WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010700100001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 27
• Document Creation Date: December 21, 2016
• Document Release Date: December 19, 2007
• Sequence Number: 1
• Publication Date: March 22, 1974
• Content Type: SUMMARY

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vue
vate Secret
Weekly Summary
DIA review
completed.
State Dept. review
completed
Secret
22 March 1974
No. 0012/74
CRIVAL RECORD
PLEASE RET TO Coy NO 16
25X1
AGENCY ARCHIVES,
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CONTENTS (March 22, 1974)
1 Arabs Turn on Oil Valve
3 Europeans Unsure of US Aims
4 Israel-Syria
Special :s.,
EAST ASIA
PACIFIC
6 Japan: US Bases; Oil; Trade
8 Cambodia: Of Setbacks
and Sihanouk
9 South Vietnam: More Communist Moves
9 Philippines-Malaysia: Muslim Rebels
MIDDLE EAST
AFRICA
15 South Africa: Bantustan Independence
16 Iraq-Kurds: Time is Running Out
17 Pakistan: Clouds on the Horizon
18 India: Grim Economic Prospects
WESTERN
HEMISPHERE
19 Venezuela: Terrorism Comeback
20 Peron Looks Eastward
21 Chile: Bolivia Ties
22 Guatemala: Onward With Laugerud
10 Brezhnev Speaks on Agriculture
11 Yugoslavia: Trieste Again
12 Italy: Rumor Tries Again
1.3 Prague Girds A ainst the West
14 Portugal: Supporting the Right
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Arabs rurm On Oil Valve
Arab oil should start flowing toward the US
soon. The amount immediately available will re-
store a major part of the oil received from Arab
sources before shipments to the US were em-
bargoed last October during the Middle East war.
After the announcement on March 18 of the
Arab decision to lift the embargo, Saudi Arabian
Oil Minister Yamani told newsmen that his coun-
try's production will be increased immediately by
more than 1 million barrels per day. Most of the
increase, he said, will go to the US. If Saudi
output does go up by that amount, production
will be about at the level that prevailed last
September.
.Production can be increased immediately,
and there is substantial tanker tonnage available
in the Persian Gulf. The normal transit time be-
tween the gulf and the US is 35-40 days. Further-
more, a small number of tankers en route to other
destinations may be diverted to the US. Addi-
tional supplies could begin to reach the consumer
even sooner, because refiners and distributors
may be more willing to draw down stocks in
anticipation of greater crude oil supplies.;
The increase in production should exert fur-
ther ownward pressure on crude prices. The full
impact will depend on the extent to which US oil
consumption increases in response to the lifting
of Arab restrictions. Auctions by producer gov-
ernments in recent weeks have brought lower
offers than the governments had expected]
i The refusal of Iraq, Libya, and Syria to join
in ending the embargo will have little effect on
world oil supplies. Iraq never did cut production
and did not participate in the meetings of Arab
oil ministers in Tripoli and Vienna at which the
embargo was ended. Libyan production is only
about 200,000 barrels per day below its Septem-
ber level. Prior to the embargo, the US received
about 350,000 barrels per day from Libya. Syria,
a minor producer, does not export oil to the US.1
1 The agreement announced in Vienna also
provides for increased amounts of oil for Italy
and West Germany, and for individual members
to increase production to the level necessary to
implement the various decisions. Yamani said,
however, that the embargo on the Netherlands
would not be lifted.)
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The announcement by the Arab oil ministers
followed a decision on March 17 by the 12-nation
Organization of Petroleum Exporting Countries
to maintain current posted prices during the next
quarter: OPEC's decision was a compromise be-
tween Saudi Arabia, which had hoped to lower
prices, and Algeria and Libya, which had pressed
for still higher prices.]
;None of the Vienna agreements were easily
reached, primarily because the oil-producing
countries are aware that any substantial increase
in production must ultimately lead to lower
prices. Although current Arab production is only
88 percent of the September 1973 level, world
crude prices have been softening for several weeks
as adjustments to the earlier price hikes curbed
demand.)
The Arabs' inclusion of a provision for a
review on June 1 of the decision to lift the
embargo against the US means they have not
foreclosed use of oil as a political weapon in the
future. The Egyptians and the Saudis, however,
had concluded that the time had come to make a
gesture of recognition to the US for its diplomatic
efforts that led to disengagement on the Egyp-
tian-Israeli front and to encourage Washington to
press ahead in working toward a comprehensive
settlement. They worked hard for a united front
on this stand, but finally failed to bring along the
Syrians and Libyans. The hard-lining Algerians
were persuaded to go along with the majority, but
apparently only after some tough bargaining. The
Algerians had earlier argued for the review
proviso, and its inclusion in the agreement was
probably at their insistence.
lEgypt's failure to achieve unanimity was a
setback for President Sadat, although not an
unexpected one; he has tried to minimize the
importance of Arab differencesliCairo's authorita-
tive Middle East News Agency went to some
lengths to play-down the dissenting positions of
Syria and Libyaj
Although Syria strongly opposed lifting the
oil embargo in the closed-door sessions of the
Arab oil ministers, Damascus has said nothing
publicly. President Asad almost certainly believes
"And this valve controls the Dow Jones averages."
that the move has hurt Syria's negotiating posi-
tion, just as he believes his interests were damaged
by Egypt's earlier decisions to exchange POWs
and to agree to a disengagement of forces in the
Sinai. If no progress is made on a separation of
forces agreement on the Golan front, Asad will
probably press Saudi Arabia and Egypt to reim-
pose the embargo in June.
-4 (Throughout the debate among the Arab oil
ministers, the Libyans apparently avoided ob-
structionist tactics in an effort to preserve their
uneasy rapprochement with the Egyptians and
the Saudis. Syria's firm opposition, however, pro-
vided the Libyans with a convenient justification
for finally rejecting the majority decision. Al-
though sharply critical of the announcement from
Vienna, Tripoli has focused its objections on the
timing of the decision rather than on the issues;
by thus qualifying its dissent, Tripoli has left
itself some leeway for future moves
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Europeans Unsure of US Aims
The governments of the nine EC member( President Nixon's remarks in Houston this
have reacted publicly with restraint to recent ex- week, reaffirming his personal opposition to any
pressions of US displeasure-including the Presi- unilateral US withdrawal of troops from Europe,
dent's criticism in Chicago last week-with the have generally been greeted in Europe as a concili-
inadequacy of political consultations between the atory gesture and a move to relax the charged
Nine and the US. tran-Atl +
+
an
h
Several of France's partners have acknowl-
edged the need to consult more fully with Wash-
ington on pending community political decisions.
There are, nevertheless, no signs that agreement
among the Nine on a procedure for such consul-
tations will be any easier to find now than during
the lengthy discussions leading to the framing of
the draft US-EC declaration that did not meet US
requirements. Rather than encouraging France's
partners to isolate Paris on the issue of relations
with the US, the trans-Atlantic tensions seem to
have increased their wariness of an open con-
frontation with Paris.
The problem of reconciling the wish of most
of the Nine to preserve close ties with the US
with their intention of preserving the integrity of
a "European" decision-making process is not
made easier by the shaky position in which many
of the community governments find themselves
today.
t oug t o ine are un i e y soon o agree on any
new suggestions for improving US-European
consultations, Chancellor Brandt is reportedly
drafting a reply to the US-after talks with the
other EC members-in order to keep a dialogue
open.
;
is a mosp
ere. But even if they are
now less inclined to term the US stand an ultima-
tum, European commentators still perceive Wash-
ington's position as a challenge to Western Eu-
rope. Conciliatory sounds from both Washington
and Paris, it is recognized, have not changed the
substance of the debate.
Moreover, there has already been some Euro-
pean comment alleging a US "carrot and stick"
approach to Europe. Such allegations reflect a
lingering uncertainty over what the US specifi-
cally wants, short of becoming a de facto member
of the community. There are still suspicions that
the US requires an impossible choice be made
between European unity and ties to the US.
France, for its part, may now be as inter-
ested in keeping trans-Atlantic quarreling within
bounds as any of its EC partners, since to do
otherwise would undermine Paris' aim of demon-
strating that all the Europeans are in the same
boat vis-a-vis the US. There are signs that the
French may in fact welcome a breather from25X6
US-European polemics in order to launch a series
of proposals ostensibly aimed at reinvigorating
movement toward European unity. With the EC
under pressure from the outside, its traditional
decision-making processes stagnating, and leader-
ship from the other members lacking, Paris may
hope-by making apparent concessions to Euro-
pean solidarity-to have a better chance of
shaping European institutions more to its liki g.
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Israel-Syria
Measured Step Toward Negotiiations
Despite the artillery exchanges on the Golan
Heights this week, Syria and Israel moved a step
closer to negotiations on a separation of forces.
Tel Aviv announced that Minister of Defense
Dayan will come to Washington on March 29 to
handle the next exchange of proposals on disen-
gagement. Damascus has reportedly named
Brigadier General Hikmat Shihabi, chief of mili-
tary intelligence, as its delegate to the talks, but
he is unlikely to come to Washington while Dayan
is in town. Secretary Kissinger will act as inter-
mediary and is expected 1o meet with both
parties separately after his return from Moscow
late next weekl
In contrast to Dayan, General Shihabi is
little; known outside the Arab world. He has
served as a negotiator before, however, and is said
to be highly regarded by President Asad. Last
June, for example, Shihabi was in charge of the
talks that resulted in the reopening of the Syrian-
Lebanese border. In addition to his intelligence
duties, he is a member of the important Baath
Party Military Committee and of the Syrian
Army's Political Bureau. Shihabi speaks fluent
Russian and English as well as some French.(
'Dayan, for his part, has reportedly expressed
some reservations about the value of coming to
Washington. He is said to believe the gap between
the Israeli and Syrian negotiating positions is still
too great for productive discussions in Washing-
ton and that more of Secretary Kissinger's Middle
East shuttle diplomacy will first be necessary.
Speaking in Tel Aviv on March 18, Dayan called
Syria's present terms for a disengagement "totally
unacceptable," perhaps referring to Syria's re-
ported calls for an Israeli withdrawal from the
Golan Heights. Echoing a theme heard from other
top Israeli political leaders over the past week or
two, Dayan claimed that Moscow was not doing
all it could to bring peace to the area and that the
Soviets had the power to press Damascus into
moderating its stand.
)The Israeli cabinet, meanwhile, has report-
edly approved a disengagement proposal that calls
for withdrawal from the Syrian territory captured
in the October war, a thinning of forces on both
sides of the cease-fire line, and creation of a
UNEF-patrolled buffer zone. The cabinet also
decided to insist on the return of all Israeli POWs
held by Syria before any withdrawals occur.'
\The disposition of the town of al-Qunay-
tirah, which Israeli forces captured in 1967, may
determine how much progress is made during the
first phase of negotiations] Prime Minister Meir
':has repeatedly insisted that her government will
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not "reward" Syria for its surprise attack last
October by handing back territory captured in
1967. The Syrians have been just as adamant
about regaining at least some land lost then, in-
cluding al-Qunaytirah.1 The town, once an im-
portant administrative center in the area and the
largest town on the Golan Heights, has acquired
considerable symbolic importance to the Syrians,
and especially to Asad, who is still under pressure
at home to demonstrate negotiations with
Israel are worthwhile.
11 `The Israelis, in a long-planned move, are
moving their two newest and largest missile patrol
boats from the Mediterranean to the Red Sea.
The deputy commander of the Israeli Navy in-
formed the US naval attache in Tel Aviv that the
boats were scheduled to reach South Africa late
last week. They were expected to remain in port
at Capetown for several days before continuing
their 12,000-mile voyage to Sharm-ash-Shayk on
the southern tip of the Sinai.
I j The boats are the first units of an Israeli-
designed and built variant of the French Saar-class
missile patrol boat. The Israeli version is larger,
heavier, and capable of extended operations at
sea. It is also more heavily armed, carrying six to
eight Gabriel anti-ship missiles, two 76-mm. guns,
and two heavy machine guns.
,',The Israeli-designed Gabriel missile was ef-
fective against Egyptian and Syrian patrol boats
during the October war, despite its relatively
short range of 11 nautical miles. The Israelis have
been testing an improved version of this missile
that has a range of over 21 nautical miles. It
probably is now, or shortly will become, the
main armament for the new boats.]
1 1-1 . he Israeli Navy has had plans to send mis-
sile boats to the Red Sea since at least early 1972.
At that time, Israeli naval officials stated that the
~- six boats of this class, all of which were then
1~ under construction, were to be specifically
equipped for operations in the hot climate of the
Red Sea. The third boat was launched recently,
but will not enter service for several more weeks.
The other three boats are scheduled to be com-
pleted by the end of this year.`
(,. )Iuring the October war, Egypt sent two
destroyers to the Bab el Mandeb Strait at the
southern end of the Red Sea, effectively blocking
the passage of Israeli shipping, Israel's entire force
of operational missile boats at that time-12
French-built Saar boats and the first Israeli-built
Saar variant-was based on the Mediterranean
coast. There were no Israeli naval units in the Red
Sea with sufficient range or firepower to chal-
lenge the Egyptian destroyers. The movement of
long-range missile boats to the area, however, will
enable the Israelis to contest any future attempt
to sever their sea routes.
555493 San CIA
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US BASE REDUCTIONS
he latest round of fl teral talks concerning
US base reductions in Japan resulted in an agree-
ment to return 32 US facilities on Okinawa to the
Japanese over the next several years. Nevertheless,
Tokyo clearly does not want the reductions to
dilute the credibility of the US defense guarantee.
Relinquishing the Okinawa facilities will
have a minimal effect on US operational capabili-
ties. Basically, the moves represent a consolida-
tion of facilities rather than a reduction of forces.
None of the facilities is of great military signifi-
cance, and no deadline has been set for the trans-
ter. US forces, moreover, will retain partial use of
nearly half the installations to be returned, and
many transfers will occur only after alternate
facilities are constructed by the Japanese.
Although the US has been primarily respon-
sible for the actual shape and scope of this as well
as previous reductions, Tokyo has obtained Wash-
ington's support to make the recent base transfers
appear to be the result of joint discussions rather
than unilateral US decisions. Even so, the Japa-
nese Government has delayed the transfer of
many facilities by its failure to allocate sufficient
Iunds to construct alternate installations for exist-
ing US forces. It also has urged the US to delay
transfer of several facilities until the Japanese
military is able to absorb them.
1-he government is caught between domestic
political pressure to reduce the US military pres-
ence-particularly in urban areas where land is
scarce-and its own desire to maintain the credi-
bility of the US defense guarantee. Thus, while
supporting a policy of a more austere US base
structure consistent with the movement toward
detente in the region, Tokyo believes that a con-
tinued US presence is necessary as a deterrent
against future Chinese or Soviet military pres-
sures. A Foreign Ministry spokesman has stated
chat the growth of the Soviet Pacific Fleet, in
particular, represents a serious concern to his
government. Tokyo's desire to demonstrate
support of the security ties with the US was a
major reason behind Japan's willingness to grant
home-porting rights at Yokosuka to a US carrier
task force a few years ago.
Several government officials, in talks with
their US counterparts, have made it clear that
Tokyo still desires US forces in Japan to maintain
a significant combat capability as evidence of
American intentions to remain involved in Asian
security. One of these officials suggested, for ex-
ample, that these forces should include elements
of the Seventh Fleet and mobile task forces com-
posed of marine and air force units. The officials
added that, while there can be further base reduc-
tions and consolidations, the US combat presence
should not be reduced substantially at the present
time.
FEW ALTERNATIVES TO OIL
. Tokyo is altering its long-term energy plans
n an attempt to reduce dependence on foreign
oil, but is not likely to have much success. Nu-
clear power development is being accelerated, and
the downward trend in coal production will be
reversed. Nevertheless, Japan probably will still
depend on oil for close to 70 percent of its energy
needs in 1985, compared with 75 percent at pres-
ant. Since domestic offshore exploration is only
just beginning and the potential yield is uncertain,
nearly all of Japan's oil probably will still be
imported.
Nuclear plants currently account for only 2
percent of Japan's total electric power capacity.
Before the oil crisis, Tokyo planned to increase
this share to 25 percent by 1985. The Japanese
now have decided to accelerate their development
program, possibly boosting the nuclear share of
generating capacity to 30-40 percent by 1985.
The program, however, already is bogged down
because of controversy over the location of
plants. Even if this were solved, the Japanese
might have difficulty obtaining sufficient en-
riched uranium. Under these circumstances, Japan
probably would be able to boost nuclear capacity
to only about one third of total electric power
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JAPAN'S PRIMARY ENERGY CONSUMPTION
Percent of Total
1973 Estimate
1980 Plan
1985 Plan
Oil
75
73
71
Coal
17
11
9
Natural gas
1
4
5
Nuclear
1
8
11
Hydro
6
4
4
generating capacity by 1985. Nuclear power thus
would account for 12-13 percent of total energy
requirements, only a small increase above the
share called for under existing plans. 'I
~. `;' ;Coal consumption will continue to increase
over' the next decade, but coal's share of total
energy will decline considerably. Domestic pro-
duction fell from a peak of 50 million tons in the
mid-1960s to 22 million tons last year. An in-
crease of only one million tons is planned during
1974-75. Even with maximum effort, the Japa-
nese probably could not boost output to more
than 35 million tons by 1985. Coal reserves are
estimated at 20 billion tons, but quality is poor
and exploitation will be difficult.*! )Least significant in Japan's energy outlook
are hydroelectric power and natural gas. Hydro-
electric capacity has nearly reached its limit;
future gains in output will come mainly from
pump-storage power plants, which can be used
only a few hours a day. Although domestic
sources of natural gas are being sought, most of
Japan's supply will continue to be imported. The
Japanese have been negotiating for supplies with
numerous countries-including Abu Dhabi, Iran,
Indonesia, and the USSR-in the hope of raising
imports ten-fold by 1985. These efforts may be
increased, but natural gas is unlikely to account
for more than 5 ercent of Japan's total energy
by the mid-1980s.
Trade Grows with North Korea
7
Trade between Japan a d North Korea is
growing steadily, having nearly tripled since 1971
and topping $150 million last year. The major
constraint on further trade growth is Pyongyang's
limited ability to earn foreign exchange, but polit-
ical factors in Tokyo also play a role.
The Tanaka government has always been in-
terested in achieving better balance in its relations
with the two Koreas and in contributing to a
softening of Pyongyang's tough international
stance. It has not aggressively pursued political
relations with the North, however, both because
of the absence of significant public pressure on
the issue and because of opposition from right-
wing elements of the ruling party. There also is a
desire not to get too far ahead of the US on
Korean policy matters. With a list of more im-
portant foreign policy problems to be resolved-
most conspicuously, an aviation accord with
Peking and energy agreements with the US and
the EC-it is increasingly unlikely that Prime Min-
ister Tanaka will choose to press ahead on the
political front with North Korea.
Tokyo has been willing, however, to move in
concrete ways to improve economic relations.
Steps have been taken to permit the establish-
ment of a permanent North Korean trade mission
in Japan, although final agreement may be some
time off. Tokyo also recently approved the first
North Korean application for Export-Import
Bank credits-for a $2-million towel plant.
The North Koreans seem anxious to buy
more from Japan. Over the past year, Pyongyang
has increased purchases of such products as steel,
textiles, telecommunications equipment, and ma-
chinery-much of it included in deals for com-
plete plants. The largest transaction for a whole
plant is the pending purchase of an integrated
steel mill. Implementation of this transaction
probably will hinge on Tokyo's granting of Ex-
port-Import Bank financing.
In the energy field, North Korea has ex-
pressed interest in electric power generating facili-
ties, including a small nuclear power plant, and in
a small oil refinery. A cement plant valued at
about $50 million was ordered last year, and
contracts have been signed for the purchase of
sulfuric acid and ammonia plants. Factories to
produce synthetic textiles and consumer dur-
ables-refrigerators, washing machines, and color
television receivers-also have been sought, as
have plants to make telephone, telex, and tele-
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CAMBODIA: SETBACKS AND SIHANOUK
The Khmer Communists this week dealt the
Bove nment its first significant setback of the year
by capturing Oudong. Late in the week, a
700-man Cambodian Army force was still holding
on just outside Oudong, but insurgent troops had
burned almost the entire town and had led off a
large number of its 20,000 inhabitants. Govern-
ment relief columns working their way toward
Oudong from the north and east were stalled by
stiff resistance.
,Although Oudong has little tactical im-
portance, it is a recently created provincial capital
and a former royal capital with religious and
historical significance. Its capture on the anniver-
sary of Sihanouk's overthrow provides the
Communists with a much-needed victory to offset
their recent poor showing in the Phnom Penh
area.
in the far southwest, fighting has picked up
around the isolated coastal city of Kampot, but
government defenders there have held their
ground. Reinforcements and supplies continue to
arrive by air and sea, and government strength has
grown to over 3,600. The Communists, who are
proceeding cautiously, recently used 120-mm.
mortars at Kampot. This is the first time the big
mortars have been used in the war.1
1On the international front, Communist rep-
resentatives have renewed their tough line on
negotiations. Sihanouk himself, during a brief
visit to the Pathet Lao headquarters in Sam Neua
last week, took the opportunity to reject any new
possibility of talks with the Lon Nol government.
He repeated the familiar line that any negotia-
tions would have to be between his "government"
and Washington. The Prince also lashed out at
"bigger and stronger" countries, almost certainly
China and the Soviet Union, which "prefer to
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compromise with American imperiaiisnR...if not
literally throw themselves into its arms.")
Sala Lek Pram ek Captured byjK
dorig Communists
Road cup
SOUTH VIE-
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SOUTH VIETNAM: MORE MILITARY MOVES
/ Communist forces in the central highlands times in the past. In early 1973, Marcos created a
IaSt'weekend initiated some of the heaviest fight- diplomatic uproar that seemed to threaten the
ing since the cease-fire. Their attacks, directed cohesion of the Association of Southeast Asian
against several government outposts near Kontum Nations-Malaysia, Singapore, Indonesia, Thai-
City, probably were in retaliation for government land, and the Philippines. Marcos now believes
efforts to block an eastward expansion of the that he has much better evidence of Malaysian
Communist logistics corridor. The South Viet- involvement in the form of testimony by cap-
namese 62nd and 95th Ranger battalions, posi- tured rebels, who claim they were trained in
tioned northeast of Kontum City, have been at- Malaysia.'
tempting to disrupt Communist efforts to con-
nect a new road with an existing one) t/-` [Manila began the latest round by leaking to
,r foreign journalists a story that it has proof that
Over 100 government Rangers, who had Malaysia is supplying arms and ammunition to the
beer missing for three days, reported on March 9-rebels. Philippine officials have shown some of
20 that up to half of the troops of the two this "evidence" to Saudi Arabian Foreign Minister
government units may have been killed, including Saqqaf, who visited Manila last week, and to the
the commander and deputy of the 95th Battalion/ US ambassador]
To the south in Military Region 3, govern-
ment officials believe that the Communists may
be preparing for new military action before the
end of the month. The South Vietnamese antic-
ipate some form of reprisal for the successful
government operation during February in the Ho
Bo Woods in Binh Duong Province as well as
against other security operations in the region.
COSVN on
March banned a civilian activities along a road
connecting Tay Ninh and Binh Duong provinces
because of Communist military traffic. In addi-
tion, ralliers reported in early March that a
medical unit has been moved into the forward
area of the border provinces northwest of Saigon
and additional food supplies are being sent there
as well.
Philippines-Malaysia
MORE WORDS OVER MUSLIM REBELS
d, -) Manila and Kuala Lumpur apparently are
building toward another war of words over
alleged Malaysian support for Philippine Muslim
rebels. President Marcos and his military advisers
charge that outside military support channeled to
Muslims through the Malaysian Borneo state of
Sabah is a key factor enabling the rebels to resist
armed forces efforts to end the fighting)
Philippine officials have raised charges of
M~laysian support to Muslim insurgents at various
L)
IS- )Marcos probably hopes his campaign to pre-
sent the Philippines as the aggrieved party will
serve a dual purpose. Other Southeast Asian
states, principally Indonesia, may be persuaded in
the interests of regional harmony to press Kuala
Lumpur to curb support from Sabah to the
rebels. In addition, Marcos hopes to discredit
Malaysia in the eyes of other Islamic states, par-
ticularly Arab oil producers, and thus undercut
Malaysian agitation against Manila's treatment of
its Muslim minority/
9 7- 1 -Marcos is combining his anti-Malaysia cam-
paign with a skillful cultivation of certain Middle
East states, such as Saudi Arabia. He seeks to
convince them that he is making an honest effort
to settle the Muslim problem but that outside
interference makes this extremely difficult.
Marcos obviously has his eye on the Islamic for-
eign ministers' conference scheduled for Kuala
Lumpur in May].
~-- If Kuala Lumpur and Manila begin trading
char es over the Muslims, Jakarta will undoubt-
edly be drawn in because of its concern over the
implications for regional stability and coopera-
tion. Jakarta may try to revive the tripartite talks
held in Hong Kong during 1973. At that time,
Indonesia tried to act as an honest broker to
settle the long-standing Philippine-Malaysian feud,
nrenared to compromise.
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BREZHNEV SPFAKSON AGRICULTURE
. 3 S7 I )
Speaking at'-the 20th anniversary of the start
of hrushchev's New Lands program, Soviet
party leader Brezhnev unveiled a land-improve-
ment program for the Russian Republic aimed at
leveling off the large fluctuations in Soviet agri-
cultural output. He also spoke of the need to
modernize and simplify agriculture's organiza-
tional structure. Indicating that agriculture is a
top-priority sector, he warned that "national eco-
nomic problems" must not tempt a diversion of
resources from the farms.
Brezhnev revealed that 35 billion rubles
would be spent during 1976-80 in the first phase
of a 15-year project to develop agriculture in the
non-black soil region of the Russian Republic.
This sum is equal to a fourth of planned agricul-
tural investment during the current Five Year
Plan. The new program will include traditional
land-reclamation projects-irrigation and drain-
age-as well as increased supplies of mineral ferti-
lizer and other agricultural chemicals. The plan
covers 124 million acres, 79 million of which are
arable and the rest useful for grazing. The crop
area represents about 15 percent of total sown
acreage and is about equal to the 70 million acres
plowed up in the New Lands of Kazakhstan and
Siberia.
Although the non-black soil area has large
tracts of boggy, uneven land, it has a high annual
precipitation and responds well to the application
of lime and mineral fertilizer. The Brezhnev agri-
cultural programs of 1965 and 1970 got good
results by providing more chemicals for this area,
which has furnished more than one third of the
increase in grain output in recent years. The new
program is feasible only because the Soviets have
been successful in boostinc their output of
mineral fertilizer.
On the other hand, the Soviets do not have a
good record in implementing land-reclamation
programs, however, and the Brezhnev plan is un-
likely to work out as announced. In recent years,
the amount of land that slipped into disuse ex-
ceeds additions of newly reclaimed land. In any
case, major benefits from the new program will
not be realized before 1980.
a streamlining at the national level.
Brezhnev's speech also hinted that some agri-
cultural reorganization may take place in the near
future. He noted that the Central Committee is
now looking over suggestions for improvements
from the grass roots. He endorsed such local-level
experiments as agro-industrial and inter-farm or-
ganizations, but warned that "hasty, artificial
nudging and exertion of pressure" will not be
tolerated. On the national level, he stated that the
present structure of management has become
over-complicated. Brezhnev called for "a unified
approach" to all agricultural questions for the
country as a whole and better coordination
among the departments concerned with agricul-
ture. At the same time, he stressed that central-
ized planned guidance must be balanced with
operational independence for state and collective
farms. These proposals echo in many ways the
reorganization scheme currently under way in the
industrial sector, namely, the creation of large,
integrated production units at the local level and
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(The current dispute between Belgrade and
Rome over jurisdiction in the "Zone B" corridor
south of Trieste will probably continue to be
noisy for some time. Tito is not expected to alter
Yugoslavia's long-held position, especially since
his other neighbors could raise similar irredentist
claims. He undoubtedly believes that maintaining
a firm stand will help to ease this burden for his
successors.(
one B came under Yugoslav administration
and r the terms of the Allied peace treaty with
Italy in 1947 and of the London memorandum of
understanding in 1954. Although Yugoslavia and
Italy are both signatories to the London docu-
ments, they have not signed any bilateral agree-
ments on the border. Since the end of World War
II, Italian rightists-who are particularly strong in
the Trieste area-have blocked Rome's efforts to
meet Belgrade's demands for official Italian recog-
nition of Yugoslav jurisdiction over Zone B. In
recent years, however, the Italians have been able
to give Belgrade private assurances that no re-
newed claims would be made:7
`Rome apparently broke this pattern with an
unpublicized note in mid-January which reas-
serted Italian claims to the territory and protested
Yugoslavia's posting of border signs in Zone B.
Rome was apparently prompted to formalize its
protest after Belgrade failed to respond to an oral
request for an explanation. The request was
triggered by parliamentary pressure from the neo-
fascists. The government probably wanted to
avoid neo-fascist grandstanding at a time when
public confidence is at a low point due to the
recent cabinet crisis and a major oil pay-off scan-
dal. Although this note was subsequently recalled,
Rome renewed its claim with another protest on
March 11. Belgrade then made the quarrel public
by issuing its own diplomatic protest and opening
up the propaganda vent.
5 'jtalian diplomats claim that Rome wants to
soften the polemics by officially expressing its
desire for good relations, but without fully with-
ill
r
l
b-
i
i
B
d
i
l
l
i
i
p
o
e
gra
e w
a
ts terr
tor
a
c
m.
ng
draw
ably reject this because it leaves the Italian claim
on the public recordr(As Rome prepared its next
move, the Yugos}av Government strongly
Page 11
denounced the Italian position on March 20. Bel-
grade put the onus on Italy for "crushing" good
bilateral relations and warned that Yugoslavia
"knows how to defend its territory.
For Tito, the problems posed by the Zone B
controversy extend well beyond Italian-Yugoslav
relations. Irredentism is an unpleasant backdrop
to his efforts to ensure a smooth succession, and
Tito almost certainly believes that he cannot ac-
cept Rome's renewed claims to Zone B without
inviting similar problems from Bulgaria. Al-
though the Bulgarians do not make any direct
claims on Yugoslav territory, Sofia steadfastly
asserts that citizens of Yugoslavia's Macedonian
Republic are Bulgarian by nationality. The Yugo-
slavs have recently been extremely defensive
about the Bulgarian position, which has also prob-
ably undercut an improvement in bilateral rela-
of Trieste
(1947-541
Umago ZONE`B
---international boundary(1970)w
O MILES H
555494 3-74
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ITALY: RUMOR TRIES AGAIN
j 1Prime Minister Rumor's new center-left gov-
ernment will probably survive a forthcoming vote
of confidence in parliament. The odds, however,
are against the coalition enduring much beyond
the national referendum on the legalized divorce
bill, scheduled for May 127
IThe speed with which Rumor was able to
put the government back together after its dis-
solution on March 2 indicates that the coalition
partners merely papered over long-standing dif-
ferences. With the divorce campaign already heat-
ing up, the parties were reluctant to embark on
the long negotiations usually required to formu-
late a program and reshuffle cabinet portfolios'
s a result, the new government looks and
sounds very much like the old one. The major
difference is that the Republican Party, which
triggered the crisis by withdrawing from the gov-
ernment after failing to resolve a dispute with the
Socialists over economic policy, has refused to
accept cabinet posts. The Republicans are limiting
their participation to support in parliament for a
cabinet made up of the remaining three center-
left parties-Christian Democrats, Socialists, and
Social Democrats]
i The new government has echoed its pred-
ecessor's pledge to give top priority to the fight
against inflation and problems related to the
energy shortage)l Substantial progress is unlikely,
however, since the dispute over how to achieve
these goals remains unresolved
)There is already widespread talk of a new
political "stocktaking" after the divorce refer-,,.
endum. In the meantime, the campaign leading up
to the referendum will probably have first call on
political energies. The referendum will either con-
firm or abrogate a 1970 law that legalized
divorce, but most politicians are playing for
higher stakes!
Those who favor legalized divorce-including
all' of the
liti
po
cal parties except the Christian
Democrats and neo-fascists---will portray the
referendum as a challenge by the Catholic Church
Rumor's dilemma - No solution ahead
to individual civil rights. This alignment of forces
will isolate the Christian Democrats from their
coalition partners and allow the Communists to
accuse the Christian Democrats of collusion with
the neo-fascists. The Communists, who were
stunned by the neo-fascists' electoral gains in the
early 1970s, will conduct their campaign as an
anti-fascist crusade-1
(i TMany politicians think that the referendum
has turned into a personal battle between the
leaders of the country's two major parties-
Christian Democrat Amintore Fanfani and Com-
munist Enrico Berlinguer. Berlinguer, in a bid for
a Communist role in the national government, has
been arguing that the time is ripe for a rapproche-
ment with the Christian Democrats. He thus tried
to get Fanfani to go along with a plan to cancel
the referendum in order to avoid an open battle
between the two parties. Fanfani's refusal to co-
operate, however, has given substance to the con-
cerns of more militant Communists who doubt
the wisdom of Berlinguer's call for _a modus
vivendi with the Christian Democratsil Even the
Soviets have chided Berlinguer for falling into a
trap set by Fanfani.;
lln this atmosphere, it will be difficult for the
Communists to adopt once again the moderate
line that gave Rumor's previous government an
extended breathing spell. The Communists still
hope for an eventual deal with the Christian
Democrats but, for the moment, the party line is
one of "intransigent" opposition to Rumor's
fra Flo ,
li
oa
tion
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PRAGUE GIRDS AGAINST THE WEST
CL4 i~Cr ~
Prague's growing attentiono ideological is-
cipline reflects the domestic political dangers that
the regime sees in detente. Czechoslovak media
have stepped up their attacks on Western propo-
sals for freer movement and on the corruptive
nature of Western ideas and values. In addition,
the regime has begun a "complex cadre assess-
ment," that is, a review of the ideological and
professional credentials of all personnel holding
responsible positions in the party and state bu-
reaucracy. These moves are clearly designed to
serve notice on all segments of the population
that detente will not be allowed to erode the
party's control.
Prague is evidently attempting to respond to
Soviet calls for strict conformity throughout East-
ern Europe. In many respects, however, detente
poses a unique problem to the Czechoslovak lead-
ership. Unlike most other East European regimes,
authorities in Prague must contend with a popula-
tion that still cherishes Western democratic tradi-
tions and has fresh memories of Dubcek's "social-
ism with a human face." The leadership feels it
must move effectively to immunize or get rid of
those in key positions who might be susceptible
to Western influences so that any increase in
East-West contacts does not make the infection
worse.
In the effort to counter the Western position
on free movement, the Czechoslovak press has
recently given much space to restating and de-
fending the party line on the European security
talks. The media have noted that Prague favors
cultural exchanges but cannot permit "deliberate
attempts" by forces in the West-including Radio
Free Europe's "hostile and anti-socialist propa-
ganda"-to undermine Czechoslovak sovereignty,
laws, and customs. One recent article also charged
that Washington was tying the extension of Amer-
ican credits to the acceptance of propagandistic
US films and cultural programs.
The leadership's rather formalistic approach
to the campaign for ideological discipline is not
likely to reduce the attractiveness of Western
values among all segments of the population,
especially the youth and dissident writers. The
decision to conduct the cadre review will, how-
ever, drive home the message to all party mem-
bers that detente cannot mean a relaxation
Czechoslovak political life
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PORTUGAL: SUPPORTING THE RIGHT
Pi he short-lived military revolt last week re-
yealed dissent within the military over Portugal's
African policy and may rave weakened Prime
Minister Caetano's position?
\By agreeing earlier to the dismissal of Gener-
als Costa Gomes and Spinola, Prime Minister Cae-
tano has increased his dependence on the ultra-
right wing of the Portuguese establishment-an
element he has never been popular with in the
past. They forced him to back down before when
he tried to modify Portuguese African policy,
maintaining that any relaxation would lead to the
loss of the overseas possessions. The ultra-right
faction includes President Thomaz, the forty
wealthiest families, and some high-ranking mili-
tary officers. It is especially annoyed because
Caetano permitted the publication of Spinola's
book, and it probably will continue to suspect the
Prime Minister of wanting to create a federation
of Portugal and its overseas provinces,]
1The right wing may have been behind the
refusal of Portuguese censors to allow publication
at home of Caetano's statement to a French news
weekly that he would not resign, although other
portions of his interview were carried. President
Thomaz's reluctance to prolong the present crisis
by firing the Prime Minister may protect Caetano
for the time being(
The sporadic military alerts of the past week
have been lifted, but military and government
officials are concerned about the extent of dissent
over the firing of Costa Gomes and Spinola.
Neither general appears to have been directly in-
volved in the revolt by some 200 officers and
men, but the march on Lisbon belies the declara-
tions of loyalty given last week by other senior
military officers just before the public announce-
ment of the dismissals
(Jther signs of defiance were evident last
week when the alumni association of Lisbon Mili-
tary College awarded decorations to the two dis-
missed generals and to Lt. Colonel Joao Bruno, a
close associate of Spinola and a hero of action in
Portuguese Guinea. In addition, both generals
wer elected to top offices in the alumni associa-
tior .
The government is treating the two generals
with caution. Both are free to come and go in
Lisbon. General Spinola's book urging a federa-
tion with the African provinces-which set off the
furor that led to the dismissals-is now being
permitted to be sold in Lisbon bookshops'
\The government has, however, arrested Lt.
Colonel Bruno along with some 30 other officers.
According to press reports quoting informed mili-
tary sources, the general commanding the Lisbon
military academy and an admiral who is the naval
secretary of the Armed Forces Defense Staff have
been dismissed in the aftermath of the abortive
revolt.]
]The regime may succeed in stilling dissent
within the armed forces and censoring public dis-
cussion of overseas policy, but in so doing it only
postpones the day of reckoninn over its efforts to
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SOUTH AFRICA: BANTUSTAN INDEPENDENCE
1r `cLavt_ J)
Transkei, the oldest of the self-governing
tribal homelands-Bantustans-created within
South Africa, may soon request independence.
Prime Minister Vorster apparently has encouraged
the move in order to show South African whites,
who go to the polls next month, that the Bantus-
tan program is working out to their advantage. It
is doubtful, however, that the remaining tribal
homelands could be brought to accept independ-
ence without concessions by Pretoria that would
provoke serious white opposition.
South Africa's white rulers developed the
Bantustan program in the early 1960s to justify
their policy of rigid apartheid-racial separation.
An eventual transition to independent status has
been a feature of the program from its inception,
although Pretoria expects the Bantustans to re-
main completely dependent satellites.
Transkei has had an autonomous administra-
tion since 1963. At its recent annual congress, the
territory's leading political party resolved to
South Africa: Bantustans
Basotho Qwa Qwa
Bophuthatswana
Ciskei
10 Gazankulu
J Kwazulu
Lebowa
-.,_w Swazi*
Transkei
Venda
200
Miles
Not yet self-governing
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request independence within the next five years.
Last week, Transkei's chief minister, Kaiser
Matanzima, introduced an independence resolu-
tion in the Transkei legislative assembly.
In a private conversation with the US consul
general in Durban, Matanzima stated that inde-
pendence could come within two years. He em-
phasized, however, that before his government
would accept independence, Pretoria must turn
over a small Indian Ocean seaport and other land
parcels that have been tentatively promised. Ma-
tanzima had previously asserted that Transkei
would not accept independence until Pretoria
ceded much more extensive territories that orig-
inally belonged to the Transkei's Xhosa tribe.
the only Bantustan that has a consolidated terri-
torial base, and leaders of other homelands have a
greater need than Matanzima to insist on major
land transfers before independence. Although Pre-
toria has plans for a partial and very gradual
consolidation of other Bantustans, actual land
transfers have barely begun. The Vorster govern-
ment is proceeding cautiously in order to mini-
mize its financial burden and, more important,
the opposition of white farmers who have to
move from any lands transferred to the home-
lands.
IRAQ-KURDS: TIME IS RUNNING OUT
At the party congress, Matanzima reportedly
argued that Pretoria would increase its financial (Iraq's troubles with its Kurdish minority
aid to Transkei after independence because Prime
Minister Vorster wants the first independent Ban- (,%
tustan to become a "showcase," both to induce
leaders of other Bantustans to request independ-
ence, and to gain international approval for the
Bantustan program. These arguments apparently
won over party members who had wanted to hold
out until Transkei's maximum land claims were
met. Matanzima's hope of greater financial aid
from Pretoria may be unrealistic, but Vorster is
believed to have assured hinn that modest terri-
torial claims would be readily granted as part of
an independence settlement.
Matanzima's willingness to go forward on
this basis with the implementation of the Bantus-
Lan program will be politically helpful to Prime
Minister Vorster. With national elections sched-
uled for April 24, he is especially eager to show
white voters that he can mollify the Bantustan
leaders with concessions that are far short of the
sweeping demands they put forth in a manifesto
last November.
Early independence for Transkei would not
necessarily hasten independence for the other
seven homelands that now have some degree of
self-government, but it could spur the demands of
the leaders of the other Bantustans for consolida-
tion of their fragmented territories. 1 ranskei is
could soon erupt into serious fighting. Baghdad
has given the Kurds until March 26 to accept its
plan for limited autonomy. Kurdish leader Bar-
zani has already rejected the plan publicly, and
last week Kurdish forces seized several Iraqi garri-
sons near the Turkish border. Although there
have been rumors of attempts to re-open talks
between the two sides, no progress appears to
have been made in resolving the impasse.)
1Meanwhile, both sides are continuing mili-
tary preparations. The government may first try
to establish a puppet government in the Kurdish
area. Such a government is likely to be opposed
strongly by most Kurds, however, and if the gov-
ernment ultimately feels compelled to resort to
ground and air attacks, the badly outnumbered
and outgunned Kurdish rebels will be forced to
relinquish population centers and take up new
positions in the mountains where the terrain
would be to their advantage.
IFor several weeks now, many Kurds have
been fleeing to the north, either to join the armed
rebels or to seek refuge. These refugees could
become a serious problem for the Kurds if the
government decides to impose an economic
blockade of the area, making it difficult to ac-
quire clothing, food, and shelter.
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1400, SECRET _ 140*
PAKISTAN: CLOUDS ON THE HORIZON
i j prime Minister Bhutto's personal prestige is
currently at an all-time high, largely as a result of
the public relations dividends he gained from the
Islamic summit conference in Lahore last month.
Recent developments in the Punjab and Baluchi-
stan, however, could eventually cause problems
for him and his ruling Pakistan People's Partyl
r [Earlier this month, Mustafa Khar was re-
placed as chief minister of Punjab Province by
Mohammed Haneef Ramay, a move that in effect
reversed the power positions of the two diverse
political forces on which Bhutto's party is based
in the Punjab. Ramay, born in Lahore, represents
the urban elite that is committed to social, eco-
nomic, and land reform. Khar's support has come
mainly from the rural and conservative elements
of the province. Although Khar reportedly will
not challenge Ramay and the urban elite's present
control of the party apparatus, his supporters
may not go along with him. In that event, the
internal cohesion of the provincial party organiza-
tion could face a serious test.(
l [in Baluchistan Province, the plans of the
People's Party for ending the governmental
instability and tribal dissidence that have long
troubled the area could be upset by the party's
heavy-handed methods of strengthening its posi-
tion. Several members of the provincial assembly,
who belong to the National Awami Party, the
main opposition group, were recently jailed or
forced into hiding and their seats declared vacant.
By-elections for the vacated seats were boycotted
by the National Awami Party, which charged that
the government would manipulate the results in
order to ensure the election of People's Party
candidates. The boycott apparently has given the
People's Party enough seats to establish firm con-
trol over the provincial government, but at the
cost of increasing the frustration and anger of the
opposition. /
Prime Minister Bhutto, for his part, is
attempting to undercut the role of the traditional
leaders of the Baluchi and Pathan tribes by
imposing administrative changes in the province
from Islamabad. These tribal leaders have gen-
erally supported the opposition.
7 >L ) i n addition, the recent murder of an opposi-
tion politician in Baluchistan may cause further
trouble for Bhutto's party. The deputy speaker of
the provincial assembly, who was also a Pathan
leader, was found dead on March 13. If his death
can be traced to the People's Party, other Pathan
leaders and politicians in the province will be
under strong pressure from their constituents to
avenge the killing or risk losing popular support.
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INDIA: GRIM ECONOMIC PROSPECTS
1
The outlook this year for the depressed
Indian economy is grim. Inflation, stagnating
industrial production and smaller-than-planned
increases in agricultural output continue to be
major problems. Chronic trade imbalances are
increasing because of soaring import costs-
especially for food grains, petroleum, and ferti-
lizer-and slow export growth. The prospects for
obtaining new foreign aid remain uncertain.
Inflation is India's major economic problem,
with the rate of inflation clirribing to record levels
in 1973. At the end of December, wholesale
prices were 26 percent higher than a year earlier.
The principal cause of inflation-deficit financing
of government expenditures--continues unabated.
Slow industrial and agricultural growth also con-
tinue to constrain supplies, which remain only
slightly ahead of population increases.
The budget for the fiscal year beginning
April 1 virtually ignores the inflation problem.
Expenditures are scheduled to increase 16 percent
to $11.7 billion and the deficit is projected to
move up 33 percent to $160 million. The actual
deficit last year was ten times that estimated, and
this year it is again likely to be significantly
greater than anticipated in the budget.
Industrial production stagnated in 1973.
Hampered by energy shortages, transport bottle-
necks, raw material shortages, labor strife, and
reduced demand for capital goods, there is little
chance of recovery this year. In addition to
recurring electric power deficiencies and coal
shortages, petroleum is now in short supply. India
imports 70 percent of its petroleum supplies.
Increased domestic oil production hinges on the
long-term success of exploratory drilling now
under way offshore from Bombay. Renewed
attention is now being given to coal, which has
long been neglected despite sizable reserves. New
Delhi's efforts to counter energy shortages by
cranking up domestic coal production and
increasing petroleum exploration will take time.
For the immediate future, energy shortages will
continue to hamper industrial production.
Agricultural production has recovered from
last year's dismal performance and food grain
production probably will increase about 10
percent to 105 million tons in the crop year
ending June 30, 1974. Output is still 10 million
tons below planned levels, however, because of
bad weather, crop disease, and fertilizer shortages.
Grain stocks and indigenous government procure-
ment efforts will be inadequate to maintain the
government's food grain distribution system until
the fall harvest. Nearly 2 million tons of grain
imports, already contracted for this year, are
being delivered. More will be needed but high
prices will curb sizable purchases for some time,
unless New Delhi can obtain concessionary terms
from sellers.
Although exports increased about 20 per-
cent in 1973, imports increased 45 percent,
creating about a $150-million trade deficit. New
Delhi received virtually no new net private foreign
investment and had to use foreign exchange
reserves and borrow $75 million from the Inter-
national Monetary Fund to pay its bills. In 1974,
the deficit will increase as import costs continue
to rise.
Import priorities have not yet been sorted
out, but it is unlikely that imports will be
adequate to accelerate production. Higher petro-
leum and fertilizer prices in 1974 will cost India
an additional $1 billion, the equivalent of one
third of its export earnings. India's $1.1 billion
International Monetary Fund quota and another
$1.1 billion in foreign exchange reserves are
available, but New Delhi is hesitant to draw down
reserves or to go deeply into debt to the fund.
The Free World Aid India Consortium will meet
in June to consider new foreign aid. Most donors
have been cautious, however, and the chances of
India nhtaininn sharnly inrreacPd aid are not
good.
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VENEZUELA: TERRORISM COMEBACK
(1 '}, '1 `1, Y c-i)
leir Left-wing extremists are following through
on declaration of war against the new presi-
dent, Carlos Andres Perez, and his Democratic
Action administration. Claiming to be urban guer-
rillas belonging to the outlawed Bandera Roja and
Punto Cero organizations, the extremists assumed
credit for the rash of arson and bombings as well
as a bank robbery that coincided with Perez'
inauguration.
Domestic as well as US-owned businesses in
several Venezuelan cities were targets of the ter-
rorists, who set fires that destroyed six structures
of the largest warehouse complex in Caracas and
damaged a high-rise apartment building in the
city's center. In addition, bombs were found in a
US-owned department store and in the offices of
a US oil company. Attempts to put out the ware-
house blaze-the worst in Caracas' history-were
hampered for a time by snipers shooting from a
nearby low-cost housing project at firemen and
police. National guard and army troops were
finally called in to restore order.
The government's reaction thus far has been
relatively low key. Interior Minister Luis Pineura
Ordaz has been urging the media, particularly the
sensationalist tabloid press, not to give the ex-
tremists the publicity they are seeking. In his first
press conference, President Perez repeated the
admonition, characterizing the terrorism as the
work of a few with no political backing. At the
same time, Perez warned that he would give no
quarter in clamping down on further outbursts.
Government officials believe that the guerrillas
hope to provoke a repressive counter-reaction
from the new government that would unite the
now-divided leftist forces in the country and at
the same time win publicity for their moribund
organizations.
Lacking the men, the organization, and the
foreign support they received during the full-scale
armed insurgency in the 1960s, the terrorists have
nothing to gain but annihilation by openly baiting
Warehouse complex blazes
Terrorist arson
the Perez administration. Even the leftist political
parties, including the marxist Movement to So-
cialism, have publicly dissociated themselves from
the extremists, a fact acknowledged by President
Perez when he absolved the legally established
leftist parties of any connection with the terror-
ists.
Although some of the incidents could be the
work of common criminals, there is little doubt
that the level of guerrilla violence, as well as the
announcements by groups claiming to be guer-
rillas, has increased in recent days. Although the
extremists are not capable of shaking the stability
of the government, they can manage scattered
acts of violence, which will probably continue for
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PERON LOOKS EASTWARD
)in an attempt to retain Buenos Aires'
independent outlook in international relations,
Juan Peron is seeking to expand Argentina's
economic relations with the Communist world.
Several Communist nations have responded by
agreeing to extend substantial amounts of long-
term aid to Buenos Aires.
Romanian President Ceausescu, during his
visit to Argentina in early March, signed a
$100-million credit agreement. The credits, the
largest by Bucharest to a South American coun-
try, cover aid for agricultural, mining, and petro-
Recent Economic Agreements with
Communist Countries
January-March 1E174
Country Date Type of Agreement
Ciuc.hrrslovckin February 21 Protocol on expanding
erononlir: couperolion
lung~lry March DrIJI el:onon 111 aril le0i
I:,r.l11I,,,I,I,I.~uor, iruc~e
I'u nl
U110) 1 I'ro ocol on r'' pan, Iing
r.nnuniir cnuper,luon
li::ur,mi^ -ubr?ary 16 Cunvonliorr irsclenlilic
I. Inilvrxlil:.r , ot)!, mliun
I ?: br r.ny ~2 ~-i,i~ 1 111lr~u~;llor~ ru
r. Sul
I rrhruary 5-8 Gurlcral ~Igrunnrenl for
Inuinil. irnd ler.Lnical
..n 4)CI,i IIU!1
"!l,urII .ri 8 A,'rl11 1 o I coop ralior
v. IIICx]rr, irrlusl!0 field
I1 58 nl ( cor,1) rr11I Ill
.'t III11110g
h/1,ln h 5 #f C i.rrlil ,nllccI icnl ';.~ `,~10U
Ir b 13 n~llrcn runt Iln
1111 III.II
12 51] I-ehnruy 12 Aylcelnun: on econorlrIr
,:rrl r,nninicnial r"npcr.ition
1 r~bluury 12 CrrIr] II 10011/Ill 11 supply
,1 1111(1 inCr-, :mr1 ~.:1i111)if:nl
!\Illc1enrrnI un sei1 0 11
hrr,,11 cu,lntrrl:nu
leum development. A $37-million contract for
Romanian oil-drilling equipment has already been
signed.
In mid-February, the USSR and Buenos
Aires concluded a series of economic agreements
that included credits, but the amount of aid was
not fixed. Soviet financial assistance was offered
for steel, petroleum, forestry, transport, power
generation, and maritime industries. Soviet
technicians already are considering a proposal to
assist in the construction of a deep-water port in
Patagonia, and Moscow is hoping to provide
power-generating equipment for the prestigious
Salto Grande hydroelectric project. Although
Argentina has not yet accepted the Soviet bid for
$65 million, which is below the lowest Western
bid, Moscow sweetened the offer with $10 mil-
lion of credits to defray local construction and
installation costs.
Recent economic agreements with other
Communist nations include the provision of
credits by Czechoslovakia for power-generating
equipment and the eventual establishment of a
joint company to produce power equipment for
sale in Argentina and elsewhere in Latin America.
Poland has pledged assistance to Argentina's
fishing, shipbuilding, and mining sectors, while
Hungary currently is drafting a cooperation agree-
ment for bauxite development and a plant to
manufacture port equipment.
Argentina's plans for industrial diversifica-
tion mesh with Communist desires to reduce the
deficit in their Argentine trade, which has
averaged more than $50 million annually over the
past three years. Peron, faced with $2 billion in
debt-service payments to Western creditors
through 1976, may view Communist long-term
aid, repayable in goods, as a viable alternative to
increased Western assistance. This merger of
interests should lead to an eventual increase in the
exchange of goods, technical and scientific in-
formation, and possibly personnel.
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TO RENEW TIES WITH BOLIVIA believes that a Brazilian economic stake in the
area would help discourage Peruvian incursions:?
/ 1 `Chilean junta chief Pinochet and Bolivian
} President Banzer agreed last week to appoint a SIX MONTHS LATER
)binational commission that will attempt to
resolve major differences as a prelude to the 1 4) Pronouncements made on March 11 to mark
renewal of diploma ic relations and economic six onths of government by the armed forces
coo eration. and carabineros strongly reiterated their deter- 25X1
'.$ ination to restructure Chile's political, eco- 25X1
, j3 \ The major stumbling block to an agreement
nomic, and social systems before allowing a
return to civilian rule
could be Bolivian insistence on obtaining an out- The statements outlined plans for the crea-
let to the sea through Chile. The two nations tion of a ''social democracy" free of the partisan
broke relations more than a decade ago during apolitics of the past. The military and police
dispute over the use of common water resources.`/ S intend to eschew reliance on any organized polit-
Even before that, however, ties had been strained ical group. Instead, they will attempt to create
for almost a century because of Bolivia's claims to their own base of mass popular support through a
territory on the Pacific coast conquered by Chile
during the War of the Pacific}
I The cordial meeting of the presidents was
arranged by Brazilian officials during the inaugu-
ration festivities in Brasilia. The new Geisel
administration undoubtedly sees several benefits
in improved relations:
? both military regimes would be strength-
ened;
? even partial reconciliation would earn
Brazil prestige as an international arbiter,
since the two leaders met for the first time on
Brazilian soil;
? a possible Chilean concession to Bolivia
on access to the sea might involve internation-
alization of a port in northern Chile, a devel-
opment that Brazil views as an opportunity
for economic gain and increased influence)
[A series of regional trade agreements is
-.i reportedly being discussed at Chile's suggestion.
Chile is concerned about Peruvian revanchism and
is anxious to attract foreign investment to its
northern border region, and the junta probably
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highly structured chain of command extending
from the junta to neighborhood councils. Par-
ticipation will be compulsory.
Junta President Pinochet emphasized the
regimes sympathy with the low-income groups
that are bearing the brunt of the economic
recovery program. Although he acknowledged
that further privations lie ahead, he promised that
the same generation will reap the fruits of these
sacrifices." Pinochet also noted that new taxers
will spread the burden more evenly and warned
"those who seek only their own profits and
ignore their social duties" that drastic penalties
will be imposed for violations of economic regula-
tions.,
Christian Democratic Party patriarch
Eduardo Frei was the only living ex-president not
present to hear Pinochet's speech. He had planned
to attend but changed his mind following publica-
tion of the junta's paper on social development, dl
GUATEMALA: ONWARD WITH LAUGERUD
The Guatemalan Government, which seems
to have stifled opposition to the disputed count
in the election on March 3, is preparing to build a
presidential image for General Kjell Laugerud,
who is slated to assume office on July lj
101- )Guatemalans generally believe that Lauge-
rud's election was engineered by gross fraud, but
the opposition's attempts to thwart a Laugerud
victory by peaceful resistance have been ineffec-
tive. Appeals by defeated candidate General
Efrain Rios Montt for nationwide strikes have
gone unanswered, and street demonstrations have
been easily broken up by police. The army has
been uneasy over the situation, but its top gen-
erals now appear to be backing the government,
and coup rumors have subsided.)
1 7 `Rios has in effect removed himself from a
position of opposition b r accepting a recall to
active duty in th arm- reportedly as military
attache in Spain.
':'C' 'Rios' principal supporters in the left-of-
center National Opposition Front are still urging
the public to reject the "imposition of Lauge-
rud," but these efforts are likely to have little
effect now that the Front is leaderless.)
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