
meeting was over in three days, and its brevity
and size suggest that it was not a maior party
q (yen before receiving this mandate, how-
ever, ever, the aviation group was embroiled in the
problem of air terrorism. Both the airline industry
4'Oand member states have demanded that the organ-
ization act to discourage and prevent hijacking;
the Israeli incident only added impetus to these
demmands. Next week, the international pilots as-
sociation plans to dramatize its demands for
punitive action against hijackers by imposing a
24-hour ban on air service to Israel. Arab mem-
bers will meet to draft proposals for expelling
Israel from the International Civil Aviation Organ-
ization. At present, however, it appears that the
assembly will vote only to deny Israel a voice in
regional air navigation and technical planning, but
not to prevent its use of the airways.]
39' (Of more lasting significance may be the pro-
1#
41
posals which would give the aviation group
y' greater regulatory powers. Proposals to levy
specific sanctions against future violators of civil
aviation agreements and possibly create a body to
implement punitive action seem like) to be ac-
cepted. 25X1
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CEMA: ROADS TO MOSCOW
(4 2 "4 S)
he flurry of consultations involving East
European premiers reportedly focused on future
economic planning and particularly the need for
CEMA countries to integrate their economies
further. The consultations may also be related to
recent Soviet expressions of interest in a dialogue
between CEMA and the EC.
The series of talks began when Hungarian
Premier Fock visited Poland on 11-12 August;
Polish Premier Jaroszewicz went to Moscow on
14 August, and was followed by Fock on 16-17
August. Their East German counterpart, Stoph,
spent a day in Moscow on 20 August, and Bul-
garian Premier Todorov arrived on the same day.
Kosygin headed the Soviet delegation in
each of these affairs, and the lists of participants
were heavily weighted with officials concerned
with economic matters and with CEMA. Official
reports on the meetings stressed the integration of
East European economies and the use of the
1976-80 national economic development plans as
a means to that end. Vital aspects of the integra-
tion problem, such as Soviet raw material supplies
to its partners and production specialization, were
considered, according to a Moscow broadcast to
Poland following the Jaroszewicz visit.
make it more compatible with the EC. Some of
the urgency in the current round of meetings may
be explained by the fact that CEMA Secretary
General Fadeyev is supposed to leave in a few
days for a vacation in Denmark that is expected
to include informal contacts with the Danes on
EC-CEMA relations.
41tSuccession politics in Yugoslavia now in-
clude a plan for reshaping the Foreign Ministry in
order to institutionalize nonalignment before Tito
leaves the scene and to tighten federal control
over foreign policy in yet another attempt to
strengthen the central bureaucracy in preparation
for the post-Tito era.)
Y& lThe reorganization will probably take place
after next month's nonaligned summit in Algiers,
which Tito is slated to attend. The timing suggests
that Belgrade expects the Algiers meeting to re-
vitalize nonalignment and thereby enhance Yugo-
slavia's stature in the European security delibera-
tions to follow.]
The reports of the meetings also refer to
decisions taken by the party leaders at the Crimea
meeting in late July where economic integration 4& In the reorganization, the ministry's geo-
was discussed. Only the Romanians and Czechs . graphic arrangement will be replaced by a frame-
among the European CEMA members have yet to work that groups the nonaligned states together'
send economic delegations to Moscow. According he Foreign Ministry decision to take non-
to a Soviet diplomat in Bucharest, Romanian MQ alignment into account is in many ways long
Premier Maurer is supposed to have his turn in overdue. Tito was a founding father of the non-
September; it could be a difficult session. aligned movement. From Belgrade's point of
view, however, the new arrangement also reflects
Yugoslavia's search for mechanisms that will con-
The recent Soviet expressions of readiness to tribute to stability in the post-Tito era and at the
begin a CEMA dialogue with the EC have appar- same time show that Belgrade's commitment to
ently given new impetus to the long-term Soviet nonalignment transcends personalities,7tThe draft
effort to increase CEMA cohesion and perhapsrlatform for the party congress slated for next
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S2- he French aid program to Africa was begun
in the late 1950s in an attempt to preserve
France's political and economic influence in its
former colonies. The policy was successful at
Fofirst, but in recent years many leaders of French-
.47 Enother objective of the reorganization is to speaking African states have come to regard their
strengthen Belgrade's central authority over the special ties with France as a political liability.
conduct of foreign relations. Foreign Minister They now see the link to France as inconsistent
Minic has allegedly found it difficult to wrest with the demands for Africanization sweeping the
control of some aspects of foreign policy from continent and an obstacle to the development of
the republics and provinces, which got a say in closer ties with other African nations.'
spring describes nonalignment as an "indis-
pensable criterion" for Yugoslavia's activity in
international relations.1
foreign affairs under the decentralization of 1971.
Their subsequent interventions in minor disputes
with Yugoslavia's neighbors irritated the Foreign
Ministry. The answer is the establishment of a
"neighboring countries" group at the Foreign
Ministry to take care of such matters. 3
41? Iminic has stumped the fringe republics and
provinces in an effort to make the pill as palatable
as possible. Minic is probably prepared to sweeten
the new accumulation of power in Belgrade with
assurances of prior consultations with the re-
publics on touchy issues.
y7 [Aid does not always buy commensurate in-
fluence, and Paris has responded to the steady
erosion of its influence among French-speaking
African states by adjusting its aid policy so that
they will get a smaller part of French aid than in
the past. I
f9&? the French decision, reached at a 2 August
cabinet meeting with President Pompidou pre-
siding, preserves the priority position of the
French-speaking African countries, but provides
for a substantial increase in assistance to other
developing countries over the next two years. The
terms of French loans to these countries will be
eased and the government's investment guaranty
program revised to encourage private investment.
French aid contributions to international organi-
zations like the United Nations will be increased.1
$0 Poreover, French control over African
monetary policies through the mechanism of the
franc zone is now thought to have been respon-
sible for the slow pace of economic development.
As a result, several African states have left the
franc zone and the Afro-Malagasy Common Or-
ganization, an alliance of countries with strong
economic and political links with France. At the
same time, support for the OAU has been in-
creasing at the expense of what remains of French
influenced
,Q, (Paris has not yet indicated in which new
areas it will provide aid, but commitments already
have been made to increase existing government
assistance and private investment in Indochina. In
any case, the aid programs are likely to be imple-
merited slowly and administered with a close
regard for their contribution to French policy
obje!ctives.7
s/ During 1972 France disbursed some $1.3
billion in aid to the underdeveloped world,
second only to the US among the Western na-
tions. This aid amounted to 0.7 percent of the
French gross national product, placing France
well ahead of other major donors in this respect.
About 40 percent of this development aid went
to the overseas departments and territories, whose
residents are French citizens, thus placing France
in the somewhat unusual position of providing
foreign aid to its own citizens. Other franc zone
and Maghreb countries account for another 45
percent of the French aid budget. Algeria contin-
ues to be the major recipient, receiving consid-
erably more aid than the 25 poorest countries
combined. 25X1
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LAW OF THE SEA: STAGNANT WATER
The UN Seabed Committee mec~ week in
Geneva in its final session prior to the Law of the
Sea Conference scheduled for early next year in
Santiago, Chile. As in earlier sessions of the com-
mittee, progress toward agreement was slow and
piecemeal. Although the US draft treaty was gen-
erally well received, discussion focused upon
specific items rather than on an overall rule of law
governing all aspects of maritime transport and
mineral and organic resources. The modest pro-
gress the session made was primarily in the area of
defining positions, often broadly, on the width of
territorial waters, the navigation through straits,
the basis for and permissible extent of economic
zones, and resource ownership and exploitation
rights in the deep ocean.
Delegates of the 91 states represented in
Geneva have made little progress in reconciling
the divergent interests of coastal, landlocked,
archipelago, developed, and developing states.
Speculation is already being heard about a second
Law of the Sea Conference, perhaps in 1976.
While the attempt is being made to draft an
international Law of the Sea treaty, a common
law is being created by the practices of nations
and industries. States are claiming, and industry is
exploiting, more and more of the "international"
ocean areas which the treaty is supposed to gov-
ern. Since preparations for the conference began,
the number of states claiming resources more
than 200 miles off their coasts has more than
doubled. Deep-sea mining, meanwhile, has gone
well beyond the 200-meter depth, where, some
hoped, international regulation would begin. The
diplomatic pace thus lags far behind that of
technology, which is expanding the potential
access-by the richer countries-to ocean re-
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Countries Ceausescu will visit
Cuba Ecuador
Costa Rica Peru
Venezuela Chile
Colombia Argentina
Page 12 WEEKLY SUMMARY
CEAUSESCU TO LATI AMERIC
t~ G~ - tr0
[President Ceausescu is slated to depart late
this month for a month-long tour of eight Central
and South American countries. The trip is clearly
intended to strengthen Romania's international
position and promote trade with these nations. A
more subtle objective of the visit is to involve
Romania more deeply with nations that may
share its sensitivity to real or imaginary manipula-
tion by big-power blocs. Ceausescu hopes that the
trip will at a minimum give him some leverage to
counter Soviet pressure on Romania to retreat
from its hard won freedom of maneuver. This
would take the form of joint declarations
stressing such principles as sovereignty, equality,
Fidel Castro will have a chance to repay the
hospitality accorded him by President Ceau-
sescu in May 1972, when the Romanian
leader begins his tour of Latin America with a
stop in Havana.
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independence, and non-interference in internal
affairs.
Ceausescu will also seek to increase Roma-
nian trade with Latin America, and may provide
additional aid to these nations. Until now, Bucha-
rest has provided only token development aid to
Latin America, and its trade has been very small.
Ceausescu hopes to increase sales of railroad and
agricultural equipment and to expand the scope
of Romania's involvement in Latin America's
petroleum industry.
At the top of his list is a joint venture with
Venezuela for the exploration and development
of oil resources in Venezuela's Orinoco Basin.
Romania is also exploring the possibility of joint
ventures with Chile to develop that country's
petroleum potential, and similar offers have been
made to Ecuador, Costa Rica, Peru, and Colom-
bia.
The trip has the added advantage of empha-
sizing the balanced nature of Bucharest's ap-
proach to international relations. No dramatic
developments, are expected; however, Ceausescu's
absence from Romania for a full month does
demonstrate his confidence in the stability of his
regime.
EGYPT: SADAT IN MOTION
ell
'resident Sadat will be` buy hen ext few
weeVs. The union with Libya is scheduled to be
proclaimed on 1 September, and if all goes amica-
bly, Sadat will meet with President Qadhafi in
either Tripoli or Cairo around that date.
Sadat was scheduled to make a quick trip to
Saudi Arabia late this week, and he will probably
meet with UN Secretary General Waldheim during
the latter's visit to Cairo 31 August - 2 Septem-
ber-simultaneously with the scheduled union
declaration. Sadat will then attend the nonaligned
conference in Algiers on 5 September, and meet
with a number of Arab heads of state who pass
through Cairo on their way to Algiers. Sadat may
be working up to an Arab summit conference
sometime after the nonaligned meeting. His ef-
forts to improve relations with Jordan could lead,
.although this is somewhat more doubtful, to a
:separate summit with King Husayn and Syria's
President Asad.
Most of this activity will detract measurably
from the fanfare surrounding the Egyptian-
Libyan union proclamation, and this could well
be deliberate on Sadat's part. His recent efforts to
generate greater pan-Arab cooperation have
broader purposes, but they are intended in part as
an insurance policy against the failure of merger
and to demonstrate that Egypt can get along
quite well without Libyan money.
Sadat's activities stand in direct opposition
to Qadhafi's policies: Qadhafi rejects the nego-
tiating process that Waldheim represents, will
probably not attend the nonaligned conference,
and regards Saudi Arabia and Jordan with out-
right hostility. Sadat obviously does not mind,
and indeed may relish, whatever ire his actions are
raising in his Libyan neighbor.
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SYRIA-LEBANON: OPEN BORDI RS
Iayria reopened its border with Lebanon on
17 August after Beirut had acquiesced in at least
some of Damascus' conditions. The Asad govern-
ment closed the frontier during the fighting be-
tween the fedayeen and the Lebanese Army last
May, both as a show of support for the fedayeen
and to prevent them from being driven into Syria
where they are not welcome.
Once the border was sealed, Damascus put
pressure on Lebanese President Franjiyah to come
to terms with the fedayeen and to make a number
of other concessions, including better working
conditions for Syrian laborers in Lebanon.
Damascus reportedly also demanded that the
Lebanese hand over several dissident Syrian exiles
and arrest a number of Lebanese politicians hos-
tile to the Asad regime, but this condition seems
to have been dropped.
The formation of a Lebanese cabinet with a
prime minister and interior minister acceptable to
the fedayeen paved the way for border talks that
began early this month. The Lebanese negotia-
tors' major concession appears to have been on
improving the lot of Syrian workers, but a series
of post-settlement meetings has been scheduled to
draft agreements on other matters. The border
reopening will ease pressures on the Lebanese
economy. Conservative press and business inter-
ests have charged that the government has capitu-
Page 14
laced, however, and that the wage and benefit
increases promised Syrian workers will in time
place an unacceptable burden on the Lebanese
economy. Foreign Minister Naffa has sought to
quiet domestic critics by implying that he gave
minimal ground.
YEMEN: IRYANI KES A P-4OVE
1 P6
'President Iryan of Yemen (Sana) has sub-
mitted his resignation. Since it cannot become
effective until it is accepted by the legislature,
which began a two-month recess last week, Iryani
has room for maneuver and plenty of time to
withdraw the resignation if he wishes.
Iryani's action may be a tactical maneuver to
gain political advantage. He has employed the
same stratagem on a number of occasions in the
past, He may now anticipate that action will be
taken to persuade him to remain in office. He
would then be in a stronger position to deal with
rivals within his regime-including Prime Minister
Hajri-and with pressures from abroad.
Iryani's move may, in part, have been pre-
cipitated by Saudi meddling in Sana's domestic
politics. Stories have appeared recently in the
Arabic pressalleging that the Saudi ambassador to
Sana is maneuvering to bring down the present
government and replace it with one that will
support a more aggressive stance toward the left-
ist regime in Aden.
Should lryani's resignation be accepted,
serious domestic repercussions would be likely to
follow. lryani is virtually the only Yemeni leader
on the scene today with any chance of bridging
the country's political and sectarian divi-
sions.
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SYRIA: ELIMINATING THE OPPOSITION
'IThe government reportedly arrested a
number of dissident Syrian Nasirists and
members of the Muslim Brotherhood late last
month. The wave of arrests followed a spate
of reports and rumors of an assassination at-
tempt on President Asad and an earlier round
of arrests of army officers. The Syrian se-
curity service may, in fact, have moved to
pre-empt a coup plot, or simply to purge
Asad's opponents, particularly in the army,
before they could mount a serious challenge
to the regime.
GREECE: GUIDED DEMOCRACY
M+ a etas
George Papadopoulos marked his investiture
as Greece's new president this week with a flurry
of action to demonstrate the newest brand of
controlled democracy. In his inaugural speech on
19 August he announced the end of martial law,
the activation of certain constitutional guar-
antees, and a general amnesty for political prison-
ers. He also directed the constitutional court that
is to supervise the development of political parties
to begin its work in September and promised to
advance the date of parliamentary elections to
late 1974.
These measures, intended to give the im-
pression that the new republic is off to an
auspicious start, do not signify great change in the
nature of Papadopoulos' rule. The sweeping
amnesty was apparently granted over the oppo-
sition of some military members of the cabinet
who stand against any move toward more liberal
government. This and the ending of the state of
siege are aimed at critics at home and abroad who
have railed against the allegedly repressive nature
of junta rule. Those pardoned will be closely
watched; effective opposition by them in the near
future is unlikely. The recent naval mutineers will
almost certainly be cashiered or retired. Many of
the regime's most vociferous opponents are in
exile abroad, where they engage in loud but
generally ineffective anti-junta activities; such
critics as actress Melina Mercouri and Andreas
Papandreou, who have lost their Greek citi-
zenship, will not share in the President's inaugural
largesse.
The constitutional court very likely will not
charter political parties that espouse objectives
that differ from Papadopoulos' goals. Con-
sequently, approved political activity will be
minimal, and potential candidates for elective
office may have little choice but to join what in
effect will be a government party.
The seemingly self-assured President is not
without his problems. A delay until October in
forming a promised "political" cabinet suggests
that the removal from the government of military
members who were Papadopoulos' colleagues in
the 1967 coup is a delicate task. These men are
not eager to leave their positions, and the liberal-
izai:ion measures announced by the President may
increase their desire to stay on and slow the
movement toward the "new Greece" envisaged by
Papadopoulos. The prospect for recruiting
hopeful politicians to take part in the promised
elections is not very bright; most politically
ambitious Greeks doubtless would rather avoid
serving with the junta government in any of its
Papadopoulos takes oath of office
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SLCKL I
p'S? Pi)
Punjab Province has been devastated by the
worst floods "in living memory." The government
relief commissioner estimates that 1 million
homes were destroyed, leaving 8 million people
homeless. Roads, rail lines, bridges, power lines,
and irrigation canals were all severely damaged.
About one half of the area planted to summer
crops has been affected. Damage to standing
crops may exceed $250 million; cotton and rice,
the country's major foreign exchange earners,
were the hardest hit. In addition, over one million
tons of stored wheat has been lost or damaged.
Flood waters, now receding in the Punjab, are
moving south down the Indus River into Sind
Province.
Islamabad has appealed for food, blankets.
tents, medicines, clothing, and boats and heli-
copters for rescue operations. Airlifted relief ship-
ments are already arriving. Medicines have been
donated by the UK, Iran, and various UN agen-
cies. The US has provided six helicopters, ten
rescue boats with crews, and the equivalent of
about $100,000. Islamabad estimates that to
compensate for lost food stocks and damaged
crops, food imports next year will have to be
increased by a million tons of wheat, 500,000
tons of corn and sorghum, and 30,000 tons of
edible oil.
On the Indian side of the border, the floods
were less severe. In Kashmir and Punjab states
about 20,000 persons are homeless; food losses,
however, were minimal. New Delhi appears to
have the situation under control and is not seek-
ing outside relief.-)
CRACKDOWN IN BALUC ISTAN
j I - q,)
Prime Minister Bhutto has once again re-
sorted to the stick in his dealings with the opposi-
tion, arresting a number of anti-government poli-
ticians in the province of Baluchistan. Reaction
has been strong both from opposition groups in
Pakistan and from neighboring Afghanistan,
where Mohammed Daud, a long-time advocate of
independence for Pakistan's frontier provinces,
recently returned to power.
Last February, Bhutto dismissed the opposi-
tion-controlled government in Baluchistan, a
sparsely populated area where politics is domi-
nated by the tribes. In the following months he
limited himself to political maneuver in an effort
to secure a majority in the provincial assembly for
his supporters. He was not successful, and the
arrests last week-including the former governor,
the former chief minister, and the head of the
largest political party in the province-signal the
beginning of a tougher approach to the politics of
the province.
Several factors influenced Bhutto's decision
to crack down:
? Under the new constitution, which went
into effect on 14 August, the provincial as-
sembly elects the chief minister; with
Bhutto's supporters still in a minority it was
likely that the opposition would return to
office. Now Bhutto has arrested enough pro-
vincial assemblymen to give his followers a
majority, and his choice to head the provin-
cial government has been sworn in.
? The combined opposition planned to
begin a nationwide protest on 24 August
against Bhutto's "repressive" policies. Bhutto
may have intended the arrests partly as a
warning to other opposition leaders.
? Bhutto has long suspected that the
USSR and Afghanistan are in league with his
opponents in Baluchistan and the neighboring
Northwest Frontier Province. There is no
good evidence to support his view, but his
sensitivity to the problem was heightened by
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Punjab
the coup last month in Afghanistan. The new
rulers in Kabul are more disposed to meddle
in Pakistan than their predecessors and have a
reputation for being more pro-Soviet.
In recent months tribal violence in Baluchis-
tan has increased, although fighting has not
approached the level the province has experienced
at times over the past two decades. Two of those
arrested, however, are chiefs of major tribes, and
a further, perhaps significant, increase in violence
is a distinct possibility.
Kabul has so far limited itself to a strongly
worded protest and requests to the US, USSR,
and Iran to use their good offices to prevent a
wider deterioration in Afghan-Pakistani relations.
Afghan leaders warn that if fighting breaks out in
Pakistan, Afghanistan may have no choice but to
become involved. President Daud tried to foment
tribal rebellion in Pakistan when he was in power
in the early 1960s. Although he failed then, he
may be tempted to try again.
There is deep distrust between Bhutto and
his opponents, and both the Afghans and Pakis-
tanis have a long history of political miscalcu-
lation and overreaction. Although Bhutto has
previously been able to resolve a number of
confrontations through last-minute compromises,
the possibility remains that the interaction of the
various parties to the dispute could lead to a
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Kas-hmir
Srinagar
Azad Kashmir
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Juan Peron and Isabel; Radical candidates Ricardo Balbin (R) and Fernando de la Rua
ARGENTINA: OFF AND RUNNING
(q at - 17)
Fluan Peron formally accepted he presi-
dential nomination last weekend and kicked off
his campaign with a dramatic speech before the
Justicialist Party convention. He made another
strong pitch for the support of moderates who
form the backbone of his diverse movement, de-
fended the Peronist administration from charges
that it is disorganized, and stressed that recon-
struction could not be accomplished overnight.
Peron's emphasis on the importance of party
unity was intended to reassure the mainstream of
his supporters at a time when militant left-wing
Peronists reportedly are planning violence in
pursuit of their "revolutionary" objectives. By
urging "naive youths" who disagree with the
government to be patient until "we are firmly in
power," Peron seemed to be holding out the
promise of a more radical program in the future.
The youth wing has grown disillusioned with
Peron, his advisers, and his policies-all of which
the youths regard as reactionary. Meanwhile,
Peron left no doubt as to his antipathy for the
left-wing terrorists when he stated that the task of
pacifying the country must continue if disaster is
to be avoided.
Peron recounted the economic mistakes of
previous governments and repeated earlier charges
that the Peronists had inherited a disastrous sit-
uation. He clearly was cautioning those who
would push for immediate radical solutions and
appealing for more time to find remedies for
Argentina's ills.
Though Peron talked of national unity and
called opposition leaders "friends," his recent
actions suggest that any thought of consensus
politics has been abandoned in favor of the highly
partisan battling that has always characterized
Argentine politics. Radical Party leader Balbin,
the major opposition candidate, has begun to hurl
invective at the Peronists, and many Radicals
reportedly are disgusted at being outmaneuvered
by Peron who led them to believe he wanted a
political alliance.
The only other politicians to join Balbin so
tar in opposing the team of Peron and wife are
the Popular Democratic Party's candidate, Fran-
cisco Manrique, who has been weakened by de-
fections to Peron, and Juan Carlos Coral, the flag
bearer of the minuscule Socialist Workers Party.
Peron was spared a challenge from the left
when firebrand Marxist union leader Agustin
Tosco in Cordoba declined to run. Tosco might
have made inroads into the Peronist vote by
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attracting dissident left-wing youth, but Peron's
commanding margin and the Communist Party's
warning against splitting the left apparently
caused Tosco to back away. Tosco's withdrawal
will leave leftists-particularly dissatisfied Peronist
youth-with little recourse other than to cast
blank ballots.
In fact, the only doubt about the outcome
of the election is whether Peron can play his cards
well enough, now that he has turned his back on a
national front, to equal or top the 50 percent of
the vote awarded Campora in March. Anything
less would require a second round of balloting-an
embarrassment that Peron would certainly prefer
CUBA: BREAKING ISOLATION
(a8 -to6)
(Fidel Castro's trip to Guyana early next
month may presage an exchange of diplomatic
missions. Havana also appears to be on the verge
of re-establishing commercial ties with Honduras,
an action that would have considerable impact on
the OAS and the sanctions it imposes on Cuba.
The details of Castro's trip to Guyana prob-
ably were smoothed out during the visit of a
Cuban delegation to Georgetown earlier this
month. Arrangements were also made for the
establishment in Guyana of a base for Cuban
fishing boats working the waters off South
America's northeast coast. The Cubans conducted
a similar operation several years ago from French
Guyana, but the limited facilities made available
to them in Cayenne forced them to, terminate it.
Crews for the fishing boats will be shuttled
between Havana and Georgetown by Cubana
Airlines-thanks to the recently signed Cuba-
Guyana air transport agreement-and the catch
presumably will be processed in Guyana and
shipped directly to European markets.
In return, the Cubans apparently promised
to provide Guyana with technical assistance, most
likely in agriculture and fishing, and may have
discussed additional purchases of Guyanese
timber. The first shipment of timber under the
agreement signed in June is now scheduled to
leave Guyana in September. Regular air service
between Havana and Georgetown-with probable
eventual onward passage to Africa-is expected to
begin before the end of the year.
An air service agreement was also signed this
month with Trinidad and Tobago. The Cubans
already have such an agreement with Barbados,
and one with Jamaica may be in the offing. A
Cuban delegation now in Kingston is probably
pressing for an exchange of ambassadors to
f=ormalize relations established last December.
Havana has responded favorably to feelers
from the government of Honduras, which wants
1o buy 10,000 tons of sugar. Although Cuba's
production this year is already committed,
Havana is said to be willing to use sugar pre-
viously earmarked for domestic consumption in
order to close the deal. Cuba obviously attaches
political significance to trade with Honduras, a
country which has heretofore stood firmly behind
the OAS sanctions imposed on Cuba.
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SLUKt I
VENEZUELA: CATCH-Up POLITICS
t o"i -'u,)
resident Caldera appears to be planning a
number of moves to attract leftist and nationalist
support for his party's presidential candidate in
the election on 9 December.
According to recent public opinion polls,
Lorenzo Fernandez of the incumbent Social
Christian Party, Copei, trails his major opponent,
Democratic Action's Carlos Andres Perez, by a
substantial margin. Copei leaders see a need for
some spectacular, probably nationalistic, moves
to redress this situation. Their aim would be to
divert attention from issues such as corruption,
food shortages, and inflation in the hope of
ensuring that the party will stay in power for
another five years. 25X1
25X1 Some announcement regarding relations
with Cuba is probable in a few weeks.
aldera plans
to meet Fidel Castro when his plane refuels at the
Havana airport on his way to the UN General
Assembly session in September. Caldera report-
edly will invite Castro to come to Caracas this
fall.
Campaign posters in Caracas
ment. aware of the armed forces' concern,
The reaction of the anti-Communist Vene-
zuelan military would likely be reserved. Military
leaders remember the losses suffered by counter-
insurgency units in the 1960s, and a Castro visit
would irritate some of them. The Caldera govern-
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Page 20 WEEKLY SUMMARY
caution of informing them in advance of major
policy changes.
Suggestions that the government party may
take action against the US oil companies seem less
likely. Some party officials have advocated na-
tionalization, but there is little evidence that the
government is planning such an extreme move
now. Recently, the petroleum minister said that a
formal decision had been taken to nationalize the
oil companies before 1983, the date when their
concessions begin to revert to Venezuela. Al-
though the minister's remarks were later re-
tracted, the government may be attempting in
this way to intimidate the oil companies into
contributing to the Social Christian campaign.
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Political tensions will increase as the election
draws nearer, and unless there is marked improve-
ment in Lorenzo Fernandez' prospects, the
Caldera government could turn to desperate meas-
ures. The Democratic Action party is preparing
for the worst, and the oil companies, caught in
this quinquennial exercise of political pressure
BOLIVIA: BANZER THWARTS FOES
(11? -118)
resident Banzer s handling of an alleged
coup plan last weekend seems to have strength-
ened his government. The dissidents, led by erst-
while government supporter Carlos Valverde, have
gone into exile in Paraguay and Brazil.
Valverde, a right-wing fanatic, reportedly
planned to launch an attempt against the govern-
ment on 18 August, while Banzer was celebrating
the second anniversary of his rise to power. Un-
fortunately for Valverde, however, police who
had been watching his house saw ammunition
being delivered and moved to arrest him on 17
August. Valverde escaped, and with about 200
armed supporters retreated to a nearby ranch.
They were surrounded by security forces, per-
sonally commanded by Banzer. When the troops
finally entered the ranch, the rebels had fled.
For some time Valverde has been seeking to
insert himself as leader of one of the two main
parties now supporting the government. At the
party convention, however, Valverde was expelled
from the party, which restated its support for the
President. His coup plan appears to have been a
last-ditch effort to galvanize opponents of the
Banzer regime, It was a dismal failure.
Banzer, who is scheduled to visit Washington
later this year, now seems to be in a reasonably
strong position for a Bolivian president. He has
not only demonstrated an ability to discover and
thwart plots, but has also kept together the fragile
coalition of parties that forms the basis of his
government. In addition, by taking personal com-
mand of the situation, he projected himself as a
vigorous man still capable of active military lead-
ership. Moreover, he has by and large retained the
support of the military, despite some discontent
among younger officers. All in all, Banzer, Bo-
livia's 187th president in 148 years of inde-
pendence, has shown he can maneuver well
enough to remain in office for longer than the
.average presidential tenure of nine
'TRINIDAD-TOBAGO: STIRRINGS
Prime Minister IN~illliiams,=faced with an in-
creasing number of thorny domestic problems, is
attempting to divert public attention with verbal
attacks on the US.
Trinidad's security forces have been unable
to track down a small band of self-styled guer-
rillas that has been attacking government facilities
in recent months. While the band poses no threat
to the government's existence, the continuation
of these hit-and-run raids will further undermine
public faith in the government's effectiveness.
This faith has already been weakened by rising
prices and the declining quality of public services.
Meanwhile, Williams, who has dominated the
governing People's National Movement for 17
years, faces a growing challenge from younger
party members. Attorney General Hudson-
Phillips, announcing that he will campaign for
election as party chairman, lashed out at the
'"aging" party establishment. Although the
40-year-old Hudson-Phillips did not criticize
Williams by name, the Prime Minister already has
moved to derail the campaign. Hudson-Phillips'
candidacy has triggered intra-party maneuvering
in anticipation of Williams' eventual retirement.
The Prime Minister's inability to resolve
these problems has been accompanied by his
growing obsession with "foreign interference"
arid frequent attacks on the US. The Prime Min-
ister also reportedly has become distrustful of his
cabinet ministers and may decide that a reshuf-
fling of his cabinet is in order.
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NICARAGUA: OPPOSITION OPPORTUNITY
(I Z:L - 12. 41
and labor are beginning
fNicaraguan politics
to change as a result of the earthquake in
Managua last December.
Discontent with the slowness and inef-
ficiency of the recovery effort has given opposi-
tion politicians their best chance in decades to
put together an effective anti-Somoza coalition.
Such efforts have failed in the past because they
were unable to offer a positive alternative to
Somoza's policies and were equally unable to
bury the hatchet and support a single candidate.
The opposition now has a better chance to
formulate a positive approach in the coming
campaign for the election next year, and the first
steps are being taken to select a single candidate.
The opposition plans to build its campaign
around need for more efficient government under
the demanding circumstances of reconstruction
and a rapidly changing society. Prior to the earth-
quake, the government could be run by one per-
son, but the opposition will emphasize the
present need for wider participation and greater
expertise, as well as a general overhaul of out-
moded administrative machinery. The opposition
hopes to play on the changing attitudes among
Nicaraguans. These changes are nowhere more
apparent than among the workers; strikes are
mushrooming as they realize more and more that
their skills are in great demand right now. The
apathy that perpetuated an economic gulf be-
tween the wealthy upper class and the docile,
poverty-stricken lower class is vanishing.
If the opposition politicians can stick to-
gether long enough to nominate and back a can-
didate, they must then try to hammer out a
constructive alternative to the Somoza regime.
Somoza is still personally popular with many-
perhaps a majority-of Nicaraguans and will be
hard to beat. There is, of course, no assurance
that the electoral registration system will be suf-
ficiently modernized by election time to prevent
the usual irregularities. Even so, if the opposition
takes full advantage of the opportunities it has
been given, it should at least emerge from the
contest with more unity and with a stronger voice
Earthquake in Managua
SOVIET NAVY IN CARIBBEAN
}x11 4 t%t
the Soviet naval group that arrived in
Havana on 4 August is in port at Cienfuegos after
12 days of exercises in the Caribbean.
The group, consisting of two guided missile
ships-a cruiser and a destroyer-and a nu-
clear-powered cruise missile submarine left
Havana on 10 August to practice gunnery and
refueling at sea and to conduct a joint anti-
submarine warfare exercise with Cuban naval
units.
This is the tenth visit of a Soviet naval force
to Cuba since 1969. If previous patterns are fol-
lowed, the group will remain in the Cuban area
for another six or eight weeks.
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"w
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INTERNATIONAL MONEY
I29.r I30
IThe dollar fluctuated sharply in heavy trad-
ing during the past week, showing a small net
overall advance against most major currencies. A
sudden fall in the dollar's value on Monday re-
flected dealers' expectations of continuing strong
West German trade performance and uncertainties
about US political developments. Higher short-
term dollar and Eurodollar interest rates remain
an important factor operating in the dollar's
favor. Sharp fluctuations also occurred in the gold
market, although gold prices showed little net
movement. 25X1
Changes in the Dollar Value of Foreign Currencies Since 19 March
(in percent)
23 August
16 August
9
August
27 July
11 July
6 July
Mark
+13.8
+13.9
+19.0
+23.1
+17.6
+25.1
French franc
+ 4.5
+ 4.8
+ 9.5
+12.5
+11.6
+19.9
Sterling
- 0.1
0.0
+ 0.8
+ 1.9
+ 3.6
+ 3.9
Yen
- 0.1
- 0.1
- 0.1
- 0.2
+ 0.2
+ 1.1
In the accompanying special report, New Departures in Burma,
these corrections should be noted:
-The date in the penultimate sentence of the Summary, Page 2, should be
-The full title of ASEAN, as discussed on Page 5, is the Association of
Southeast Asian Nations.
Page 23
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
New Departures in Burma
Secret
N2 42
24 August 1973
No. 0384/73A
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SLUKt I
Summary
Over the past decade, the government of Prime Minister Ne Win and his
military colleagues has been known tor its strikingly inept economic management,
its xenophobic withdrawal from world affairs, and an indigenous brand of "Burmese
socialism" along with repressive political control. Since the first of the year, a
number of important changes in Burmese policies have altered this picture. On the
home front the government has abandoned a key domestic economic policy of the
past seven years-government control over the domestic rice trade. Peasants can now
sell their stocks legally and at the best obtainable price.
Abroad, Rangoon seems to be coming out of its shell-responding like its
neighbors to a rapidly changing regional and international political environment.
Burma has called for a conference of Southeast Asian nations to work out ways to
establish a durable peace throughout the region. Ne Win himself has recently visited
Bangkok, Jakarta, and Kuala Lumpur in an effort to improve relations with some of
his Southeast Asian neighbors. Rangoon has also become more cooperative in
supporting US and UN efforts to deal with the international narcotics problem. In
foreign economic policy, the long-standing hostility toward foreign capital has been
modified. Burma has joined the Asian Development Bank, accepted new loans from
the World Bank and from Japan, and-perhaps most significantly-invited private
foreign oil firms, including some 35 American companies, to compete for contracts
to explore and develop Burma's offshore oil resources.
These changes do not mean that the Ne Win regime has abandoned its
commitment to socialism or its tear of foreign entanglements. In large measure, the
changes are pragmatic attempts to deal with the country's fundamental and long-
standing economic problems-symbolized by declining rice exports and dwindling
foreign exchange reserves. I he new departures may not last long enough to have a
long-term impact on domestic political developments. But after years of stagnation,
a process of change is under way. It is being firmly orchestrated by Ne Win and the
same group of army officers that have governed the country since 1972. There is no
indication that they will not continue to be the arbiters of power in Burma.
Special Report
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Prime Minister Ne Win
Shoring Up the Economy: Rice and Oil
The economic motivation-indeed neces-
sity-for new departures in Burmese policy was
signaled last April in Ne Win's remarks to an
extraordinary congress of the ruling Burma So-
cialist Program Party. In his opening address, the
Prime Minister candidly outlined the failures and
inadequacies of the country's economic perform-
ance. To get the economy moving, he argued, the
government would need the help of private busi-
ness-thereby reversing the regime's customary
practice of attacking, expropriating, and even im-
prisoning private businessmen. (Subsequently,
some 380 businessmen who had been jailed for
economic crimes were released from custody.) In
his closing address to the congress, Ne Win called
for a more pragmatic approach to foreign eco-
nomic policy, noting that the Western powers are
technologically superior to the Communist na-
tions and that Burma must choose from each
system that which can best be adapted to Bur-
mese socialism.
Special Report
The need for these significant changes is
directly related to Burma's severe rice shortage,
which is perhaps worse than the one in 1967. At
that time rioting became widespread once people
became aware that the government was continu-
ing to export rice while people were going hun-
gry. Burmese official statistics are always suspect,
but they show paddy production falling from
about 8 million tons last year to 6.8 million tons
this year. It may have been even lower. Rice
exports, 500,000 tons in 1972, will probably not
exceed 100,000 tons this year. Government pro-
curement has been a perennial problem. Prices
offered the peasants by cooperatives are consider-
ably below those obtainable on the black market.
In June the government reportedly had only
350,000 tons of rice in reserve to help meet
domestic needs until the next harvest, which be-
gins in December.
In an effort to circumvent the rice problem,
Ne Win accepted the pragmatic advice of a num-
ber of his military and ex-military colleagues:
first, on 21 April, he stripped the Ministry of
Cooperatives of its monopoly over rice procure-
ment and distribution; then, effective 12 May, he
lifted controls on internal trade in rice and wheat,
in the hopes of moving more grain to the market
place. These economic liberalization measures ap-
pear to offer some prospect for bringing the
Burmese economy out of the doldrums.
At the party congress Ne Win also set the
stage for a new departure in foreign offshore oil
exploration. On the day that he closed the con-
fere!nce, top American, Japanese, and West Ger-
man diplomats in Rangoon were informed that
Burma intended to invite private foreign oil com-
panies to compete for rights to explore and de-
velop Burma's offshore oil resources. In the past,
Rangoon had insisted that any external financing
for offshore exploration come from foreign gov-
ernments, not private oil companies. Drilling had
been undertaken in the Gulf of Martaban by a
Singapore-based American firm financed by a
$10-million loan from the Japanese Government.
The drilling had gone on for a year and a half, but
it had produced only five dry wells.
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SECKE I
Myi tkyina
Special Report
(trin
it Mandal
4Pt'Hil~ t , ~.
THAJLI ND
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t~tUNt I
New offshore surveys by one Japanese and
two American oil firms (Gulf and Amoco) may
have helped increase Burma's confidence in strik-
ing oil in commercial quantities. Ne Win also may
have acted under some pressure from pragmatic
Burmese military leaders-such as Brigadier Tin U,
the deputy minister of defense and vice chief of
staff of the armed forces-who are counting on oil
revenues to provide the foreign exchange needed
to buy new military equipment. Burma's foreign
exchange reserves have dropped to their lowest
level in 25 years, but there is little chance that oil
will make any significant contribution to earnings
for the next several years.
A More Outgoing Foreign Policy
The gradual emergence of Rangoon from its
diplomatic shell-dramatized by Ne Win's call for
a Southeast Asian peace conference-is probably
also related to the country's economic ills. Minis-
ter of Planning and Finance U Lwin has long
argued that Burma must expand its contact with
other nations in order to become solvent and that
such an expansion is possible without endangering
Rangoon's independence. But his recommenda-
tions ran up against the government's fear-based
largely on its long border with China-that the
only way to preserve Burmese independence is
"noninvolvement" with the great powers and
strict "neutrality" in conflicts arising out of dif-
ferences between Communists and non-Commu-
nists in Asia.
U Lwin's advice became less objectionable
with the announcement of the Vietnam cease-fire
and the great power moves toward detente. Ne
Win saw the shifting power balances as an oppor-
tunity to move back into the diplomatic com-
munity with little risk to Burma's "neutralist"
credentials. He also saw in these shifts a chance
for Rangoon and the Southeast Asian states to
work out some sort of modus vivendi with China.
As Ne Win sees it, the process would hopefully
draw Thailand and the other countries partici-
pating in the Association of Asian States
(ASEAN) away from what Rangoon regards as
"the association's pro-Western orientation." In
this sense, Ne Win can interpret his new flexibility
Special Report
Loading rice
as being in line with Burma's long-standing policy
of onalignment.
Nothing has yet come of Ne Win's proposal
for a peace conference, but he has not given up.
During his visit to Jakarta in June, he reiterated
his belief that the nations of Southeast Asia
should get together to discuss ways and means of
maintaining peace and stability in the region. He
has said that he wants all the states of Southeast
Asia to attend, along with the communist and
neutralist elements contending for power in Indo-
china-the Viet Cong in South Vietnam, the
Pathet Lao in Laos, and the Khmer Communists
in Cambodia. He has said he would exclude the
big powers (China, the Soviet Union, the US and
Japan), but he has not been consistent about
China. When he first discussed the conference
idea he definitely excluded China. Six months
later in Jakarta, he told the Indonesians he wished
Peking would take the initiative in convening such
a conference. Ne Win apparently believes that the
Burmese reputation for neutrality and nonalign-
merit will attract Communist groups to his
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Jtt:t-+(t t
proposal. In fact, his proposal is so amorphous
and ill-defined that it has stirred little interest in
any quarter.
Ne Win's long-range goals are to keep all the
big powers out of the region and to bring his
small neighbors closer to his own concept of
neutrality. He is troubled by Chinese support of
insurgency in the area and believes that a strong
regional forum not susceptible to great power
manipulation is the best way to discourage Peking
from this course. He is also intent on moving his
non-Communist neighbors away from close ties
with the US. He considers Thailand and the Phil-
ippines as much too closely associated with the
US and is increasingly suspicious of Singapore
now that Prime Minister Lee Kuan Yew has be-
come such an outspoken advocate of a continuing
US military presence in Thailand.
An improvement in relations with Thailand
will prove difficult. The Thai and the Burmese
have never been friends, and in recent years the
irritation level has increased because of Thailand's
willingness to allow former Burmese prime minis-
ter U Nu to base an insurgent movement in Thai-
land. Bangkok supported U Nu mainly because it
profited from the sale of arms and supplies to the
U Nu group. Now, after several years of very
Special Report
Temples at Pagan
limited results, U Nu's prospects do not seem to
be getting any better. U Nu has dropped out of
the movement, and the flow of money to the
rebels-primarily from foreign oil concerns-seems
to have dried up. For these and other reasons,
some elements of the Thai Government seem re-
ceptive to rapprochement with Burma. Ne Win
was warmly received during his recent trip to
Bangkok, and the Thais used the occasion to
announce U Nu's departure from Thailand. Never-
theless, there remain formidable obstacles in the
way of better relations-particularly Thai support
for ethnic insurgencies in Burma as well as
Chinese irregulars and Chinese nationalist intelli-
gence forces.
The maintenance of good relations with Pe-
king overshadows all of Rangoon's foreign policy
concerns. Indeed, Rangoon's strict adherence to a
nonaligned foreign policy is an outgrowth of this
need. Perplexed and disturbed by China's support
for the Burmese Communist insurgent movement,
Ne Win took up the issue with Chou En-lai when
he traveled to Peking in 1971. The Burmese seem
to have accepted the fact that there is little they
can do about it and that they must defer to
China's power. In view of Peking's current desire
for improved relations with its Southeast Asian
neighbors and its rapprochement with the US, Ne
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Win probably believes that his limited policy de-
partures will not cause Peking concern. The
Chinese have not in fact given any sign of dis-
pleasure over Rangoon's new economic or foreign
policy moves.
The Limits of Change
The new departures in Burmese policy sug-
gest a basic shift of influence within the circle of
advisers surrounding Ne Win. The pragmatic tech-
nocrats and generals such as U Lwin and Brigadier
Tin U, seem to have gained Ne Win's ear. The
left-wing ideologues who argue for political and
economic institutions patterned on the Soviet
model and who had the upper hand are certainly
unhappy with the changes. They lack the strength
to challenge Ne Win's authority.
The "Burmese road to socialism" and other
roots of Burmese policy are not being scrapped.
Rice policy, for example, could easily revert to
the old ways when the current shortages ease, or
the regime could turn to a more coercive ap-
proach to the Burmese peasant if the new policy
does not work. Recent reports of rice looting and
other problems indicate that the new approach is
hardly a panacea. Rising prices or more serious
rice shortages could easily lead to rioting. The
Special Report
government, by removing itself from the rice
trade, may manage to deflect part of any such
discontent from itself to private rice merchants-
who have never been popular in Burma.
The new receptivity to foreign capital is also
limited. Rangoon is turning to private foreign
firms essentially for their technology and capital.
Burma plans to emulate Indonesian-style profit
sharing arrangements in order to maintain the
government's ownership and control over its off-
shore oil resources. Burma is entering the compe-
tition at an advantageous time because the oil
companies are eager to gain rights to new re-
sources. Rangoon has a good chance of obtaining
the favorable terms from the companies that it is
now seeking. Even if oil is discovered offshore in
large commercial quantities, it would take at least
five to seven years before the oil could have a
subsiantial impact on the Burmese economic
scene.
The effort to organize a conference which
will promote neutrality, Burmese-style, for the
region as a whole suffers from the same ambigui-
ties and lack of focus that characterizes much of
the talk about neutrality throughout the region-
whether it comes from Rangoon, Kuala Lumpur,
or Jakarta. The nations of the area do seem to
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JE`I~I~C I!
recognize that it is a time of change in Southeast
Asia and in the world and that they must some-
how promote their own self-interest by greater
cooperation with one another.
Ne Win recognizes that this is a time of
transition in Burma, too. The government is
thinking in terms of new polices and changes in
form. In September, the Burma Socialist Program
Party is scheduled to hold a party congress at
which the draft of a new Burmese constitution
will almost certainly be approved. Around De-
cember, a national referendum will be held to
gain the people's formal assent to the new consti-
tution. Under its terms, elections are to be held
early in 1974 for a People's Congress (or Parlia-
ment) and for People's Councils (lesser assemblies
on a state and local level). If all goes according to
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plan, the new constitution of the "Socialist Re-
public of Burma" will be promulgated on 2 March
1974, exactly 12 years after Ne Win took power.
The process will be carefully orchestrated by
Ne Win and the men who govern the country
today. The party and the people will be told how
to vote, and candidates for office will be carefully
screened and selected. Military influence may be
more subtle in the new government than in the
present one, but former military men who re-
signed their military commissions-as Ne Win has
done and has directed others to do-will almost
certainly retain key roles. They will continue to
be the arbiters of power in Burma-and will prob-
ably continue to do the bidding of Ne Win.
She Dagon Pagoda, Rangoon
24 August 1973
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