WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010800020002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 21, 2016
• Document Release Date: June 19, 2008
• Sequence Number: 2
• Publication Date: April 5, 1974
• Content Type: SUMMARY

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Weekly Summary
State Dept. review completed
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Secret
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5 April 1974
No. 0014/74
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CONTENTS (April S, 1974)
eiiiger?ce, reports and analyzes sgni+-
s of the week through noon on i hursday. i
L c , ?orn c re.esearch, the Office 01 Strategic:
tt i ..ire.t_oiate of Science and Technology EAST ASIA
ceher?sive treatment and therefore PACIFIC
?iv as --ruecial Reports are listed in the
1 The USSR: Media Look at the US
3 Egypt: Countering the Critics
4 Israel-Syria: The Golan Front
6 France: Vying To Succeed Pompidou
12 Japan:
11 Thailand: Military Rumblings
8 China: Hard Line Expected at UN
9 Laos: A Coalition at Last
10 Cambodia: Out of the Shadows
16 Western Europe: Aircraft rou e
17 Communists Seeking Oil for Aid
17 Yugoslavia: Restraining the Conservatives
18 Portugal: Overseas Policy Divisive
19 Romania: Ceausescu's Coronation
MIDDLE EAST
AFRICA
20 Israel: On the Home Front
21 Turkey: The Military Watchdog
22 Ethiopia: Still Unsettled
23 Soviet Arms to East Africa
WESTERN
HEMISPHERE
24 Peru-Chile: A Volatile Border
26 Venezuela: New Directions
27 Brazil: Liberalization in Doubt
27 Argentina: Peron Switches Tactics
Comments and queries on the contents of this
publication are welcome. They may be directed to
the editor of the Weekly Summary
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the USSR:
[Soviet media have begun to send out mixed
signals on the outlook for Soviet-US relations.
The evidence is tentative, but there are signs that
Moscow has some qualms about continuing to
accord detente with Washington the degree of
prominence that has become commonplace over
the past two years or soo
/ fA major article in Pravda on March 30,
marking the third anniversary of the 24th party
congress at which Brezhnev launched his "peace
offensive," gave scant attention to US-Soviet ties.
By contrast, last year's anniversary article placed
considerable stress on the gains achieved in bila-
teral relations.)
I IThe recent article did take brief note of the
"extremely important effect" improved US-
Soviet relations have had on international affairs.
The usual references, however, to meetings at the
summit, SALT, and recent progress in bilateral
ties were missing.7
I Fin addition, the allusion to the US was fol-
lowed by a reference to the "great complexity"
of the current international situation. This situa-
tion, said Pravda, is marked by the continuing
military preparations of various capitalist coun-
tries and by their counterattacks against Mos-
cow's efforts toward detente)
I ILast year's Pravda article hailed the "para-
mount international significance" of US-Soviet
relations and praised the results of the May 1972
summit. It listed the major agreements concluded
between General Secretary Brezhnev and Presi-
dent Nixon, and it expressed optimism over
prospects for SALT.
Last week's Pravda article is not the only
straw in the wind. Earlier this year, the Soviet
Communist Party's theoretical journal Kom-
munist gave a similarly perfunctory treatment to
relations with Washington. Handling of this sensi-
tive issue in the Soviet press suggests a more
cautious attitude on Moscow's part, if not a slack-
ening of enthusiasm on the part of some Soviet
leaders
IThe Soviets have already found ways to
demonstrate their displeasure with Washington's
expanded role in the Middle East, with the delay
in granting the USSR most-favored-nation status
in trade, and with US statements on nuclear tar-
geting. These concerns, together with uncertainty
over the political situation in the US, may have
led the Soviets to pause and take stock of their
own expectations with regard to detente:?
1 This has not prevented Moscow, however,
from trying to counter what Soviet commentators
have called "pessimistic" press accounts of the
outcome of Secretary Kissinger's recent visit to
Moscow.(
One commentator said that the Secretary's
visit was a "new contribution" to relations and an
"important step" toward guaranteeing the success
of President Nixon's planned visit to the USSR.
Taking issue with negative Western press assess-
ments of the progress made on SALT during the
recent Moscow talks, the commentator contended
that mutually acceptable solutions are possible
despite the complicated nature of the problem.
The Soviet international affairs weekly, Life
Abroad, went even further, asserting that "an
agreement could be worked out in time for the
planned summit meeting."]
fA similarly positive portrayal of the Sec-
retary's visit was carried by Tass, which noted
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that improvement in US-Soviet ties has allowed
tangible results in several major areas, including
arms control. Refuting allegations about the
"tough" position Moscow adopted on SALT dur-
ing the Secretary's visit, Tass branded these idle
speculation.
)An article in Izvestia took much the same
line. It presented a more sober appraisal of the
prospect for progress at SALT, however, pointing
to the complicated nature of the problem and the
alleged opposition of the Pentagon.
There is increasing evidence that the Soviets
have decided to cut back significantly on the
number of Jews allowed to emigrate to Israel.
This decision is probably related to the poor
prospects Moscow sees for gaining most-favored-
nation treatment from the US. During the first
three months of 1974, Soviet Jewish emigration
to Israel was about 22 percent less than the same
period last year]
\The Soviets contend disingenuously that
there are simply fewer Jews who now wish to
leave the Soviet Union. According to a Moscow
radio commentator, applications for emigration
decreased sharply as a result of the October war
in the Middle East, and in January of this year
applications were less than half the number of
January 1973. The commentator claimed that
educated Soviet Jews do not want to give up the
advantages of socialism and are skeptical about
the kind of treatment they would receive in
Israeli
tt it is becoming clear, however, that the
authorities have deliberately put new bureaucratic
obstacles in the way of prospective emigrants.
These procedures have included greater police
scrutiny of the applicant, the need to submit
character references that go back at least six
months, qnd a requirement that application forms
be typed.j
I In practice, a would-be emigrant must now
quit his job at least six months before applying
for emigration, since upon applying he runs the
risk of being fired and thus receiving a poor
Awaiting Transportation
character reference. The requirement that applica-
tion forms be typed is a lesser obstacle, although
it does mean that a prospective emigrant must
secure a permit-required of all private citizens-
to purchase a typewriter, or find some other
method of having the application typed./
4 ,Such harassment has doubtless discouraged a
great number of potential applicants but probably
is not the only factor contributing 'to the decline
in emigration. Despite persistent Soviet prot-
estations that "practically any" citizen may go to
Israel, there have recently been signs that Soviet
authorities are simply refusing exit permits to
large numbers of Jews even after they have
managed to satisfy the bureaucratic requirements.
Moscow's tougher policy can probably be
atri uted to the trouble the USSR is having in
getting most-favored-nation treatment from the
US. The message seems to be that if the US
Congress is willing to turn down trade concessions
to Moscow by linking the issue to Soviet emi-
gration policy, the Kremlin is prepared to reverse
this linkage and restrict emigration until most-
favored-nation treatment is grainted.
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Egypt: Countering The Critics
f : President Sadat appears to be growing in-
creasingly concerned that criticism of his foreign
and domestic policies from the Soviets and Arab
radicals will adversely affect the willingness of
other Arab states to continue peace negotiations?
He has begun counter-attacking and, in a major
policy address on April 3, lashed out at the USSR
for being not the protector of Arab interests it
claims to be, but instead a hindrance to the Arab
cause!
SSadat recited a long history of unfulfilled
Soviet promises of aid and charged that Moscow
had obstructed his efforts over the years to initi-
ate hostilities by consistently attempting to limit
his focus to diplomatic rather than military
action. At the same time, he implied, Soviet
tactics virtually guaranteed that diplomatic action
would be fruitless. Largely because Moscow
sought to keep the Arabs militarily weak, the US
gained the impression that the Arabs were ineffec-
tive "dead bodies" too weak to bargain with or to
deserve diplomatic intervention to break the
Arab-Israeli impasse
0 f3y emphasizing that the Arabs would still be
in this stagnant situation had he heeded Soviet
opposition t:o war, Sadat was telling the other
Arabs, particularly Syria, that Moscow is an un-
reliable ally and that dependence on Soviet advice
in the cyyrrent negotiations will also do the Arabs
nogoodi
jSadat has attempted in recent weeks to
back rack from the blatant criticism of Nasir by
noting that he shares responsibility for all of
Nasir's policies and is attempting now not to
"destroy Nasir's legacy" but to correct the "nega-
tives" of his predecessor's regime. This oft-re-
peated theme---emphasized again in his speech this
week-reflects some misgivings that Soviet crit-
icism on the issue might strike a responsive chord
among Egyptians, as well as other Arabs
(g Although Sadat seems to be somewhat
defensive in countering Soviet propaganda on
internal Egyptian affairs, his outspoken attack on
Moscow's war and peace policy may herald
harsher attacks in the future on Soviet interests in
Egyptl\The speech was preceded by an AI-Ahram
editorial questioning the continued value of the
Soviet-Egyptian friendship treaty and, although
Sadat himself did not mention the treaty, he laid
(y the groundwork for a later call for its modifica-
tion if the close relationship with Moscow that it
symbolizes begins to rankle still more. Such a
move would risk Egypt's major source of military
aid, however, and Sadat will have to approach this
issue cautiously]
Soviets in treating domestic matters, although
,,in this case his approach was more in the nature
of a defense of his own policies than a direct
attack on the critics of those policieslVBoth the
7 Soviets and radical Arabs have weighed in
strongly against the anti-Nasir propaganda cam-
paign launched in Cairo newspapers two months
ago by overzealous Sadat supporters. Moscow and
the radical Arabs seized on the campaign as
indicative of a general rightward drift in Egypt,
and Sadat is concerned about the impact of their
charges that he is selling out both Nasir's "revolu-
tion" and general Arab interests for the sake of
the US and of his own domestic power position./
`Moscow, which has not yet responded to
Sadat's speech, announced on Wednesday that it
is sending a new ambassador to Cairo-Vladimir
Polyakov. Although he has less status than his
predecessor, Polyakov is an expert in Middle East
affairs and probably has the primary task of
salvaging whatever is possible of the Soviet-
Egyptian relationship
(a SSince the October war, Moscow has made
energetic efforts to consolidate its relations with
other Arab states----mainly Syria and Iraq-as
alternative areas of influence. The Soviets will
most likely, however, attempt to maintain their
military aid program in Egypt, where they
undoubtedly want to protect their investment
while waiting hopefully for the balance to again
swing back in their favor.
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6 11srael's heightened concern was prompted by
indications that the Syrians might !be preparing to
renew major offensive action.
the Syrians had shifted their forces
125X1 into a better position to launch an !,attach
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Israel-Syria: The Golan Front
Military Tensions High
growing sense of crisis developed on the
Golan front this week as shelling between Israeli
and Syrian forces entered its fourth weekTel
Aviv demonstrated its concern by giving wide
publicity to its reinforcement of the front in a
move apparently designed both to warn Damascus
against any renewal of offensive action and to
reassure the home front of Israel's military
preparedness. Late in the week, however, Israel
reduced its level of military action, possibly to
give the situation time to cool down, as well as to
assess the effect of its recent measures on
Damascus.,
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I ~-r [Damascus apparently believes it must main-
tain military pressure on the Golan front to sup-
port its negotiating aims. It may also consider
that an aggressive posture now will blunt criticism
of any future concessions. Israel views this as a
military threat, however
1, One result of the prolonged period of
grb Wing tension has been to increase the chances
of miscalculation by both sides, raising the
possibility that a minor incident could lead to a
major outbreak of fighting. Both Syrian and
Israeli forces are in positions from which they
could attack with little or no warning, and either
side might launch a pre-emptive attack if it
believed the other were about to strike
Negotiations Begin
J On the political side, the Syrian delegate to
the Washington disengagement talks, Brigadier
Hikmat Shihabi, is scheduled to arrive next week.!
1 During his visit to Washington last week,
srae i Defense Minister Dayan submitted a disen-
gagement proposal which, according to the Israeli
press, would leave the Israelis still in control of a
part of the salient captured in the October war.
This proposal, which probably represents only
Israel's initial bargaining position, would clearly
be unsatisfactory to the Syrians, who reportedly
will insist that the Israelis withdraw completely
from the salient as well as from the town of
al-Qunaytirah, which was captured in the 1967
war. The Syrians also want a linkage between an
Israeli commitment to withdraw from all the oc-
cupied territories and any immediate disengage-
ment accord. For their part, the Israelis are in-
sisting on the exchange of POWs prior to any
withdrawal.]
I (o [The Israelis are aware that their proposal is
unacceptable to the Syrians, but they would
apparently prefer to see the negotiations drag out
for some months in the hope that the Syrians will
modify their position. It is clear that for any
disengagement to occur, both sides will have to
modify their present positions 5ignificantly.~__
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France: Vying to Succeed Pompidou
The first round of elections to selec
uc-
cesso to President Pompidou will be held on
April 28 or May 5-earlier than either the Gaull-
ists or their leftist rivals would have preferred.
Gaullist Jacques Chaban-Delmas and Socialist
Francois Mitterrand are the main contenders, but
there will be several other candidates; most will
declare within a week.
The Communists, Socialists, and left Radi-
cals had hoped an election would not occur until
at least next year. They wanted more time to
develop an image of international statesman for
their leader, Socialist Francois Mitterrand, 57.
The leftist alliance also hoped for time to exploit
popular dissatisfaction with the government's fail-
ure to resolve the country's economic problems.
One Socialist leader recently said, "If we believed
in God, we would be in church lighting candles
for Pompidou's health."
The leaders of the leftist alliance are still not
agreed on how to present their candidates. The
Communists want Mitterrand to run as the sole
leftist candidate fearing that one of their own
would do poorly and expose the party's weak
position. Mitterrand, however, wants his allies to
Francois Mitterrand
field candidates so he can run on a moderate
platform, rather than be associated with the more
extreme portions of the alliance program. He is
gambling that he will win enough' votes on the
first round to make it into the second, where he
hopes to prevail with the additional support of
Communist voters.
The other main candidate, Jacques Chaban-
Delmas, 58, is a liberal Gaullist and a former
prime minister. At a party congres's last Novem-
ber, his Gaullist colleagues indicated that they
would support him as a successor to Pompidou.
The governing coalition-Gaul lists, Independent
Republicans, and a small centrist! group-is in
some disarray however. One of their major prob-
lems is that Giscard d'Estaing, the leader of the
Independent Republicans, may chgose to break
coalition unity and run in the 1 first round.
Giscard, 47, was thought to be Pompidou's favor-
ite, but he faces serious opposition, from ortho-
dox Gaullists. Giscard is also hampered by his
patrician image and his association with France's
economic woes as Pompidou's economics and
finance minister.
First-round challenges would', also come
from:
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Behind Pompidou; Messmer, Faure,
Giscard d'Estaing,
? Pierre Messmer, 58, the lackluster, or-
thodox Gaullist prime minister.
? Jean Lecanuet, 53, leader of one of the
two center union factions. He won 16 percent
of the first ballot in 1965 against De Gaulle.
He may run to avoid having to associate him-
self prematurely with one of the front run-
ners;
? Edgar Faure, 65, the leader of the left-
wing Gaullists and president of the National
Assembly. He sees himself as a compromise
candidate;
? Alain Poher, 64, the centrist who will
act as interim president. In 1969, when he
served in that capacity after De Gaulle's resig-
nation, Poher won 42 percent of the second-
round vote against Pompidou.
Foreign Minister Michel Jobert is now re-
ceiving considerable publicity for his aggressive
foreign policy tactics, but he lacks a political
base-he is not even a member of any party-
which makes him an unlikely candidate.
No president has been elected in the first
round under the present system. In view of the
many likely candidates, this election probably
will be no exception. Uncommitted voters make
up some 30 percent of the French electorate and
usually determine the outcome. The French con-
stitution provides that the Constitutional Council
must set an election date within 20 to 35 days of
the death of a president. Candidates must file by
April 9 or 16. If no candidate receives an absolute
majority on the first ballot, a second must take
place two weeks later, with the two candidates
who receive the most votes on the first ballot
participating in the run-off. The law also allows
the top candidates to withdraw in favor of one of
the first-ballot losers. This can happen when a
candidate is thought more likely to draw wide
second-ballot support. On the second ballot, a
simple majority elects.
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CHINA: HARD LINE EXPECTED AT UN
I Peking is demonstrating the importance it
attaches to the special session of the UN General
Assembly next week by sending the highest rank-
t jng Chinese delegation ever to the UN)IVice
Premier Teng Hsiao-ping, a member of the UN)[ Vice
will lead the delegation, with Vice Foreign
Minister Chiao Kuan-hua, a veteran at UN meet-
ings, as his deputy
IThe special session, which will deal with raw
materials and economic development, affords
China the opportunity again to champion efforts,
`
by the developing countries to control their own
natural resources. The Chinese may also antic-
ipate that they will have an opportunity to _dis-
cuss Taiwan and other issues with US officials
14t the session itself, the Chinese almost
certainly will criticize the US and USSR for
`plundering the economic resources of the
developing countries. The Chinese, for example,
probably will defend the pricing policies of the oil
producing states and seek to blame high oil rites
on the "exploitative" nature of capitalism and on
manipulations by the large oil companies. Because
of leftist pressure built up during the current
anti-Confucius, anti-Lin campaign in China, Teng
and Chiao probably will be much more critical of
the international activities of US orporations
than they have been in the recent past)
A Chou seems to be holding firm on other
foreign policy issues bearing on relations with the
West. Western businessmen have encountered few
i delays in conducting business with the Chinese,
and the volume of Chinese imports from the West
continues high despite criticism in the Chinese
media of "over-reliance" on such imports. Despite
the fact that Chou is under pressulre-on Taiwan
as well as other issues-there appears to be no
alteration in the substance of Chinese forei n
policy.
\Increased criticism of US business would be
in line with the more militant note Peking has
been sounding on several foreign policy issues in
recent weeks. Speeches by Premier Chou En-lai
have included reminders that China, as a socialist
country, would continue to support revolutionary
causes, and Chou's speech at a banquet on April 1
for visiting Cambodian Communist leader Khieu
Samphan was resolute in its reaffirmation of rev-
olution in the abstract. Increasingly militant
rhetoric on some international issues has been
accompanied by a harder attitude toward Taiwan
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LAOS: A COALITION AT LAST
fter more than 13 months of hard bargain-
ing, the two Lao sides are ready to form the
nation's third coalition government in nearly 17
years. Prime Minister Souvanna Phouma and his
half-brother, Lao Communist chairman Prince
Souphanouvong, are now expected to present
their new coalition cabinet and advisory politica
council to -the King for royal investiture on April 5.
he 'Final breakthrough in the protracted
negoctiations resulted from private discussions
between Souvanna and Souphanouvong's personal
emissary, Phoumi Vongvichit, who recently
returned to Vientiane. The success of this dia-
logue paved the way for Souphanouvong's return
to the Lao, capital after an absence of some 11
years. Following a brief stopover in Hanoi, the
Lao Communist leader-accompanied by a small
entourage of senior officials-arrived b Pathet
Lao aircraft in Vientiane on April 3]A crowd
'estimated at several thousand, including many
students, welcomed the Prince from Sam Neua lin
a prepared statement, Souphanouvong struck` a
positive note on the prospects for success of the
new government, but he cautioned that on the
basis of past experience-an obvious reference to
the rapid collapse of coalition experiments in
1957 and 1962-obstacles may yet remain in the
search for peace and national reconciliation
JSouvanna and Souphanouvong proceeded to
the royal capital of Luang Prabang in preparation
for the investiture ceremonies. They are to be
joined there by the entire membership of the
coalition cabinet and advisory political council.
I'"1 An official roster of the new coalition's
membership has not yet been announced. It
appears, however, that key individuals in Sou-
vanna's present cabinet will continue to occupy
important portfolios-including defense, interior
and finance--in the coalition cabinet, and that,
for both sides, the new government will be a
reflection of the remarkable staying power of the
Lao ruling elite over more than a decade.
Souvanna Phouma
The protocol to the February 1973 peace agree-
ment weights the leadership of the joint council
in favor of the Pathet Lao
makes the council
,
a
Policy-recommending body independent of and
co-equal with the coalition cabinet and ive 't
s
the responsibilitY for or anizin g
9 g general elections
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l? After a long period of obscurity, Khmer
communist "defense minister" Khieu Samphan is
having his day in the international limelight.
When Samphan arrived in Hanoi on March 28, he
received a warmer welcome than that accorded
Sihanouk earlier on his way back to China from
Laos. The Chinese staged another impressive
reception when Samphan arrived in Peking on
April 1. Samphan's next stop reportedly will be
Pyongyang.
[in his major speech in Hanoi, Samphan
emphasized that the only solution in Cambodia
was for the US to end its "aggression" and ter-
minate all forms of support to the Lon Nol gov-
ernment. Samphan asserted that Cambodians
would then be able to settle their own affairs. He
did not repeat Sihanouk's recent call for direct
talks with Washington. North Vietnamese leaders
publicly assured Samphan that Hanoi could be
counted on to render full support to the Khmer
Communists. They also indicated that they would
resist any efforts to press the insurgents into
negotiating
addition, his trip to Peking has served to identify
the Chinese more closely with the Khmer Com-
munist leadership. The prominence accorded
Samphan also raises questions concerning Siha-
nouk's political future.,`
On the Battlefront
[Khmer Communist forces this week ap-
peared intent on following up their recent victory
at Oudong with another at Kampot. They kept up
their pressure against the southwestern provincial
capital, pushing government defenders back
within a mile of the city at several points. Al-
though Phnom Penh has sent moire reinforce-
ments to Kampot, the situation there at mid-week
continued to deteriorate.'
.3 )-'"Closer to Phnom Penh, lead elements of the
Cam odian Army units participating in the effort
to retake Oudong were still stalled a mile short of
the town.!
A Change of Councils
,-q [On the political front, President Lon Nol has
In Peking, Samphan stuck to his militant line
and gain denounced the US and its "lackeys" for
alleged espousal of "sham cease-fire, sham talks,
and sham peace." Premier Chou En-lai's public
remarks reflected the cautious tone that has char-
acterized Peking's statements on Cambodia over
the past year. Although Chou made no specific
reference to peace proposals, he implied approval
of a negotiated settlement in Cambodia by citing
the Paris and Vientiane cease-fire agreements as
"victories" in Indochina:
scra pea the High Political Council. Ostensibly
the country's ruling body, the; council had
become increasingly ineffective cue largely to
political frictions among its three members-Lon
Nol, Republican Party head Sirik Matak, and
former chief of state Cheng Heng. In recognition
of the need to maintain some sort of high-level
advisory body, however, Lon No) subsequently
established an "executive councilL" Besides the
President, the new council consists of Matak,
Prime Minister Long Boret, and Ca bodian Army
chief General Fernandez. The inclusion of the last
two will allow the principal executors of gov-
ernment policy t participate more effectively in
From the Khmer Communist viewpoint,,z-fits formulation.jLAlthough Matak is likely to be
Samphan's visits probably are intended to empha- ' pleased at the prospect of having more responsi-
size that the Khmer Communists are an inde- bility, he is certain to remain sensitive to any
pendent force that must be reckoned with politi- efforts by Lon Not to impose his will on the
cally before the fighting in Cambodia can end. In council.
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THAILAND: MILITARY RUMBLINGS
j\fter nearly six months of mostly lackluster
civilian rule in Bangkok, the first signs of restive-
ness among the Thai military have begun to
appear. Earlier attempts to develop a democratic
system of government have almost invariably
foundered for lack of strong leadership and have
resulted in military coups. From the moment that
Thanom Kiittikachorn's military regime collapsed
last October and he was replaced by civilians,
local observers have been speculating as to how
long the military, in control for most of the past
40 years, would allow "democracy" to last this
time.)
Sanya
Prime Minister Sanya
issued
-de - a statement ing that the government would
resign or that the cabinet would be reshuffled. He
announced, however, that he was bringing four
senior statesmen into the government as advisers
to the prime minister, including former foreign
minister Thanat Khoman and economist Puai
Ungphakon. Sanya may hope that bringing the
outspoken Thanat and the capable Puai into the
government will enhance its image, if not its per-
form nce, until elections can be held later in the
year/
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the increasingly generous terms of Japanese aid,
(though the terms still are less liberal than those
of most major Western donors. Tokyo, with few
exceptions, will probably not allow its loans to be
used to procure goods and services from other
developed countries. Japanese businessmen and
government officials generally want development
project loans to be used to finance Japanese
exports. In a few instances, Tokyo has allowed
world-wide procurement, largely because of
political or oil-supply considerations, and such
exceptions probably will still be made when
considered expedient.
46 Jlapan's dependence on imported oil and
other commodities is bringing about a significant
shift in the distribution of its aid. Assistance
increasingly will flow to countries and regions
producing needed minerals and agricultural
commodities. A cabinet-level International Co-
operation Agency, being formed to coordinate aid
programs, is expected to promote aid to help
secure supplies of key raw materials.'
~L Following the October war and the Arab
oil-production cutbacks, Tokyo began promising
substantial loans and technical aid to countries in
the Middle East, both oil producers and non-
,e producers, to help ensure friendly ties with oil-
Japan has pledged at
rich states. Since November
,
okyo is increasing its economic aid toLfii least $720 million in loans to several countries,
developing nations despite concern over its bal- -r including about $380 million to Egypt. This
ance-of-payments position. Under the budget for upsurge in aid accounts for much of the over-all
?fiscal 1974, funds for grants show a more than rise in the Japanese aid budget for this fiscal year,
40-percent gain over last year, to about $500 -s Tokyo's aid to this area had been minimal)
,~
million. Slightly over half this amount is ear-
markedfor contributions to multilateral organiza-
tions, such as the International Development
Association and the Asian Development Bank.
Loan allocations are set at about $840 million, up
20 percent. Total aid outlays last year were about
$1 billion, a 7_Q-percent jump over the level
In addition to the large grant component,
mosf loans carry concessionary terms, reflecting
Despite the large amount of aid to the
id le East, the major portion of Japan's bila-
teral aid probably will continue to go to countries
in South Asia and the Far East. Resource-rich
Indonesia, for example, is slated to receive some
$400 million in loans this year. Latin America
and Africa will have the lowest priority for aid,
but some mineral-rich countries-such as Peru,
Bolivia, and Zaire-are likely future recipients.
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Poth British and French leaders played to
opinion at home in their presentations at this
week's EC Council meetings in Luxembourg. Paris
-made a concession only on US trade demands.
The stiff positions of the two may preclude prog-
ress for some time on almost all issues under
consideration by the Nine. Over the next month,
in any case, the attention of all the EC members
is likely to be focused on the French elections.]
ment except for its references to improving rela-
tions with the US, and the Germans called on the
British to relegate national interests to the back-
ground.
'The initial reactions to Britain's tough tone
in demanding new terms of membership in the EC
have been generally negative, the prevailing senti-
ment being that the implied ultimatum-better
terms or UK withdrawal from the community-is
not conducive to smooth negotiations. Britain's
partners are virtually united against changes in the
basic EC treaties. Concern over a serious clash
between London and its partners is leading some
officials of the Nine, especially from the smaller
countries, to urge moderation and a matter-of-
fact approach to Britain's stand. These officials
take some comfort from London's pledge to con-
tinue participation in community business while
renegotiations are under way. They also hope that
Britain's specific requests, when made, will prove
amenable to compromises within existing EC
structures and policies.
?Foreign Minister Jobert noted pointedly,
how ver, that applicant states had ample opportu-
nity during the negotiations for membership to
'make their points of view known, and that it was
necessary for the new members to adapt to com-
munity procedures. Jobert characterized as
generally unacceptable the British intention to
continue to participate in community activities
while reserving the right to refuse further steps
toward integration that would prejudge the re-
negotiation issues.1
Il talian Foreign Minister Moro disagreed
entirely with Foreign Secretary Callaghan's state-
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Page 14 WEEKLY SUMMARY
=o'" 4
3 he EC took positive action only in the field
of trade negotiations with the US. The foreign
ministers-including the French-agreed to
improve the EC's offer of tariff reductions to
compensate for the adverse effects on American
exports of EC enlargement. Even the revised offer
is still likely to fall short of Washington's de-
mands, but it will probably meet the US deadline
of May 1. Paris had insisted last November that
the EC's offer on compensation at that time was
"final," but apparently softened its position
because of recent US warnings of retalia-
Callaghan entering EG
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(,pl The joint British, West German, and Italian
project to develop a European Multirole Combat
Aircraft (MRCA) continues to encounter delays,
rising costs, and technological difficulties. The
project is about six months behind schedule, and
some of the more pessimistic European experts
on the project speculate that the plane will never
get beyond the prototype stage?
Serious problems with the MRCA's engines
have twice delayed plans for its first flight---now
expected to take place in May or June.
France in developing a new low-level, twin-
engined Dassault fighter aircraft which is sched-
uled to be operational around 1980'. This aircraft,
like the MRCA, will have a multirole capability
allowing it to carry out reconnaissance, strike, air
superiority, and interceptor missions. The council
of ministers of the seven-nation Western Euro-
pean Union reportedly will discuss the French
proposal at a future meeting.
similar French proposal several years ago
was urned down by the British-West German-
Italian consortium, and it is likely that Paris'
current initiative will be rejected as well. A more
likely alternative is that the countries involved
will purchase less-expensive aircraft tailored for
specific missions; West Germany and Italy have
already expressed interest in this approach. Such
aircraft could include the US-built A-7 and F-4, as
well as the Lockheed Lancer and the YF 16 and
17, lightweight fighters now under develop-
25X1 k" \The cost of the airplane already has far
exceeded initial projections. The cost per aircraft
was originally estimated at the equivalent of $2.5
million.
I Ps a result, the West Germans and the
Italians are seriously considering withdrawing
from the project and have begun seeking aircraft
elsewhere. The UK does not want to cancel the
project, but budgetary constraints may force
London to restrict its participation and reduce
the number of planes it might purchase.
The French suggested in March that the
three participants scrap the project and join
Artist's conception of MICA
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5tuht I
COMMUNISTS SEEKING OIL FOR AID
P" (p3 -14)
he USSR and Eastern Europe are seeking
more oil from the Middle East as well as increased
cooperation with the national oil companies in
producing countries. Eastern Europe is increasing
its reliance on Middle Eastern oil-about one
fourth of their imports is scheduled to come from
Iran and the Arab producers this year.
The USSR and Eastern Europe have pro-
vided more than $1.4 billion of aid for the devel-
opment of national oil industries in the less-devel-
oped countries-almost half of which went to
India and Iraq. Since 1969, the agreements in-
creasingly stipulate repayment in oil. In February,
Moscow was negotiating a contract with Iraq to
accelerate development of the third and final
stage of the North Rumaila oil field. This year,
Romania extended the only new Communist aid
for oil development-a $37 million credit for
machinery and equipment to Argentina. More-
over, Bucharest and Ecuador jointly announced
plans for Romania to provide, probably on a
commercial basis, technical services to Ecuador's
petroleum sector.
Although still less than 10 percent of total
Soviet - East European aid undertakings in the
Third World, oil development assistance in some
countries has been a critical factor in establishing
national oil industries. This was particularly true
in India, where Communist assistance made pos-
sible 50 percent of New Delhi's crude oil produc-
tion and 60 percent of its refinery capacity. Iran's
natural gas industry was encouraged by Soviet
willingness to take gas, which had been largely
burnt off in the past. Soviet-developed oil fields
and a Czechoslovak-built refinery account for all
of Syria's production capacity.
The Communist countries have given aid to
national oil industries in hopes of assuring a guar-
anteed oil supply for Eastern Europe, but this is
not succeeding. In January, Iraq stopped oil ship-
ments on Soviet account after Moscow refused to
pay $17 per barrel, the price Baghdad was de-
manding from Western customers. Shipments
under previous agreements apparently have re-
sumed recently. Earlier Soviet plans to obtain as
much as 300,000 barrels per day of Iraqi oil this
year-three times the estimated 1973 level-may
be scaled down. It also is doubtful that the two
parties will agree to long-term deliveries at fixed
prices. East European countries, often agreeing to
pay the higher prices demanded for Middle East
oil, nevertheless also had difficulty in buying oil
this year. Libya, however, may become an im-
portant supplier to Eastern Europe; agreements
signed so far this year call for a doubling of oil
exports.
Some less-developed countries that purchase
Soviet oil are facing problems, in part due to
Soviet difficulties in procuring oil from the Mid-
dle East. Moscow notified Ghana, for example,
that the price for Soviet crude would be raised to
nearly $15 a barrel. In other moves, Moscow
reportedly reduced its 1974 commitment to
Morocco below the 20,000 b/d supplied last year,
and it told Bangladesh that it will now have to
pay hard currency for Soviet petroleum prod-
25X1
Yugoslavia
RESTRAINING THE CONSERVATIVES
.77 kenior party leaders are again warning neo-
Stalinist zealots to fall into line with established
party policy or face stern disciplinary measures.
Some of the phrasing revives the question of
Soviet intentions toward Yugoslavia, a rare occur-
rence since Tito's rapprochement with Brezhnev
hit full stride last fall'
The warnings almost certainly reflect an
eme ing consensus in the leadership that conserv-
ative elements are using Tito's drive to tighten
party discipline as a screen for attacking their
ideological opponents. Tito himself has cautioned
against "witch-hunts" or other attempts to alter
his moderate internal policies. Nevertheless, con-
servative extremists, in boldly agitating for com-
prehensive party controls, have recently criticized
prominent party dons-like Vladimir Bakaric in
Croatia-for their softness toward liberals and
nationalists.
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Last week, Edvard Kardelj, Yugoslavia's top
ideologue and a close friend of Tito, upbraided
those who favor a return to the Stalinist methods
of the country's early postwar years. He told a
party meeting in his native Slovenia that the ac-
tions of ideological "revanchists" amounted to a
"reactionary blow" against the "free self-manage-
ment of the peoples of Yugoslavia."
IBosko Siljegovic, the chief of the presidium's
foreign policy commission, elaborated on Kar-
delj's charges at a republic party congress in Bos-
nia-Hercegovina-a conservative stronghold. He
stressed that neo-Stalinists are prone to subor-
dinate national interests, even the sovereignty of
Yugoslavia, to the fight against imperialism. He
added that such factions would inevitably seek
foreign military and political support
studied attempt to calm the unrest over this
troublesome issud7
"?'" rln a speech on March 28, Caetano reassured
the ultra-conservative members of the establish-
ment by declaring that Portugal would never
abandon its African provinces: Caetano also
hinted that the military rebels who made a feeble
attempt to overthrow the government on March
16 would be dealt with gentlyi. This attitude
should relieve some of the simmering discontent
within the military over the arrest of the officers
who favored a change in overseas policy]
Caetano seemed to be acutely aware that
more internal disorders might be in the offing. He
warned the Portuguese that more anarchy would
inevitably lead to the establishment of an "i
?~
ron
1 There is no evidence that the Yugoslav authoritarian regime." Caetano claimed he would
part 's conservative zealots have engaged in any not like to see that happen, and his warning
illicit dealings with the Soviets. Given the extent probably is a signal that he is under strong pres-
of the Tito-Brezhnev rapprochement, Moscow sure to clamp down hard if there is any further
might well reject such potentially embarrassing unrest
approaches. Charges of anti-Yugoslav activity
nevertheless serve as a warning that the party will
quash factional activity of any kind. Indeed, Sil-
jegovic's allegations are the type of rhetoric that
preceded the Yugoslav purges of 1971-72, and the
still-fresh memory of these events ensures that his
words will not fall on deaf ears-1
7' Vito has so far remained out of the contro-
versy, although he has clearly sanctioned Kardelj's
and Siljegovic's warnings. Having pronounced
only last November his "trust and confidence" in
Soviet party leader Brezhnev, Tito probably
deems the veiled rhetoric hinting at inimical So-
viet intentions to be an uncomfortable but neces-
sary course of action.
Portugal
OVERSEAS POLICY DIVISIVE
J1"] jPrime Minister Caetano's refusal to censure
either side in the quarrel over Portugal's policy
towards its overseas territories appears to be a
-7e Vhe only critical remarks in the speech were
directed at foreigners, whom Caetano accused of
insisting that Portugal surrender its African em-
pire while refusing to consider the solutions set
forth in General Spinola's book. It was the first
time the Prime Minister has mentioned Spinola's
book, and his remarks implied that he saw some
merit in Spinola's thesis. Spinola has been at the
center of the controversy because his book, which
gwas published in February, argued that a military
solution was impossible and that Portugal's inter-
ests would be better served if Lisbon extended
greater autonomy to the African provinces)
> 'Meanwhile, more problems have surfaced in
Mozambique, one of Portugal's' overseas terri-
tories. A petition circulating there condemns the
church hierarchy in Mozambiquelfor collaborat-
ing with Lisbon in maintaining a repressive system
that exploits the people of the!, territory. The
petition was signed by the bishop of Nampula,
who is Portuguese, and by all the members of an
Italian missionary order stationed In the Nampula
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Last week's election of Nicolae Ceausescu to
the new office of president of the republic, and
the accompanying personnel and organizational
changes, further institutionalize the Romanian
leader's predominance. The changes also add a
new dimension to an emerging form of socialism
that is uniquely Romanian
;Establishment of the presidency weakens
bot the existing state council (the corporate
"head of state") and the office of premier. The
new presidency assumes most of the functions
and powers of the council, including its role of
supreme representative of the state. Moreover, the
president's right to preside over the council of
minister effectively undercuts the role of the
prem ier
Ceausescu strengthened his grip on the party
by abolishing the once prestigious Permanent
Fiand-picked membership of the Secretariat and
the Executive Committee. Ceausescu's presumed
chairmanship of the new Standing Bureau, which
is charged with coordinating party and govern-
ment activity, further enhances his authority,
The personnel changes made last week are in .Rion of the "cult of personality') nd that the
keeping with Ceausescu's practice of rotating of- coronation-like atmosphere lacked only a crown.
ficials between party and state posts. This is part2 After receiving a presidential sash and a golden
of his effort to raise the level of managerial com a scepter, he pledged to use his office "to achieve
petence and to increase efficiency by finding the the brilliance and grandeur of the Socialist
correct balance of loyalty and expertise./ Republic of Romania." The Soviet ambassador
''i he most significant shift was the retirement
of 72-year-old Premier Maurer "because of health
and age," although he reportedly had policy dif-
`ferences with Ceausescu. He was replaced by
Manea Manescu, a former deputy premier, a
leading economist, and a long-time adviser to
(.: Ceausescu. The Romanian leader had evidently
found a convenient opportunity to retire Maurer
with honor and to replace him with a man of
proven loyalty and pliability.)
Ceausescu's
inauguration as president was a s owy demonstra-
was reportedly so chagrined at these events that
he initially refused to sign the Bucharest diplo-
matic community's message of congratulations.'
rOn balance, last week's events seem to mark
the beginning of a process that will continue until
the party congress convenes late this year.
Ceausescu apparently intends to use the congress
to put his personal stamp on the structure and
membership of all elite party and state organs,
while further "creatively" tailoring Marxism-
Leninism to purely Romanian circum-
stances.
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ISRAEL: ON THE HOME FRONT
Nom's+,at rF
The partial results oche official inquiry into
Israel's conduct of the war last October, which
were published this week, are unlikely to mute
the controversy surrounding the handling of the
war by Prime Minister Meir's government. In
effect, the findings clear the government of direct
responsibility for the shortcomings uncovered in
the investigation and place the blame squarely on
the military.
The five-member commission, which is
headed by Israel's chief justice and includes two
former chiefs of staff, chose not to deal with the
broader question of ministerial responsibility and
focused on the more easily defined issue of mili-
tary accountability. Such an approach should for-
mally get Prime Minister Meir's government off
the hook, but it has raised a storm of controversy
and leaves the commission open to charges of
conducting a whitewash.
Israeli editorials are already claiming that the
commission report is suspiciously protective of
Defense Minister Dayan, in particular, and are
calling on the commission to direct more atten-
tion to the activities of the senior political leaders
during October. Predictably, the opposition
Likud bloc called on the government to accept
the moral and political responsibility for the
short-comings highlighted in the report and to
resign. The Likud is likely to offer a motion of no
confidence in the government when the Knesset
meets in a special session on April 10 to hear a
government statement on the commission's find-
ings. The government should be able to withstand
such a challenge.
Chief of Staff Elazar, who quit in view of
the report's findings, complained in his letter of
resignation that the report was unfair in treating
him differently from Dayan. Professional military
men are likely to become more bitter and even
demoralized should the commission's final report,
expected in late April or May, absolve the govern-
ment of direct responsibility and put the burden
of blame on the military establishment, This
could touch off resignations by officers not impli-
cated by the commission.
THE OFFICIAL INQUIRY INTO THE WAR
FOCUSED ON MILITARY ACCOUNTA-
BILITY RATHER THAN MINISTERIAL
RESPONSIBILITY.
The report bore down particularly hard on
the military intelligence staff, charging it with
failing to detect Arab preparations for war and
improperly evaluating available information. It
recommended the removal of intelligence chief
Zeira and several other senior military intelligence
officers, including Zeira's deputy for estimates.
Meanwhile, Mrs. Meir's cabinet avoided an-
other potential crisis when the Notional Religious
Party's central committee, in a stormy session,
voted to endorse the party leadership's earlier
decision to join Mrs. Meir's coal',ition. The vote
failed to head off the resignation of Social Wel-
fare Minister Hazani, who held one of three cabi-
net posts allotted to the party. Hazani said his
action was motivated by the difficulty he had in
reconciling the party's decision to stay in the
government with contrary advice from Israel's
Chief Rabbinate. Hazani, however, assured Mrs.
Meir of his continued support in the Knesset.
The National Religious Party remains di-
vided over the question of participation in the
cabinet without having first obtalined legislation
revising the Law of Return to apply only to
orthodox Jewish immigrant converts. Despite
these strains, the party's other two cabinet
members-Interior Minister Burgl and Religious
Affairs Minister Raphael-apparen',tly will stay on.
The party will not immediately name a re-
placement for Hazani, presumably as a gesture to
its more conservative wing.
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f The coalition government of Prime Minister
Bulent Ecevit, in office since February, is pushing
controversial political-amnesty legislation and
considering lifting the ban on cultivation of
opium poppies. In tackling these issues, it has met
behind-the-scenes pressure from conservative mili-
tary officers, who are wary of both coalition
parties and determined to prevent any deviation
from what they consider Turkey's national in-
terests./
1'1- I
A general amnesty-particularly for "crimes
of t ought -was an important issue in the elec-
tion last fall for Ecevit's left-of-center Republican
Peoples Party, the dominant partner in the gov-
ernment coalition. Senior officers, however,
object to provisions in the government's bill that
would include in the amnesty those charged with
disseminating communist propaganda and with
advocating violent overthrow of the government.
`J Military leaders have rallied their supporters
in parliament and believe the provisions they
oppose, which have been attacked by the opposi-
tion parties,, will be removed. The controversial
provisions are also disliked by fervently anti-com-
munist deputies of the Islam-oriented National
Salvation Party, the junior coalition partner,
although they have reportedly agreed to vote for
the bill.)
IThe army has also made its weight felt on
the opium poppy question. The opposition of
most officers to ending the ban on cultivation, a
move advocated by both coalition parties during
the election campaign, was probably partly
responsible for the government's postponement
of a decision on the issue until the end of July.
The army does not want to complicate relations
with Washington, lest it jeopardize US military
aid. The ban has been unpopular, however, among
peasants in the poppy-growing areas, who are
being courted by the opposition parties in antic-
ipation of a possible breakdown of the present
coalition and early elections. The planting of
poppies for seed was resumed on state farms last
month to ensure adequate seed stocks for a
normal fall planting.
I Military pressures on Ecevit's government
raise the specter of the March 1971 "coup by
memorandum" in which the army forced the
resignation of the Justice Party government, led
by Suleyman Demirel, and brought about a two-
and-a-half year period of rule by military-backed
"above party" cabinets. Although the key officers
who signed that memorandum have now been
retired and the army displayed considerable
patience during the three-month crisis that pre-
ceded the formation of the present government, it
clearly has not given up its role as watchdog.
Ecevit reportedly hopes to retire most of the
remaining senior officers who supported the 1971
coup. He will have until August-the customary
time for retirements -to generate enough support
within the military to ensure that there will be no
adverse reactions.
Turkish farmer in poppy field
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NWrest in the security forces eased during
the ast week as moderate elements appeared to
gain strength over radicals, and the government
took new steps responsive to earlier demands by
military and civilian dissidents. The breather may
be short-lived, however. Civilian turbulence is
growing in the provinces, where townspeople are
complaining about local corruption and peasants
are becoming increasingly itated over the ex-
plosive issue of land reform.
Emperor Haile Selassie was forced to accede
o demands for an inquiry into corruption among
present and former high-level officials to calm the
t/IMeanwhile, more serious civilian demonstra-
-p'tions occurred during the week in at least half of
r.;~Ethiopia's provincial capitals and in numerous
other towns in support of prompt action against
corrupt and incompetent local officials. Local
administration reportedly has broken down in
some areas because officials are staying away
from their posts or have been placed under house
arrest by town smen~Jormally submissive parlia-
mentary representati s are becoming more vocal
in their denunciation of provincial governors; one
deputy called for the dismissal of all 14 gov-
ernors, whom he labeled "arrogant mini-
dictators.",
military unrest. Late last week a seven-man in-
vestigative commission was named that includes a J` fhe greatest potential for violence comes
police colonel and an army officer. The commis- fron the mass of uneducated rural Ethiopians.
sioners are widely regarded as men of integritylthough most of these people apparently remain
and competence; two have been prominent in r loyal to the Emperor, they want ,changes in land
progressive circles. Initial reaction to the appoint- tenure that will guarantee them their own farms
ments has been generally favorable, although the and provide relief from the large rents paid land-
US Embassy reports that some reformers in the lords. Stirred up by reports of urban unrest,
military doubt the panel packs enough political peasants in some areas have taken matters into
weight to carry out a thorough investigation] their own hands, murdering landowners and
seizing land.?
11 jArmy and police units in Asmara that had
broadcast peremptory demands for swift legal
action against official corruption and arrested
some 20 police officers have returned to their
barracks. Paratroops, however, continue to con-
trol the air base at Debre Zeit, where since March
25 they have been containing radical air force
personnel who had threatened direct action
against the government of Prime Minister Endal-
katchew. Tension between the paratroops and
airmen remains high.
jEarlier in the week the Defense Minister
issued a public statement charging that "irrespon-
sible elements" in the armed forces-a clear ref-
I ?irThe tribal nature of the landlord-tenant con-
ct I increases the likelihood of more violence.
Landlords are mostly members of the more
sophisticated, politically dominant tribes; tenants
are mainly members of the poorer, less-educated
tribes whose resentment is coming to the surface
after years of submissiveness?
'IEndalkatchew has attempted to calm the
rowing peasant unrest by promising that the
'government will soon issue a policy pronounce-
ment on land reform. The implementation of land
reform and the dismissals of provincial officials, if-
carried out, will undermine the power of the local
erence to the rebellious airmen-had attempted a ,4, nobility and landowners who have formed the
coup last week. A demonstration of solidarity
with the air force radicals staged by students in
Addis Ababa in reaction to the statement was
quickly dispersed by riot police.?
main power base of the regime.. They may be
forced to decide whether to accept or resist the
central government's intention to carry out far-
reaching changes.
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rMoscow is using its military aid programs in
East (6Africa in an effort to increase its influence
there. Somalia is receiving MIG-21 jet fighters and
a surface-to-air missile system-the most sophis-
ticated weapons ever sent to East Africa. In addi-
tion, long-dormant aid programs in Uganda and
Tanzania are being revived.
Somalia, which has been anxious to upgrade
its mainly Soviet-equipped military forces, has
received 15 MIG-21s this year. The air force flies
MIG-15s and 17s, but has only a limited capa-
bility to operate MIG-21s-seven pilots are re-
portedly trained on the aircraft.
THE PURPOSE: FRIENDS AND INFLU-
ENCE AT THE EXPENSE OF THE CHI-
NESE, AND PORT FACILITIES FOR SO-
VIET INDIAN OCEAN NA VAL FORCES.
After a hiatus of several years, the Soviets
have resumed arms shipments to Uganda. Re-
lations between the two countries cooled when
President Amin came to power three years ago,
but have improved over the past year. Some five
MIG-17 jet fighters, ten T-34 tanks and six ar-
mored personnel carriers were delivered last Nov-
ember.
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The increase in Soviet military aid to East
Africa appears to represent a pragmatic and
opportunistic response tailored to events in each
country. Moscow is eager to win friends in East
Africa, especially at the expense of the Chinese,
and to secure the use of port facilities for its
Indian Ocean naval forces. The Soviets are still
concerned about maintaining stability in the area,
however, and have cautioned the Somalis, for
example, about pressing their irredentist claims
against Kenya and Ethiopia. Moreover, it is
unlikely that the additional Soviet arms will give
any recipient a significant military advantage over
its neighbors. Somalia, Tanzania, and Uganda do
not now have the capability to utilize effectively
the equipment currently in their inventories, and
the introduction of more sophisticated equipment
will only complicate matters.
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PERU-CHILE: A VOLATILE BORDER
Peruvian and Chilean leaders are attempting each side, which is interpreter' by the other as
to dissipate the atmosphere of impending conflict aggressive in nature'
that has recently arisen between the two coun-
tries. The basic cause of tension-Peru's loss of c19 (Peruvian resentment over the loss of some
territory to Chile in the last century-remains, southern territory to Chile in' the War of the
however, and both sides are likely to continue Pacific (1879-84) never has been far from the
preparations for a possible confrontation surface, but it is coming to the fore as the cen-
tenary of the war approaches. the Peruvian mili-
'' In a recent press conference, Peruvian Presi- tary has traditionally held that national honor
dent Velasco emphasized that absolutely no con)0O dictates that the lost territory must be regained
flict existed with Chile. Chilean Foreign Minister by 1979. Reports that Chile may be planning to
Huerta has made similarly moderate statements, give Bolivia access to the sea through territory
declaring that Santiago wants good relations with that formerly belonged to Peru have exacerbated
all countries, especially its neighbors. These Peru's revanchist sentiment. Lima has noted that
statements were prompted by military activity by any such move by Chile would be interpreted as a
^2
Territorial Losses'ir he War of the Pacific
(1879-1884)'
LA PAZ
Returned to Peru 1929 -
"Tac Arica" tam
Aric P4
Retained by Chile - # n'U
Antofagasta'-
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violation of their 1929r boundary treaty, accord-
ing to which neither country will cede border-area
territory to a third power without the concur-
rence of the other. Velasco has declared that Peru
'would be happy to see Bolivia regain an outlet to
the sea-but only through former Bolivian terri-
tory7
Although Peruvian revanchism is the strong-
est factor tending to raise tensions between the
two countries., ideology may also have been play-
ing a role since the conservative military regime
took power in Chile.
Recent Peruvian military moves that have
tended to heighten Chile's fears include the pur-
chase of Soviet tanks last fall, the arrival of Soviet
instructors in January, and the announcement last
month that the army's armored school will be
transferred from Lima to southern PeruI
fPeru is attempting to strengthen its military
posture through foreign arms purchases. It re-
cently ordered six Jet Ranger helicopters from
the US and has asked Washington to speed up
deliveries of armored personnel carriers and mor-
tar carriers scheduled for shipment late this year.
t Peru now has Soviet T-55 tanks in its inventory
and on order.
Partly in response to Peru's military pur-
chases, Chile has sought to modernize its armored
corps. A high-level military procurement team is
touring West Germany, France, and the US in
search of tanks to replace outdated US models,
thus far without success. In the face of turndowns
j6y both Paris and Bonn, the team is expected to
press Washington for the tanks, as well as for
TOW anti-tank missiles and self-propelled artil-
lery. Chile already is scheduled to receive 16 M-60
tanks from the US, but it would like both more
tanks and an accelerated delivery timetable]
I-~ he Chilean Air Force is seeking to increase
r
its je fighter inventory and to assure an adequate
flow of spare parts. Negotiations with the US for
a squadron of F-5s are nearing completion.
25X1
1 Peruvian leaders probably are concerned that
recent press reports raising the specter of Peruvian
aggression, possibly with Soviet involvement, will
further isolate the regime from its Latin American
neighbors. Lima is sensitive to the fact that Velas-
co's government stands out as the most radical in
South America, and it apparently does not want
to offend further its more conservative neighbors,
especially Brazil. In addition, Velasco appears to
be interested in bettering Peru's relations with
Washington, a policy likely to be made more
difficult by reports and rumors that Lima has
aggressive plans. Nevertheless, mutual suspicion
and hostility are likely to grow. The prospect,
therefore, is for a continuing arms buildup on
both sides, concurrent with Peruvian efforts to
quiet the hysteria through political and dip-
lomatic,channels.
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VENEZUELA: NEW DIRECTIONS
113-111
Venezuela's new g nment, c cumulating
massive financial resources as a result of high oil
prices, is beginning to chart new directions in
economic policy. Caracas has adopted a cautious
approach, however, and is emphasizing careful
preparation before spelling out specific courses of
action.
In his first major step to fulfill his promise
to nationalize the oil industry, President Perez has
named a study commission to analyze alternative
approaches. The commission, headed by the
minister of mines and hydrocarbons, is to report
to the President within six months. Congressional
action on nationalization is likely to be taken by
the end of this year.
In a second major decree, Perez has ap-
proved a 90-day freeze on prices of goods and
services to give the government time to work out
a general plan for wages, prices, and employment.
The government also has ordered a study to lay
the groundwork for a unified national planning
effort and has named a commission to study
reform of public administration.
Minister of Mines Hernandez
At current oil prices, Venezuela's revenues
could rise by over $7 billion this year, an increase
of about 200 percent over last year. The gain may
not be so high because of signs that world oil
prices are softening; nevertheless the quantum
jump in revenue will permit the government to
undertakesignificant investments ;in support of its
commitment to rapid economic development.
Perez has stated that investment will be directed
toward areas of high productivity, with emphasis
on diversifying exports; industries specifically
mentioned are petrochemicals and steel.
There are limits, however, to the extent that
government spending can be stepped up. Even
with a planned increase in exp nditures of 20
percent this year, there could be surplus of over
$6 billion. The government is preparing legislation
to establish a fund that would use half of the
surplus for foreign investment; several US banks
have been consulting Caracas about such
possibilities.
Other excess oil revenue would be used to
finance international projects, particularly in
Latin America, through multilater4al organizations
including the Inter-American Development Bank,
the Caribbean Development Bank, the Central
American Bank, and the Andean Development
Corporation. Caracas also intends to help de-
veloping countries import Venezuelan oil at cur-
rent prices. Caracas has stated that its further
objectives are to increase the export capacity of
developing countries and to act as a catalyst for
multinational projects, in order to 'Contribute to a
global redistribution of income.
Concern about growing inflationary pres-
sures motivated the decision to impose a price
freeze. Even in the first nine months of 1973-
before the sharpest oil price increases-the general
price index rose 8.7 percent, compared with 3.5
percent in 1972. Domestic price increases last
year reflected higher prices for imports and the
effects of a poor agricultural crop, in addition to
increased demand. Expanded government expend-
itures this ear will add to domestic inflationary
pressu res.
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BRAZIL: LIBERALIZATION IN DOUBT
[Recent actions by the Geisel administration 12 t) cThe action may be intended to discourage
raise questions about the President's commitment other intemperate or embarrassing remarks that
to some sort of political liberalization might hinder any liberalizing plans the administra-
( tion may still have. On the other hand, a similar
incident five years ago ultimately led to the
In one instance, for example, Geisel moved-, mposition of Brazil's harshest national security
to block the political aspirations of former law, which is still in effect. Geisel's early moves
finance minister Delfim Netto, who had hoped to indicate that, despite talk of a possible demo-
become governor of his home state, Sao Paulo) cratic opening, the government is still authoritar-
Even though Delfim is widely acknowledged
as the architect of much of the country's recent
economic success, opposition to his ambitions is
strong, primarily among military leaders. While he
is resented for a number of minor reasons, the
fundamental fear of many officers is that Delfim
would try to use the governor's position as a base
from which to question-and possibly challenge-
the military's control of the political system..1
an, and will firmly lay down the rules
the participants it selects must play.
ARGENTINA: PERON SWITCHES TACTICS
1 a- r ' I n contrast to the heavy-handed measures
recently employed to remove Cordoba's governor
When Delfim's interest in the governorship 4' and his deputy, the Peron government is using a
became clear, Geisel named another former minis-) Llmore gingerly approach in dealing with situations
ter as the government's official candidate. To in other troubled provinces
underscore his opposition to Delfim, the Presi-
dent proposed a draft law that would reduce the
already limited role of political parties in the ' In Mendoza, where friction between op-
selection of gubernatorial candidates. This move ?r posing Peronist factions has flared sporadically
proved sufficient to deprive Delfim of whatever or months, Peron 's conservative (orthodox) fol-
overt support he already had among politicians.)- owers are resorting to legal means to remove
The regime also may have signaled its displeasure Governor Martinez Baca, a holdover from the
with a leading Sao Paulo newspaper that has sup- $' Campora regime with links to the left. Charges of
ported Delfim editorially by reaffirming full-scat ~,,?influence-peddling and other malfeasance have
censorship after reportedly considering a partia brought calls for his impeachment, and the prob-
lifting.;
2d I n addition, a federal deputy of the opposi-
tion party, Who bitterly criticized Chilean leader
Pinochet when the latter visited Brasilia, has
drawn the ire of the administration. The justice
minister is preparing legal action against the legis-
lator, who is charged with violating a national
J.zecurity law that prohibits public offenses against
a foreign leader. The government is proceeding
along constitutional lines, although it clearly
intends to pursue the issue firmly'
ability is strong that he will either resign or be
removed. Non-Peronists in the province, including
leaders of the Radical Party, are loudly endorsing
calls for Martinez Baca's ouster. Peron has been
careful to cultivate support from other political
parties, and he may be striking deals with them in
return for favors
5., Intra-Peronist squabbling continues to create
problems in Santa Fe and Salta provinces, where
left-wing governors are also under attack from
orthodox Peronists, but the situation does not
appear to be unmanageable. Right-wing Peronist
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labor groups apparently are having little success in
their efforts to unseat the governors, and Peron
may be counseling a go-slow approach, especially
if he believes popular support for removal of the
elected officials is lacking.l
11 Meanwhile, the federal take-over of Cordoba
has left deep scars, and the political situation in
this key industrial city continues to be shaky. The
administrator sent out by Buenos Aires has
alienated both right- and left-wing Peronists,
thereby complicating his task of pacifying the
turbulent Cordobans. The thorny dispute is
aggravated by the hostility of the provincial con-
11 jress to federal intervention. Adding to the dif-
ficulties, university students have occupied offices
at the University of Cordoba to protest the
naming of a new rector by federal authorities
Unless the sharp differences among feuding
government officials, labor unions, and student
groups are resolved, the current balancing act will
prove to be little more than a palliative. There are
signs that tempers are rising on all sides, in-
creasing the likelihood that further violent clashes
will b rovoked b extremists.
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