WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010800060001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

State Dept. review completed
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ument Denied
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Secret
Weekly Summary
Secret ~.
3 May 1974
No. 0018/74
Copy Np 5 8
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l coordinated with or .prepared by PACIFIC
1 The Middle East: On the Syrian Front
3 France: Mitterrand, Giscard
Lead Campaign
4 Portugal: Junta Consolidates Power
week through noon on Thursday. It EAST ASIA
CONTENTS May 3, 1974
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:ar:.i tPie ;:34~t~~torate of Science and Technology. 6 Laos: The Honeymoon Wanes
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MIDDLE EAST
AFRICA
9 Egypt: Cabinet Shuffle; Fanatics
10 IsraeL? Coalition Negotiations Begin
10 South Africa: New Mandate
11 Ethiopia: Still in Flux
WESTERN
HEMISPHERE
25X1
15 Venezuela: Economic Changes
16 Costa Rica: Rough Sledding Ahead
17 Uruguay: On the Way Out?
17 Brazil Pursues Chinese Market
17 UN: Special Session on Resources
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~ ~~~.~ .~
~~
Z"he JLt~Qille fast
Fighting on the Syrian front was generally
moderate dluring the past week, although both
Israeli and Syrian aircraft were active over the
battlefield. Mount Hermon was again the focal
point, as both sides battled for control of the
dominant peaks. Tel Aviv announced last week
that 40 Israeli soldiers have been killed and 99
have been v~uounded on the Syrian front since the
cease-fire in October.
Israeli aircraft attacked Syrian targets on the
slopes of Mount Hermon for three days in a row
early in thE: week. The attacks apparently were
aimed at keeping the Syrians from completing a
road to the top of the mountain. Israel already
has completed a road near the ridge line on the
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Bettie Line~~
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western slope of the mountain. Both the Syrian
and Israeli roads appear to cross over into Leba-
nese territory.
Syrian aircraft also were active, striking at
Israeli positions in the area of the mountain on
two occasions last week. The second attack
culminated in a dogfight in which at least two
Syrian MIG-21s were shot down. The Israelis have
acknowledged no losses in the air battle.
According to the Lebanese Defense Ministry,
Israeli and Lebanese units exchanged artillery fire
in southern Lebanon for two hours on April 30.
Beirut claimed that the Israelis attempted to
occupy positions near Shaba, but were forced to
withdraw under Lebanese pressure. This claim,
which was denied by the Israelis, almost certainly
was exaggerated in order to uiet critics of Prime
Minister Sulh's government.
Despite Foreign Minister Gromyko's agree-
ment with Secretary Kissinger in Geneva to exer-
cise joint influence toward a "positive outcome"
in the Middle East, the Soviets still see American
efforts to promote Syrian-Israeli disengagement as
a threat to their continued influence in the area.
The almost total Soviet silence concerning Secre-
tary Kissinger's latest travels in the Middle East is
indicative of Moscow's sensitivity to the US
initiatives.
The Soviets may well try to give the ap-
pearance that they are playing a significant role in
the current negotiations. Syrian officials have
stated, for example, that Gromyko wil- visit
Damascus in the near future. The Soviets, how-
ever, continue to assert that Geneva is the proper
venue for settling the Middle East conflict.
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~A,I Harrah
May 3, 74
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~,,.,.~ J t l: K t l
Fran~~e
MITTERRAND AND GISCARD LEAD
As tP~e first round of presidential cam-
paigning ends, Francois Mitterrand, the sole can-
didate of the left, is the clear front-runner. The
obstacles to his winning afirst-round victory are
still formidable, however, so that arun-off be-
tween Mittterrand and Independent Republican
Giscard d'E=staing is the likely outcome of the
balloting on May 5.
Gaullist candidate Jacques Chaban-Delmas,
whose campaign never caught on, appears vir-
tually out of contention. His backers had hoped
to boost hiss showing in the polls by getting Gaul-
list mavericlk Jean Royer to withdraw, but Royer
refused to quit.
The latest polls show that Giscard has gained
support not only among pro-Chaban voters but
also among those who initially preferred Royer.
Giscard had! seemed to be most vulnerable on his
management of the economy over the past
decade, and his two major rivals hit hard on his
role as economics and finance minister. The
voters, however, do not seem to be holding
Giscard personally responsible for France's eco-
nomic problems.
Mitterrand has been campaigning effectively
despite mui:ual suspicions between Socialists and
Communists, and he will easily win a place in the
run-off. In order to gain the absolute majority
needed to win outright on Sunday, however,
Mitterrand would have to improve considerably
on the left's best previous first-round showing.
The best first-round performance by
e e in the legislative election in 1967, was
just over 43 percent of the votes; it has never
topped 47 percent. In both the 1969 presidential
race and the 1973 legislative election, opinion
polls just before the first-round election day over-
estimated the percentage of left votes by 3 to 4
points. Mitterrand's current rating is 43 percent.
In previous elections under the present sys-
tem, no presidential candidate has achieved a
first-round victory. De Gaulle and Pompidou, the
front-runners in those races, won only sli htl
more than 44 percent in the first ballot
Giscard d'Estaing
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Portugal
The seven-man junta headed by General
Antonio de Spinola, which assumed leadership in
Portugal after the almost bloodless coup last
week, has already issued decrees designed to re-
store domestic liberties and consolidate its power.
Political groups, labor unions, and student asso-
ciations, which had been quiescent under the pre-
vious government, have become active. If the
junta is willing to include representatives of both
the left and right in the provisional government-
to be established within two weeks-and is able to
persuade them to join, this would augur well for
the stability of the country over the near term.
General Spinola met earlier this week with
representatives of various political parties that
were illegal under the previous regime. A spokes-
man for the parties described the meeting as very
cordial, but the moderates appeared to be more
satisfied than the far leftists. The leftists were
disappointed that Spinola refused to consult with
them on the formation of the government and
that he refused to make a commitment on im-
mediate decolonization.
Political groups are busily organizing, issuing
manifestos, and collecting funds. Socialist leader
Mario Soarer and Communist Party leader Alvaro
Cunhal are playing prominent roles following
their triumphant return from exile. Both parties
have participated in the formation of a leftist
coalition, the Portuguese Democratic Movement,
to serve as a vehicle for participation in the new
government. This would comply with Spinola's
announcement that he favors broad coalitions
rather than many parties. The union may be
short-lived, however, as Soarer has stated pri-
vately that he is concerned by competition from
the well-organized Communist Party. Soarer is
working to build his own party's strength, and
probably stands a better chance than Communist
leader Cunhal of getting a ministerial post in the
provisional government.
In an attempt to reform the state-controlled
universities, the junta has dismissed their rectors.
Student associations previously closed down by
the Caetano government are reopening, and
campus political activity appears to be on the rise.
The labor organizations that were formed by
the ousted regime are also undergoing changes. In
Lisbon and Oporto, leaders foisted upon the
organizations by the previous government are
being fired and workers are electing new leaders.
In an effort to consolidate his power within
the military Spinola has reinstated General Fran-
cisco da Costa Gomes, also a member of the
junta, in his previous job as chief of staff of the
armed forces. Costa Gomes, who had approved
the publication of Spinola's book, was fired from
his job in March, ostensibly for refusing to take a
ceremonial oath of allegiance to the old regime.
Three other junta members have taken over as
chiefs of staff of the air force, army, and navy.
The junta has retired 24 senior officers, including
two former ministers and the ex -chiefs of staff,
thereby eliminating a potential threat from senior
officers who have remained faithful to the
Caetano government.
Generals Gomes and Spinola, and Captain of the Navy Pinheiro
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The Spinola junta is being widely supported
by the Portuguese power structures in all three
African territories. Civilian and military adminis-
trations are being run, on an interim basis, by the
deputies to the governors general and the military
commanders that were relieved of their respon-
sibilities shortly after the coup. The transition has
been large{y without incident.
The idea of greater autonomy for the terri-
tories is a popular one, particularly in Angola and
MozambiquE~, which have sizab{e white settler
populations that have long wanted less inter-
ference from the metropole. Politically, however,
Lisbon faces a problem stemming from the
former government's refusal to allow local politi-
cal organizations. The new regime will now have
to permit the emergence of such organizations,
broadly multi-racial in composition, if its new
African policy is to have any meaning. One group
in Mozambique that had been accepted by the
Gaetano government as a cultural organization has
since the coup openly avowed political ambitions.
The ou:;ter of Gaetano has been welcomed
by Portuguese Africa's liberation movements and
by the black African governments that have been
supporting them through more than a decade of
insurgency. 'The guerrilla groups have rejected
Spinola's federation concept, however, and have
reiterated their demands for complete independ-
ence. For the time being, they are likely to adopt
await-and-seep attitude.
In deciding future policy, Lisbon will have
to take into ,account the quite different military
and political situations that prevail in the three
territories. In Angola, three rival insurgent organi-
zations, each with serious factional, recruiting, or
logistic problems, have failed to gain even mini-
mal territorial control. It seems unlikely that Lis-
bon will be ready to negotiate with any of these
groups in the near future.
In Mozarbique, the insurgents are unified,
and their activity has been on a modest upswing
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since the first of the year, marked by a slow but
steady southward infiltration. Their military ef-
fort could be enough to press Lisbon into even-
tually opening a dialogue.
In Portuguese Guinea the military stalemate
that developed convinced Spinola during his five
years as governor general of the futility of seeking
a military solution. The African Party for the
Independence of Portuguese Guinea and Cape
Verde consistently has waged the strongest mili-
tary and political effort of al! the African insur-
gent organizations. Last September, the party
proclaimed the "Republic of Guinea-Bissau,"
which is now recognized by more than 60 Com-
munist, African, and other Third World countries
as well as by the Organization of African Unity.
The "republic" has been granted observer status
in the UN and intends to push for membership at
the next UN General Assembly. Although the
African party's territorial claims are inflated, it25X1
may be the first of the liberation movemen
ain political concessions from Lisbon.
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LAOS: THE HONEYMOON WANES
The new coalition government in Vientiane
completes its first month in office this weekend
with little to show in the way of tangible accom-
plishments. Since the coalition was invested on
April 5, both sides have been preoccupied with
ceremonial functions and bureaucratic adjust-
ments. The few cabinet meetings have avoided
dealing in depth with any of the controversial
problems involved in the implementation of the
Lao accords.
The aura of relative good will is beginning to
dissipate, however, as the status of the National
Assembly shapes up as a major political dispute.
The heart of the problem is the Communists'
insistence that the assembly is now an illegally
constituted body whose functions, including ap-
proval of the national budget, have been shifted
by the Lao accords to the advisory political coun-
cil-chaired by Lao Communist leader Soupha-
nouvong, The accords, in fact, neatly skirt the
issue of the assembly's future as well as its rela-
tionship to the council.
Souphanouvong ignored the assembly in his
speech on the occasion of the council's first meet-
ing on April 25. He emphasized that the council
and the coalition government are "two equal and
independent supreme state organs," that the
council's important task is to cooperate closely
with the government in running "all the king-
dom's affairs," and that the council would soon
draw up a "common political program" to pre-
sent to the government.
~Souvanna can-
not allow the problems associatea with the assem-
bly to undermine the coalition arrangements. He
has already made it clear that he would not wel-
come any statements or actions by assembly dep-
uties that could antagonize the Communists.
Given the tatter's growing concern over the assem-
bly issue, Souvanna will have to draw on all his
political skills to avoid a serious confrontation
between the two sides.
Souphanouvong greeting well wishers
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Fighting Fl;~res
The Khmer Communists attacked the pro-
vincial capital of Prey Veng east of Phnom Penh
this week on schedule. Cambodian Army defend-
ers were anticipating the assaults, repulsed them,
and inflicted substantial casualties on the insur-
gents. The Communists, who have been preparing
for the Prey Veng campaign for over a month, can
be expected to keep pressure on the city. Prisoner
reports indicate that as many as 5,000 Commu-
nist troops--supported by artillery-are now in
the vicinity of Prey Veng.
Closer to Phnom Penh, Communist forces
capitalized. on relatively weak government
defenses along the Bassac River seven miles south-
east of the capital to move within mortar and
recoilless-rifle range of the city's southern suburb.
Late in the week, the Cambodian Army high
command belatedly moved to counter this threat
by shifting units from less-active fronts around
the city.
North of Phnom Penh, a 2,000-man govern-
ment garrison abandoned the town of Sala Lek
Pram on Route 5 and moved south to join govern-
ment units at Lovek. There are now nearly 5,000
troops and 40,000 civilians at Lovek. The consoli-
dation of forces there will facilitate resupply
operations, but Lon Nol's decision to maintain
the isolated and militarily insignificant base is
questionable. At mid-week, Communist gunners
were hitting Lovek with 105-mm. howitzer fire
and ground units were closing in on several sides.
On the brighter side for the government, the
insurgent drive against the southwestern pro-
vincial capital of Kampot appears spent. Cam-
bodian Army troops have been unopposed as they
pushed out from the city in all directions, and
they report that the insurgents took heavy casual-
ties from artillery fire and air strikes. In the near
future, the Cambodian Navy is expected to re-
sume resupply operations at Kampot, which has
been cut off from the sea for almost a month.
Samphan's Travels
~ A I!![ E3 (~ D I A
hnom
penF
Khmer Communist "defense minister"
Khieu Samphan was in Belgrade and Bucharest
this week on his tour of Eastern Europe and
Africa. Samphan began his trip with a short visit
to Albania, where he restated his demand that the
US withdraw all personnel and assistance from
Cambodia and let the Khmer solve their own
problems. Samphan's extended absence from
Cambodia at this time suggests that the actual
responsibility for conducting the war rests in the
hands of other Khmer Communist leaders.
North Vietnamese Defense Minister Vo
Nguyen Giap, who has reportedly been seriously
ill, made an appearance at the May Day celebra-
tion in Hanoi on April 30.
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Kompong~~"\
Chhnang ~~
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A better reading of Giap's h~~
could become available on May 8, when the
North Vietnamese celebrate the 20th anniversary
of the Dien Bien Phu battle. With his reputation
as the architect of that victory, Giap would be
expected to la an active and ma~or role in its
25X1 celebration.
Prime Minister Whitlam formally kicked off
the national election campaign this week, making
it clear that opposition obstructionism will be his
major issue. Using a campaign theme of "Give
him ago," Labor hopes to encourage the elec-
torate on May 18 to continue Whitlam in office,
give him a more cooperative parliament, and en-
able him to make good on promises made when
Labor came into power 17 months ago.
Seizing on the government's vulnerability on
economic issues, the Liberal-Country opposition
is emphasizing Labor's failure to stem inflation
and curb disruptive labor unrest. The opposition
is also making a strong pitch for restoration of the.
past closeness of US-Australian relations. In this,
it may be misjudging the temper of the electorate.
Although certainly well disposed toward the US,
the public seems in general to approve Whitlam's
efforts to steer a more independent course. Whit-
lam, seeking to turn this nationalistic mood to his
advantage, is stressing his government's efforts to
strengthen Australian ownership of its industries
and resources in contrast to the opposition's al-
leged "selling out" to foreign interests during its
23-year tenure.
Assessing the politicking to date, local
pundits generally give Labor the edge. The Whit-
lam government, however, with its brash style and
recent ending of fertilizer subsidies, has alienated
the rural constituency, which is over-represented
in current voting arrangements. Rural disaffection
could lose Labor a few seats, but Labor could also
pick up some in urban districts now only ten-
uously held by the opposition. Present indications
are that the election will be close.
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JCVI-(C I
~..
President Sadat carried through with his
long-awaitE~d cabinet reorganization last week. Al-
though he made a bow to the continuing "con-
frontation" with Israel by retaining the prime
ministership himself, he has openly labeled the
new cabinet as one that will lead the nation
during the period of reconstruction and develop-
ment.
Sadat created a new post of first deputy
prime minister, and named to it former economy
minister I-lijazi, who has been the man most
closely identified with Egypt's liberalized eco-
nomic policy and the plans for reconstruction.
Hijazi will be, in effect, the prime minister. He
had initially been slated for that post when Sadat
was considering cabinet reorganization plans last
January. At that time, however, Sadat was criti-
cized for seeming to be abandoning the "battle"
by giving uip the prime ministership he assumed in
March 1973 to consolidate plans for the war.
The rE=mainder of the 35-member cabinet is
little different from its unwieldy predecessor, but
Sadat and Hijazi have created asuper-cabinet of
sorts that is intended to concentrate on the gov-
ernment's development tasks and streamline its
operations in this field. The new body consists of
four ministerial committees that will coordinate
policy implementation between the cabinet and a
series of specialized advisory councils. The com-
mittees are functional and combine the responsi-
bilities of several ministries. Although the effort
to eliminata~ red tape sounds efficient on paper,
the new system could in fact prove to be more
cumbersome than the old.
Egyptian authorities remain edgy in the
wake of thf: abortive attack two weeks ago on a
Cairo military academy, which they say was in-
tended as tl'~e first stage of a coup against Presi-
dent Sadat by Libyan-backed Muslim fanatics.
Although the government claims the plot had
little support, the shrill publicity given to the
affair suggests real concern over the plot's pos-
sible domestic ramifications, as well as an intent
to force a showdown with Libya.
According to government accounts, 11 per-
sons were killed and 27 wounded in the attempt
to take over the Egyptian Army's engineering
school on April 18. Cairo has charged a Pales-
tinian, who has a checkered history of affiliation
with a variety of Arab organizations, with being
the ringleader of the group. He is said to have met
in Libya last year with President Qadhafi to dis-
cuss the formation of commando units in various
Arab countries and to have recruited some Egyp-
tian students for what they believed was a polit-
ico-religious organization. Although the govern-
ment contends that most of the youths dropped
out when they discovered the group's real aims,
Cairo acknowledges that 80 conspirators are now
under arrest. The charges filed against them carry
the death penalty.
Although President Sadat does not appear to
be in any immediate danger, the incident has
revealed a susceptibility among Egyptian youth to
the appeal of a religious fanaticism reminiscent of
the old Muslim Brotherhood, a tendency that is
surely disturbing to the regime. A few weeks
earlier, students and religious leaders at AI-Azhar
University had demonstrated against a new law
that religious conservatives believe is too liberal.
This incident reflected a degree of Islamic ortho-
doxy that apparently surprised the government.
Last week, in a further indication of religious
conservatives' readiness to back their sentiments
with action, a large group demonstrated at a
mosque against the government's suspension of an
imam-a former Muslim Brotherhood activist-
who is under investigation for his possible com-
plicity in the coup.
The evidence for Libyan involvement in not
firm, and in private the Egyptians themselves hesi-
tate to point an accusing finger directly at Tripoli.
Nonetheless, the parallel between President Qad-
hafi's conservative Islamic philosophy and the
sentiments of Egypt's religious fundamentalists is
striking, and the Egyptians may genuinely fear,
even in the absence of real evidence, that Tripoli
is encouraging the fundamentalists.
The anti-Libyan propaganda that Cairo has
put out on the affair has taken on an indignant
tone, and Tripoli's counter-propaganda is only
slightly less insulting. The two have also traded
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veiled threats. A Libyan newspaper has quoted a
Koranic injunction against "slanderers" who will
find that "those who would overthrow will be
overthrown," and a leading Cairo columnist, pos-
sibly with Sadat's personal blessing, recently re-
minded Libya of "secret," and by implication
subversive, organizations previously established in
Arab countries by President Nasir.
Sadat and Qadhafi have previously demon-
strated a capacity for sustaining a high level of
verbal warfare, and the latest exchange could be
nothing more than another, more intense round.
On the other hand, Sadat may have reached the
end of his patience and may be heading, justi-
fiably or not, for a break with Tripoli.
Although Libya has in the past been an
important financial contributor to Egypt, Sadat
would apparently not at this point be losing much
if he did break with Qadhafi. The Libyans
stopped ad hoc aid payments in 1972, and Qad-
hafi recently confirmed in a newspaper interview
that he has now cut off Tripoli's annual $59
million Khartoum subsidy payments. Aid pledges
made in wartime, he said, have become "null and
void" now that "the war is over" for Egypt.
25X1
ISRAEL: COALITION NEGOTIATIONS BEGIN
Prime Minister -designate Yitzhak Rabin,
the new leader of the dominant Labor Party,
made no headway this week in his efforts to form
a new cabinet. The major problem in the way of a
reconstitution of the old ruling coalition remains
the National Religious Party's insistence on hav-
ing its way on the religious conversion issue and
on including the right-wing Likud bloc in the
governing coalition. Rabin, who now personally
heads Labor's negotiating team, reportedly re-
jected both demands. The Religious P-arty will
meet this weekend or early next week to hammer
out its "final" position.
If, as seems increasingly possible, no com-
promise can be reached with the National Re-
ligious Party, Rabin will probably try to form a
coalition with the Independent Liberal Party and
the Citizens Rights Movement. Such a grouping
would give him a slim one-vote majority in the
120-member Knesset. Leaders of the two parties
have said they would serve in a Rabin cabinet, but
only on the basis of an explicit Labor commit-
ment to hold elections soon. This might even-
tually be acceptable to Labor, many of whose
leaders are convinced that an early election
is9inevitable. From their point of view, it is
clearly preferable to get a new Labor team into
office before elections are held than to have Mrs.
Meir's shop-worn caretaker overnment run the
country until the elections.
SOUTH AFRICA: NEW MANDATE
South Africa's all-white electorate gave
Prime Minister Vorster a convincing mandate last
week to go ahead with any measures he considers
essential to maintain white supremacy.
The National Party, which has been in power
since 1948, slightly increased its already large
parliamentary majority in the general election
held on April 24. In the new parliament, the
Nationalists will have 122 seats, the United Party
41, and the Progressive Party 6.
O n April 29, Vorster announced some
changes in his cabinet, but kept ultraconservatives
in the ministries of defense, labor, and Bantu
affairs. The minimal reshuffle has dampened
hopes of South African moderates that the Prime
Minister would seize the opportunity of an elec-
tion victory to take positive action in race rela-
tions, such as giving some bargaining power to
black labor unions.
In parliament, Vorster will encounter more
vigorous opposition than ever before. Helen Suz-
man, the sole Progressive MP since 1961, now has
enough party colleagues to force a public vote on
any issue that the Progressives choose to contest.
Such tactics could be especially embarrassing for
the United Party, which usually has sought to
blur critical issues in order to hold together its
ideologically diverse elements. Pre-election dis-
array in the United Party helped Progressive can-
didates to take over five former United Party
seats, and now there is speculation that some
members of its liberal win may soon go over to
the Progressives.
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Instability continues in the absence of a
clearly dominant center of power. The weakened
Emperor and the insecure cabinet led by Prime
Minister Endalkatchew are unable to impose their
will on the military, which on one hand supports
the government and on the other continues to act
independently to back reform demands. The mili-
tary may be moving toward a more active role in
the governrrient, but at present still appears un-
willing to assume the burden of directly running
the country.
The coordinating committee that moved
against the ex-ministers appears to be one of a
network of committees of moderate reformists
that have been created independently in the vari-
oras military units. The committees are only
loosely associated; no one group has assumed
over-all control and there seems to be no central
planning. The committees attempt, however, to
reach agreement on specific issues through ad hoc
negotiations.
Late Izist week, army and police units in
Addis Ababa, acting under the direction of a
military "coordinating committee," arrested 20
former ministers and senior civilian officials as
well as a number of senior military officers. The
Endalkatchew government's cautious handling of
the former officials, all of whom were suspected
of having profited from official corruption, has
been a major source of friction with the moderate
reformists who predominate within the security
forces and who otherwise have generally sup-
ported the cabinet installed in March.
This week the military for the first time
forced out of office a member of the current
cabinet. On Tuesday, the government yielded to
strong pressure from the army's Second Division
based in Eritrea Province, for the removal of
General AssE~fa Ayene from his post as minister of
posts and telecommunications. Assefa, who was
chief of staff under the former government, will
remain in custody of the armed forces pending
investigation of charges that he had tried to create
dissension among military units and made plans
for the air force to bomb Asmara during the
initial military revolt last February.
So far, these military moderates remain in
general agreement on the desirability of preserv-
ing the present government. The coordinating
committee in Addis Ababa, in announcing its
arrest of the former ministers, made a point of
declaring that the armed forces and police sup-
port the cabinet and Haile Selassie. The reluc-
tance of some army units to force the Assefa issue
stemmed largely from their desire not to damage
further the cabinet's prestige.
Moreover, the army and police are actively
supporting the government's crackdown last week
on strikes and demonstrations. On April 30,
troops raided the telecommunications headquar-
ters in Addis Ababa and arrested striking workers
and some of their leaders. This action has appar-
ently prompted striking bus drivers as well as
telecommunications workers to return to work. A
spokesman for military and police units in Eritrea
publicly pledged support for the cabinet and
urged all strikers to return to work.
Nevertheless, there are indications that at
least some moderates question the ability of the
Endalkatchew cabinet to restore order and to
proceed with promised reforms. As a result, the
moderates may soon force out other ministers,
and perhaps replace them with more reform-
minded military collea ues.
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For the past six months, the Soviets have
been working patiently to convene a world com-
munist party conference with the unstated but
real purposes of closing up ideological ranks in a
time of detente and of underlining the Soviet
Union's leadership in the communist world. The
evidence suggests that the Soviets have a lot more
groundwork to attend to.
An official of the Italian Communist Party,
which opposes the idea of such a meeting, has
recently stated that "several" other communist
parties also oppose it. They fear-with justifica-
tion-that Moscow intends to use the conference
to denounce the Chinese and to impose a new
orthodoxy on the international movement.
Statements in Moscow indicate that the So-
viets are aware of the resistance to a world confer-
ence, but are still promoting it, though cau-
tiously. In a speech on April 22 commemorating
Lenin's birth, Soviet party secretary Ponomarev
argued that although many of the problems raised
at the last world communist conference in 1969
had been solved, new ones have arisen that call
for "unity of action" and "collective efforts."
Ponomarev said the Soviet Communist Party
is ready to join the efforts being made by other
communist parties to strengthen the movement's
"political and ideological cohesion." This ambigu-
ous statement suggests that opposition is keeping
the Soviets from openly committing themselves
to a world conference in 1975 after a projected
series of regional conclaves in late 1974: Most of
these preparatory conferences have not moved
much beyond the talking stage.
Moscow's surrogates in the campaign to win
support for such a meeting, according to the
Italians, include the Bulgarian, Czechoslovak, and
Indian parties. Without the weight or authority of
a direct Soviet proposal behind them, however,
their activity on behalf of a conference has had
little impact.
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VENEZUELA: ECONOMIC CHANGES
Presidlent Carlos Andres Perez announced
sweeping economic changes this week, including
the apparently imminent nationalization of the
US-dominated iron-ore industry and the applica-
tion of toragh restrictions on foreign investment.
In a nationalistic speech to the Venezuelan
Congress just before May Day, Perez proclaimed
his intention to restructure the economy and to
take over the Orinoco Mining Company, a sub-
sidiary of US Steel, and Iron Mines of Venezuela,
a subsidiary of Bethlehem Steel Corporation.
These two companies do the bulk of Venezuela's
iron-ore mining and export two thirds of their
production to the US. Their 50-year concessions
were not due to expire until the year 2000. Re-
garding nationalization, Perez did not give any
details of how or when he would proceed, al-
though he spoke of action "now." Presumably
this matter will have to be studied at some length,
as is being clone in the case of the reversion of the
petroleum concessions, to determine the structure
of the industry after reversion and what role, if
any, might k~e left to present concessionaires.
Equally distressing to US business interests
was Perez' announcement of measures to im-
plement the strict code of the Andean Pact. Perez
said that his government will publish a list of
industries providing domestic goods and services,
and that these will be reserved to Venezuelans;
foreign comlanies will have three years in which
to sell a minimum of 80 percent of their shares to
Venezuelans.. Among the enterprises affected are
chain stores operated by Sears Roebuck and the
Rockefeller family interests. The transfer of
control will be under the supervision of a new
government agency, the "Superintendency of
Foreign Investment."
Following through with the philosophy
behind the iron-ore as well as the petroleum re-
version-plans for which were not modified in the
speech-Perez' announced that he will order the
cancellation of contracts providing for two new
aluminum plants that allow for only 25-percent
participation by the Venezuelan state. The Presi-
dent also said that he will order the revision of a
gold-mining contract with a German firm because
"these mines belong to the Venezuelan miners by
right of suffering."
The remainder of the President's speech was
of more general interest to the average Vene-
zuelan. Announcing a series of domestic measures
broadly populist in tone-including aminimum-
wage decree, fiscal reforms, and wage and salary
increases-Perez was fulfilling campaign promises
to improve the lot of the poorer classes and
narrow the gap in income distribution. Citing the
necessity for immediate action, Perez asked
Congress for authority to proceed by decree to
implement his program.
Perez' move against the iron industry was a
shock to some foreign businessmen, who had
perhaps become overly complacent after the elec-
tion of a party traditionally friendly to foreign
business. The president of the Orinoco company
told the US ambassador that he did take some
encouragement from the fact that Minister of
Mines Hernandez assured him that the govern-
ment did not contemplate abrupt action. Never-
theless, he commented that canceling important
contracts involving US aluminum companies
would certainly have. an unfavorable impact in
world financial circles and could cause the injured
parties to try to attach Venezuelan assets abroad
in reprisal.
Although the Perez government has decreed
its goal, implementation could still leave room for
meaningful participation by foreign companies.
While the country has ample financial resources,
especially since the rise in oil revenues, it lacks
the technological know-how that major industrial
countries could provide.
With a massive election mandate for mod-
erate change, Perez took office on March 12
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under no significant pressure from nationalist or
leftist groups to move against US-dominated
industries other than oil. His latest moves in the
economic field demonstrate his determination to
develop substantial momentum early in his five-
year term in attacking Venezuela's problems.
COSTA RICA: ROUGH SLEDDING AHEAD
Daniel Oduber of the incumbent National
Liberation Party will be inaugurated as president
of Costa Rica on May 8. Although he is a skilled
administrator and negotiator, Oduber will prob-
ably be performing the most delicate balancing
act of his career over the next four years. His
party did not win a majority in the legislature,
and he will therefore have to bargain with some
of the smaller parties far the support he needs for
his legislative program. He will also have to retain
the good will of outgoing President Figueres, to
whom many members of the party are personally
loyal.
The price of Figueres' good will and the
amount of power he will retain within the party
have been evident since the election. "Don Pepe,"
refusing to act like-a lame duck, was instrumental
in railroading two controversial bills through the
assembly. Before the furor over one of these-the
extradition bill-had died down, Figueres intro-
duced four more. One of the latter, an education
bill, caused a national teachers' strike. Another,
which levied an advertising tax aimed at the op-
position newspaper, I,a Nacion, caused an-unprec-
edented boycott of the assembly by opposition
deputies and a few from Figueres' own party. The
walkout paralyzed the legislature by denying it a
quorum.
Meanwhile, Figueres departed on state visits
to Romania and Yugoslavia, leaving Vice Presi-
dent Jorge Rossi to keep the lid on things. With
Figueres out of the way, Rossi worked out a
face-saving compromise with the teachers
whereby they would return to work, and the
government would hold the education bill for the
new assembly. Oduber has apparently worked out
a similar agreement with the deputies on the
advertising tax bill so that a quorum can be
rounded up for consideration of the two remain-
ing and more important bills-the family assist-
ance package and a bill to equalize the official
and unofficial exchange rates.
The Costa Rican legislature, unlike those in
some other Latin American countries, has never
been a docile instrument of the executive, and the
high-handed tactics of Figueres' last few months
in office may have stiffened its resistance to exec-
utive pressure even more. Oduber takes the reins
next week, facing an opposition majority and an
outraged public. If his administration is to accom-
plish anything, he will have to prove responsive to
public opinion. Beyond this, he will need to use
all of his diplomatic skills.
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The military has been a dominant factor in
national politics for over a year. This rise to
prominence resulted from the army's important
role in the ezirlier campaign to suppress the ubiq-
uitous Tupamaros. Having largely curbed the ter-
rorist threat, the officers pressed the civilian gov-
ernment for more effective action in dealing with
a variety of economic problems. At the same
time, however, they hesitated to assume full con-
trol of government. This was probably because
the officers themselves, at least until recently,
were divided on whether and how to take charge.
In addition, i:hey may have been reluctant to oust
Bordaberry because he was viewed as a con-
venient scapE~goat for problems they have been
unable to correct.
It is possible that some of the military's
hesitancy and divisiveness will be overcome by
the country's growing problems. The economy
continues to worsen and, with the southern
hemisphere winter about to start, the full impact
of the petroleum crisis is still to come. Also the
officers are disturbed about a possible resurgence
of the terrorists and by their contacts with ex-
tremist groups in Argentina. This concern led to a
recent series of raids in which a number of known
or suspected Tupamaros were killed or taken pris-
oner. The persistence of the very problem that
engendered rilitary activism in the first place
could convince the officers that only by assuming
complete control can they devise definitive solu-
tions. Finally, if the relatively cautious Alvarez is
in fact being converted to the idea of ousting the
President, thE~ military stands to gain the degree
of unity that will be needed if a decision is
ultimately made to remove Bordaberry.~
exporters, visited Peking last month to promote
sales of Brazilian goods. While similar groups have
visited China in the past, this is the first time
Brasilia has sent government representatives. Pek-
ing, responding to a Brazilian invitation, will send
a trade mission to Brazil in August. The pragmatic
Brazilians may also be willing to discuss di lo-
matic ties.
Past trade relations between Brazil and25X1
China have been sporadic and largely indirect.
Until recently, the Chinese bought Brazilian sugar
through international brokers in London. Except
for 1971, the trade balance has been heavily in
Brazil's favor. Brazil has sold sugar, cotton, and
coffee to China, but has imported only small
amounts of chemical products.
Brazil is chiefly concerned with exploiting
the large Chinese market. China is mainly in-
terested in a long-term contract for sugar and
could become Brazil's number-one market, re-
placing the US and the USSR. In any case, trade
undoubtedly will still strongly favor the Brazil-
ians. Peking seems to be willing to go along with
this arrangement but will insist that full diplo-
matic recognition, coupled with a break with
Taiwan, is the price Brazil will have to pay. 25X1
Brazil i:s striving to increase trade with
China, but Peking will require formal recognition
as the price for a major trade agreement. A
14-member trade mission, sponsored by Brazilian
The UN General Assembly on raw materials
and development, which adjourned May 2,
adopted a controversial plan for "a new world
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economic order" despite strong objections from
the US and somewhat milder protests from other
Western industrialized nations. The plan was
adopted by consensus without a formal vote, al-
though the developed states-including the US,
Canada, West Germany, and France--voiced
strong reservations.
The resolutions endorse unrestricted na-
tionalization of resources, producer cartels, and
the linking of prices of raw materials that the
developing countries export to those of manufac-
tured goods exported from developed states. The
plan also includes an immediate aid program, to
be financed by voluntary contributions, for states
most seriously affected by oil price increases.
All nations at the session agreed on the need
for an immediate aid program, but there was a
dearth of proposals or commitments, especially
from the oil-rich developing states. The develop-
ing countries softened some of the more radical
provisions of the original resolutions in order to
get developed-country support for an aid pro-
posal. Under the consensus plan, contributors are
to pledge funds to the program by June 15, and
the scheme will become operational next
January.
The General Assembly decided to forward to
the Economic and Social Council proposed re-
solutions for long-range assistance to developing
states and for rationalization of the world re-
source problem. Among these are the US proposal
to establish a group of eminent persons to study
natural resources, a French plan for a UN eco-
nomic monitoring group, and a joint Sri Lanka -
New Zealand proposition for emergency measures
to supply fertilizer and pesticides to needy coun-
tries. In the Economic and Social Council's
deliberations, which will continue until mid-May,
the developed countries will presumably try to
minimize the political rhetoric that characterized
the General Assembly and find specific immediate
measures as well as long-range solutions to the
problems of poor nations and raw resources
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