WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010900140001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Weekly Summary
State Dept. review completed
Secret
Secret
No. 0044/74
1 November 1974
Cop; N2
70
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
The WEEKLY SUMMARY, issued every Friday morning by
the Office of Current Intelligence, reports and analyzes signif-
icant developments of the week through noon on Thursday. It
frequently includes material coordinated with or prepared by
the Office of Economic Research, the Office of Strategic
Research, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and therefore
published separately as Special Reports are listed in the
contents.
CONTENTS (November 1, 1974)
1 The Arab Summit: Turning Point
EUROPE
5 Spain: Franco Acts as Arbiter
6 Italy: Fanfani Out; Moro In
10 EC: Preparing for a Summit
11 Albania: Government Shifts
MIDDLE EAST
AFRICA
13 Israel: The Coalition Returns
13 Ethiopia: Trying To Govern
15 Bhutto's Moscow Visit
16 Sri Lanka: Going Nowhere
EAST ASIA
PACIFIC
18 Philippines: Military Morale
19 Vietnam: More of the Same
WESTERN
HEMISPHERE
20 Venezuela: New Dialogue with US
21 Cuba Drafts a Constitution
22 Brazil: Economic Policy Changes
22 Argentina: Focus on Terrorism
23 OAS: A Touchy Issue
24 Peru: Military Unrest Serious
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 25X1 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Next 1 Page(s) In Document Denied
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Nwi _490f
The Arab Summit: Turning Point
(r - .--)
~fhe Arab heads of state who convened at
Rabat last weekend made the crucial decision to
endorse the Palestine Liberation Organization as
the sole authority over the Palestinians in the
Israeli-occupied West Bank. This action forecloses
any early negotiations over the West Bank with
the Israelis, who at present will have nothing to
do with the PLO, and casts a shadow over the
Arab approach toward the entire range of issues
involved in a Middle East peace settlement.
The summit decision, taken after three days
of intense closed deliberations, brushes aside King
Husayn's argument that only Jordan can nego-
tiate with the Israelis and that the ultimate
fate of the West Bank should be determined by
plebiscite. Husayn's acceptance of the decision
thus acknowledges that Jordan is effectively
barred from taking the lead in obtaining a mili-
tary withdrawal on the West Bank. Husayn prob-
ably also believes that there is now no active role
for Jordan to play at a reconvened Geneva con-
ference.
Husayn had threatened to walk out of the
summit if his position was rejected. He apparently
concluded, however, that such an action would
only draw the wrath of Arab conservatives and
radicals alike, risk cessation of the Saudi and
Kuwaiti financial subsidies to Jordan, and-should
the summit decision prove unworkable-preclude
any future acknowledgement by Egypt and Syria
that his approach is the only realistic course.
Moreover, the Arabs offered Husayn new finan-
cial inducements, including a $300 million annual
contribution to his defense budget.
SECRET
Page 1 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
. L_VI \L I
Sadat (1) and Husayn at the summit
The official announcement of the summit
decision did not specifically grant the PLO au-
thority to negotiate the return of the West Bank.
Instead, in an apparent bow to Husayn, it called
on Egypt, Syria, Jordan, and the PLO to co-
ordinate a negotiating strategy. In practice, this
may mean that Egypt and Syria will carry the
burden for the Palestinians. During the summit,
various PLO spokesmen hinted that the organiza-
tion would be willing to accept Egypt, Syria, or
even the Arab League speaking on its behalf with
the Israelis. Neither Egypt nor Syria, however,
want a break with Jordan, and Morocco's King
Hassan noted in his press conference at the end of
the summit that Jordan and the PLO still have
complementary roles to play.
By acceding to the PLO's demands, the
moderate Arabs have chosen to limit their room
for maneuver in negotiations and will now have to
decide what their next step will be in dealing with
Israel. The key Arab leaders will meet again in
Algiers on November 2-3, presumably to map out
new strategy in anticipation of Secretary Kis-
singer's next visit.
The one-sided summit outcome apparently
marks the end of Egyptian President Sadat's ef-
forts to restore momentum to the negotiating
process by getting some movement on a West
Bank disengagement. His rationale for reversing
his earlier position of support for Jordan and
swinging over in favor of the PLO is not entirely
clear. The Syrians, however, appear to have been
determined to secure a full-fledged endorsement
of Palestinian sovereignty over the West Bank,
presumably as a means of refocusing attention on
their own demands for movement on the Golan
front.
Indeed, it seems highly likely that a principal
purpose of the Arab action at the summit was to
raise the level of tension in the Middle East. in
hopes of spurring Washington to apply more
pressure on the Israelis. This was clearly a Syrian
objective, and Sadat may also have concluded
that he can use the united Arab stand as a means
of pressing the US. He may even have been per-
suaded that, in the absence of further withdrawals
SECRET
Page 2 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
SECRET
on any front, his support of US policy was under-
mining his credibility.
Sadat and Syrian President Asad may have
also concluded that the possibility'of negotiating
a limited West Bank disengagement-which would
offer little, if any, benefit to Egypt, Syria, or the
PLO-was not worth the price of a protracted
wrangle at the summit. Israeli Prime Minister
Rabin's difficulties in selling a West Bank disen-
gagement to his own constituents, and doubts
about the effectiveness of US leverage on Rabin,
could have contributed to such a conclusion.
Whatever the reasoning of Sadat and Asad,
the decision of the Rabat summit signals a more
frontal as well as a more collective approach to
Arab-Israeli issues, which could limit the flexibil-
ity of Arab leaders in dealing with the US and
Israel. Sadat, for instance, may now feel it neces-
sary to try to clear any future staged withdrawals
in the Sinai with Syria, Jordan, and the PLO.
Sadat may be personally unhappy with the
decision, but the apparently pivotal role played
by the Syrians at the conference suggests that
Sadat believes his own future effectiveness
depends on his ability to coordinate with Syria.
For their part, the Syrians appear to have con-
cluded that only a tough stand by the Arabs now
will be sufficient to induce the US and Israel to
make the concessions necessary to avoid a pro-
longed stalemate or a resumption of hostilities.
The PLO obviously emerged as a victor at the
summit, but it still remains with Egypt and Syria
to determine where the Arabs go from here.
Again, the Oil Weapon
Although the PLO-Jordanian issue dom-
inated the summit, the chiefs of state found some
time to talk about ways of using oil money to
advance the political, social, and defense interests
of the Arab states. At the conclusion of the
conference, it was announced that the oil pro-
ducers would contribute approximately $2.35
billion annually to help build up the armed forces
of Syria, Egypt, Jordan, and the PLO. Discussion
of other basic problems-how to use the oil
weapon without jeopardizing the world financial
structure, and long-term relations between the oil
producers and Europe-seems to have been post-
poned.
The Arabs reportedly did decide that invest-
ment priority will be given to less-well-endowed
Arab countries, though no specifics were worked
out. They also agreed that funding to the Afro-
Arab bank would be increased from $15 to $25
million, and that an Afro-Arab summit would be
held at some point to shore up Arab relations
with black Africa. This meeting would pre-
sumably consider steps such as direct aid or
preferential pricing for oil.
The Israeli government reacted cautiously to
the Rabat summit. Prime Minister Rabin report-
edly told the Knesset members of his Labor
Alignment on October 29 that the government
would not "shoot from the hip" but would first
make a thorough and painstaking examination of
the summit's decisions. He told the full Knesset
the next day that the outcome of the Arab meet-
ing was bad news for Israel, hinting that it would
complicate the chances for a Middle East peace
settlement and possibly require the government
to draw some significant "conclusions." He
stressed, however, that the government would not
talk with "terrorist organizations"-presumably
meaning the PLO-whose declared policy is the
destruction of Israel.
Israeli press commentary was extensive and
predictably negative in its assessment of the
Rabat meeting, claiming that the Arabs have
undermined the peace talks and appear to be
leaning toward a military, rather than a political,
solution to the Arab-Israeli dispute. Several
editorials reflect particular interest in Wash-
ington's reaction to the summit. One of Israel's
largest dailies speculated that US pressure on
Israel to negotiate with the PLO will now
increase. Another daily, which frequently reflects 25X1
government opinion, agreed that this may be
what the Arabs want but that, at the moment,
this is an unreasonable demand.
SECRET
Paqe 3 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
SPAIN: FRANCO AS ARBITER
EIn directing a cabinet change this week, Gen-
eral Franco appears to have played his usual role
of balancing the demands of conflicting groups.
While appearing to yield to rightist pressures by
dismissing liberal Information Minister Pio
Cabanillas, and thereby triggering the protest res-
ignation of Second Deputy Prime Minister and
Finance Minister Antonio Barrera de Irimo,
Franco has maintained balance in the cabinet by
letting Prime Minister Arias appoint two mod-
erate replacements. Moderate and liberal groups
are concerned, however, that Cabanillas' ouster
signals a turn to the right and the shelving of any
meaningful liberalization program.
Rumors abound that other resignations are
expected, including some reports that Arias him-
self considered resigning on the grounds that his
usefulness had been impaired. The US embassy in
Madrid, however, believes that any other resig-
nations will be limited to the sub-cabinet level
and to close associates of the ousted ministers.
The fact that Arias is staying on suggests that he
believes his program of moderate liberalization
still has a chance.
Cabanillas' removal was ordered by Franco him-
self over the objections of most of the cabinet.
Barrera, who previously had threatened to resign
over differences in economic policy and the slow-
ness with which Arias was moving on his liberal-
ization program, may have used the occasion of
Cabanillas' sacking to get out.
Franco reportedly acted in response to con-
tinued pressure from rightist groups who have
been troubled by the unprecedented press free-
dom that Cabanillas instituted. The rightists have
been especially concerned over the possible im-
pact of the broad coverage the Spanish press has
given to the downfall of the Caetano regime in
Portugal and the subsequent dismissal last month
of President Spinola. They also were enraged over
the coverage of Franco's illness this summer,
which they regarded as overly candid and detailed.
Some restrictions are likely to be imposed
on the relative freedom the press has enjoyed as
part of Arias' liberalization program. These re-
strictions are not expected to be overly harsh,
however, since the new information minister-
Leon Herrera Esteban-is viewed as a moderate. A
career civil servant, Herrera will not be as aggres-
sive as his predecessor. He is closely identified
with Fraga Iribarne, the current ambassador to
London and a possible future prime minister.
The new second deputy prime minister and
minister of finance, Rafael Cabello de Alba, is a
business executive and a moderate like his
predecessor. A vice president of a Spanish auto-
mobile firm and a member of parliament, he is
expected to follow the same economic orienta-
tion.
The real test of the degree to which Arias'
liberalization program may have been set back
will come when the Prime Minister presents his
bill to permit the formation of political asso-
ciations, which he has promised by the end of the
year. Rightists object to associations because they
fear they will become full-fledged political parties
and usurp the role reserved to Franco's National
SECRET
Page 5 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
ITALY: FANFANI OUT; MORO IN
)In the aftermath of Amintore/Fanfani's fail-
ure to revive Italy's center-left coalition, President
Leone turned this week to another senior Chris-
tian Democratic leader-Foreign Minister Aldo
Moro-to make the next attempt to form a gov-
ernment. Although Moro will probably try first to
bring the four center-left parties back together, he
may have to settle for a temporary caretaker
administration.
Moro will have to grapple with the same
inter-party differences that brought Fanfani
down, but certain political and personal char-
acteristics may give Moro an edge over the Chris-
tian Democratic Party chief. In contrast to Fan-
fani, whose support within the party comes
mainly from the center and right, Moro is the
most influential leader of the left. As a nego-
tiator, moreover, Moro is less inclined toward the
head-on collisions that generally characterized
Fanfani's efforts. Moro may thus be a better
choice than Fanfani, politically and tempera-
mentally, to work out an agreement with the
Socialist Party.
The Christian Democratic leadership has
given Moro more room for maneuver than it pro-
vided Fanfani, apparently in a last-ditch attempt
to keep the center-left alive and avoid early
elections. Fanfani was restricted to the formation
of a cabinet of Christian Democrats, Socialists,
Social Democrats, and Republicans, but Moro is
instructed only to organize a government "within
the framework" of the center-left concept. Under
this mandate, Moro could in theory put together
anything from a four-party cabinet to an all -
Christian Democratic caretaker administration
supported in parliament by all or most of the
other parties,.
Although Moro may have an easier time with
the Socialists, he is likely to encounter the same
difficulties with the Social Democrats as his pred-
ecessor. The Social Democrats precipitated the
crisis a month ago when they charged that the
Socialists were trying to water down the austerity
program and establish closer ties between the
government and the Communist Party.
During Fanfani's negotiations, the Social
Democrats revived an old feud between them-
selves and the Socialists over the Socialist policy
of allying with the Communists in certain local
governments. The Socialists defend the practice as
a political necessity in some localities. The other
coalition parties do not condone the Socialist
policy, but they tend to look the other way in an
effort to secure concessions from the Socialists on
broader issues. Toward the end of Fanfani's talks,
the outlines of a compromise on economic issues
had begun to emerge. The Social Democrats, how-
ever, slammed the door on any agreement with
the Socialists by issuing a firm statement reit-
erating their position on the Communist question.
Moro could attempt to form a government
without the Social Democrats, whose votes are
not required for a center-left majority. Since their
exclusion would give the government a decidedly
more leftist complexion, however, any step in this
direction would encounter stiff resistance from
the center and right-wing elements of the Chris-
tian Democratic Party. Moro's credentials as
leader of the Christian Democratic left would
make such an attempt less expensive politically
for him than for any other Christian Democratic
leader. A similar attempt by Fanfani, for ex-
ample, would have eroded much of his center and
right-wing support within the party.
The Communist Party probably regards the
replacement of Fanfani by Moro as a positive
development. Although Moro is no more likely
than Fanfani to make major concessions to the
Communists, he is generally on better terms with
them; Fanfani has clashed with the Communists
repeatedly since assuming the leadership of his
party in 1973. In addition, the Communists are
probably pleased because Moro's selection signals
the Christian Democrats' reluctance to break with 25X1
the Socialists and is in line with the Communist
objective of avoiding the dissolution of par-
SECRET
Page 6 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 25X6 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
JCI..f r'1C I
CYPRUS: SLOW PROGRESS
)It became increasingly likIy this week that
Archbishop Makarios will soon return to Cyprus,
thereby complicating the already slow-moving
political discussions between Acting President
Clerides and Turkish Cypriot Vice President
Denktash. Substantial progress continued to be
made on humanitarian issues in Cyprus, however,
despite the lack of movement toward a political
settlement.
Makarios, who is in New York to participate
in the UN debate on the Cyprus issue this week,
reportedly informed Clerides that he intends to
return to Cyprus by way of London and Athens
after the Greek elections on November 17. Cleri-
des commented that Makarios might well an-
nounce his intention to resign the presidency at
some future time, but that he would be persuaded
by his supporters to stay on as president.
Clerides said that only if he is given full
decision-making authority would he be willing to
continue to negotiate with the Turkish Cypriots
following Makarios' return. The outcome of the
Cyprus problem, according to Clerides, depends
on the degree of influence the new Greek govern-
ment exerts on Makarios. The archbishop has
been reluctant to accept the basic Turkish terms
for a settlement. Clerides noted that Greek Prime
Minister Karamanlis, who is expected to win the
coming election, is a realist and agrees with Cleri-
des' view that any settlement of the Cyprus prob-
lem is bound to be unfavorable for the Greek
side.
Humanitarian Questions
The exchange of prisoners and detainees,
which has been going on for several weeks, was
essentially completed on October 28. A total of
2,488 Greek Cypriots and 3,319 Turkish Cypriots
have been released. Some 530 of the Greek
Cypriots chose to return to their homes in the
Turkish-controlled sector of the island, but only
84 Turkish Cypriots elected to return to the
Greek-controlled area.
In the first transfer of its kind since the
August cease-fire, Greek Cypriot authorities on
October 25 permitted the entire population of a
Turkish Cypriot village to move from the Greek
to the Turkish sector. While the Greek side is
generally opposed to population transfers, an ex-
ception was made for this village on "humani-
tarian grounds" following an agreement between
Clerides and Denktash, probably because of an
alleged earlier massacre there of some of its in-
habitants. Agreement was also reached in prin-
ciple on October 29 for the evacuation of aged
and infirm Turkish Cypriots from the British
sovereign base areas.
The Turkish Cypriots are now likely to press
the Greek Cypriots to agree to the unification of
the released prisoners with their families. This
would enable more than 13,000 Turkish Cypriots,
but only a token 2,100 Greek Cypriots, to move
north. The Turkish side will also continue to
demand that all Turkish Cypriots in the Greek
sector, as well as the remainder of those in the
British base areas, be permitted to move to the
Turkish sector. Turkish Cypriots are reportedly
continuing to trickle into the north on their own,
apparently with the acquiescence of Greek
Cypriot authorities. Clerides is unlikely to con-
sent officially to either demand, however, unless
he gets some major concessions from the Turkish
Cypriot side. Except for some criticism from
leftist political leader Vassos Lyssarides, Clerides
has commanded broad support among Greek
Cypriots for his handling of humanitarian issues.
He is expected to come under strong pressure,
however, to deal with the question of the esti- 25X1
mated 3,000 Greek Cypriots that are still un-
accounted for after the corn letion of the ris-
oner exchange.
SECRET
Page 8 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
SECRET
EC: PREPARING FOR A,SUMMIT
G? ~T 3
)The EC summit, ca ied for b France and
likely to take place after mid-December in Paris,
will seek improvements in political coordination
and try to formulate policies on such major eco-
nomic problems as inflation, unemployment, and
energy. There appears to be considerable doubt
within the community that there is sufficient
time to prepare for a meaningful, productive
meeting. The lukewarm response in many quar-
ters to the call for a summit now is also colored
by recognition that the record of accomplish-
ments by recent summits has been disappointing.
In the view of the US mission to the EC, the
recent French initiative-which aims to rein-
vigorate the EC by fostering closer ties between
community activities and political cooperation
among the Nine-could lead to some progress on
EC institutional questions. The outlook, however,
is for continued slow movement in the present
mixed framework of central EC control and inter-
governmental cooperation.
Paris' several proposals represent a poten-
tially important change in policy toward Euro-
pean political integration. Key elements include:
? Creation of a "European Council," thus
bringing summit meetings into the EC Council
framework.
? Provision for the popular election of a
European parliament.
? Maintaining 1980 as the target date for
full European union.
? Ending the practice of unanimous votes
in the council on questions that do not affect
the vital interests of the member states.
Although Paris' proposals appear to repre-
sent an important change in French policy toward
European political and economic integration, it is
too early to reach firm conclusions regarding the
extent and durability of the apparent new direc-
tion of France's European policy. The French
have proposed, for example, the creation of a
"light secretariat" to prepare for European Coun-
cil meetings. This raises for some the suspicion
that Paris wants to impose a new inter-govern-
mental body to detract from the role of the EC
Commission.
In addition, Paris has said nothing about
extending the powers of the European Parlia-
ment, considered by many to be more important
than election procedures. Finally, doubts arise
over Paris' call for more inter-governmental
cooperation outside the framework of the com-
munity treaties.
EC leaders, including Giscard, seem to be
doing what they can to help the Wilson govern-
ment stay in the community, and they can be
expected to try to avoid actions that might
embarrass Britain. Largely in response to British
concerns, Giscard stressed during his press confer-
ence on October 24 that such substantive issues as
energy, inflation, and unemployment would be
discussed, along with EC institutional reform. In
fact, most of the French political proposals will
probably find their way into the summit agenda.
A possible exception is the proposal for direct
elections to the EC Parliament, which Britain
rejects outright.
In contrast to the British, some German of-
ficials are enthusiastic about what they consider a
basic change in French policy toward the EC, and
a Foreign Ministry official has characterized the
proposals as "exciting." The French initiatives are
seen as contributing to the reform of EC
SECRET
Page 10 WEEKLY SUMMARY r",-', 1 -7A
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
institutions, and thus welcomed, although the
Foreign Ministry also notes that man important
questions are left open.
The Germans
nevertheless want summit discussion of funda-
mental economic problems.
Despite considerable skepticism about the
possibilities for real breakthroughs at the summit,
France's partners are eager to end the year with
some tangible sign of community progress. In part
because of a desire to take advantage of Paris'
wish for movement in the EC-and, in Britain's
case, the hope of assuring a moderate French
stance on "renegotiation" of the UK's member-
ship terms-France's partners may show consider-
able indulgence for such French initiatives as
Giscard's proposal for an energy conference of
consumers and producers early next year
ALBANIA: GOVERNMENT SHIFTS
, -S
In a major speech to pa iasrf~e'ht t is week
Premier Shehu revealed that he has taken over the
post of minister of defense, confirming persistent
rumors that defense minister and party stalwart
Beqir Balluku has been fired. Balluku was un-
doubtedly also ousted from the Politburo.
Neither Shehu nor the Albanian media have
offered any explanation for Balluku's removal,
but earlier reports from Tirana suggested that he
was removed in midsummer for "revisionism, high
treason, and lack of ability." Western press
sources subsequently reported that he had
favored closer ties with the Soviet Union and had
criticized the slow pace of modernization in the
army. This would imply that he had committed
the grave error of expressing dissatisfaction with
Premier Shehu (c)
the support Albania was getting from its ally,
China.
Shehu also announced the appointment of
Abdyl Kellezi, chairman of the State Planning
Commission, to replace Balluku as deputy pre-
mier; the elevation of Adil Carcani to first deputy
premier; and the naming of two obscure party
officials to head the ministries of communications
and finance.
Some changes in personnel have been ex-
pected since a plenum of the party Central Com-
mittee met in late July to discuss defense policy.
Instead of directly announcing the changes, how-
ever, Albanian media have leaked them piecemeal.
Most have centered in the Defense Ministry,
which suggests that there has been a general
housecleaning of Balluku's cohorts.
Shehu's speech was in most other respects a
typical Albanian tour d'horizon of domestic and
foreign policies. Following a review of agricultural
and economic achievements, Shehu predictably
lauded Peking's support of Tirana and under-
scored party chief Hoxha's announcement earlier
this month that Albania would not establish dip-
lomatic relations with the US, UK, or West Ger-
many. Shehu castigated all members of the War-
saw Pact, except Romania, but he heaped special
scorn upon the USSR, calling it the "most hated
and most dangerous" traitor to socialism "ever
known by history."
SECRET
Page 11 WEEKLY SUMMARY
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
In the past month, the Soviet Union has
purchased more than 5 million tons of wheat and
corn for delivery in fiscal 1975 and reportedly is
still in the market. This amount-in addition to
the 850,000 tons being imported under contracts
from the preceding fiscal year-compares with
12.5 million tons imported in fiscal 1974 and 24
million tons in fiscal 1973.
Moscow began the new round of buying in
Argentina in mid-September, then moved on to
the US in early October, where the Soviets were
unable to buy all the corn they wanted. They
subsequently bought wheat from Australia and
are rumored to be closing grain deals with
Canada, Thailand, France, and Sweden.
The purchases began just as the grain harvest
in the USSR was ending. The harvest was slowed
by poor weather, and the corn crop apparently
was below expectations. The Soviet grain crop
will probably be 195 million tons, 5 to 15 million
tons short of domestic requirements and export
commitments.
New Grain Purchases
for delivery in FY 75
(thousand metric tons)
Supplier Wheat Corn
US 1,200
= Aus,tral is 1,000
1,000
Argentina 625 855
Canada (unconfirmed) 600
?7h0ilan,e {unconfirmed) 50
Total' a x,425 1,905
SECRET
Page 12 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
NW-1 Nftw#
ISRAEL: THE COALITION RETURNS
'he National Religious Party r joined the
ruling coalition on October 29 after nearly five
months of off again, on again, negotiations with
Prime Minister Rabin's Labor Party. The return of
the party strengthens conservative influence in
the government, which could complicate Rabin's
efforts to assume a flexible negotiating position in
peace talks with the Arabs. The Religious Party
remains strongly opposed to Arab control of the
Israeli-occupied West Bank, with its numerous
Jewish religious sites.
Rabin has insisted, however, that the coali-
tion agreement with the Religious Party will not
restrict his ability to negotiate with the Arabs. He
noted that, as a member of the coalition, the
party would not be able to support efforts to oust
the government over the conduct of peace nego-
tiations. It would be free, however, to vote
against any agreement presented to the Knesset
for approval.
Religious Party leaders, motivated largely by
their desire to regain the influence, patronage,
and financial benefits accruing to a party in the
government, overcame substantial opposition to
the move, particularly from the party's orthodox
youth wing. Swallowing its pride, the leadership
gave in on most of the party's demands for enter-
ing the coalition, including its insistence that the
government support an immediate amendment to
the Law of Return to recognize as Jewish con-
verts only those immigrants converted in accord-
ance with orthodox Jewish religious practice.
The party joined the government under a
coalition agreement essentially the same as the
one it worked out with Mrs. Meir's government.
The party regained the three ministerial port-
folios-interior, religious affairs, and social wel-
fare-it had held before.
The small Citizens Rights Movement walked
out of the coalition just before the Knesset ap-
proved Rabin's new cabinet. The loss of the three
Citizens Rights Knesset seats is more than offset
by the gain of the ten Religious Party deputies,
even though the two deputies from the party's
Page 13
youth wing only grudgingly support the govern-
ment. If all coalition deputies support the govern-
ment, Rabin will now have a more comfortable
majority of eight in the 120-member
ETHIOPIA: TRYING TO GOVERN
Since it cracked down (las mo~h) the
Arnied Forces Coordinating Committee has been
enjoying a respite from challenges to its authority
from opponents within the military. The com-
mittee, however, still faces critical tests of its
ability to govern, such as trying detained former
leaders, getting an ambitious rural development
program under way, and dealing with labor
unrest. At the same time, the committee is trying
to streamline its own decision-making process.
The committee's arrest of opponents in the
army aviation and engineering battalions proved
sufficient warning to other dissidents within the
important First Division. The dissidents were
resisting the committee's attempt to abolish the
division's special status and perquisites, gained
while it served as the imperial bodyguard. The
First Division now appears to be cooperating with
the coordinating committee and has reportedly
agreed to accept assignments outside Addis
Ababa.
The committee still suffers from serious
ideological, ethnic, and regional differences.
These may become more pronounced as a result
of efforts reportedly under way to adopt new
procedures for decision making. The changes
under consideration apparently involve a
reduction in the size of the 120-member com-
mittee and delegation of authority to a smaller
group.
The trials of detained aristocrats and former
officials, which are expected to begin shortly,
may also increase tensions within the committee.
SECRET
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
General Aman
Head of the Armed Forces Coordinating Committee
There are sharp differences over how to deal with
the prisoners. The moderates, who presently con-
trol the committee, are concerned with the
trouble-making potential of radicals in the mili-
tary who favor harsh punishment; some radicals
reportedly have advocated killing the prisoners
without trial. The moderates are also concerned
that supporters of the jailed aristocrats, perhaps.
joined by sympathizers in the military, will
foment disturbances during the trial or even try
to free the prisoners.
The military tribunal that will try the
prisoners will sit in a former imperial palace in
Addis Ababa where the committee now has its
headquarters. Some of the prisoners have been
moved to the palace from the army compound
where they had been held since their arrests.
Former emperor Haile Selassie remains under
detention at the compound, and the committee
has made no announcement on his future.
Meanwhile, the committee is proceeding
with plans to send thousands of students into the
countryside to engage in educational and rural
development work. A majority of students now
seem willing to participate in the campaign. They
are not enthusiastic about disrupting their lives,
let alone losing their ability to engage in political
agitation in the cities, but realize they can no
longer count on support from their labor and
military allies. The students have also heeded the
committee's warning that they would be barred
from further education if they do not take part in
the rural experiment.
Some student radicals continue to oppose
the campaign and earlier this week defied the
committee by tearing up registration forms.
Nevertheless, they seem to be losing steam,
although they still possess greater influence in the
fragmented student movement than their
numbers warrant. The radicals may gain support
from other students if the committee's program
encounters serious organizational and funding
problems. There is also the possibility of friction
between the students and the conservative rural
population, as well as the chance that some
students may try to sabotage the campaign once
they reach the countryside.
Labor unrest also continues, caused mainly
by the unruly behavior of unemployed workers
not affiliated with the trade union movement.
Crowds of workers demanding jobs have been
gathering daily at some government offices and
on several occasions have attacked employer
representatives attending sessions of the labor
relations board. On October 26, one worker was
killed and several wounded when police over-
reacted and fired on demonstrators in front of
union headquarters. The coordinating committee
later characterized the killing as a "tragic
mistake," but the incident will probably trigger
allegations that the committee is acting as
callously as the previous regime.
SECRET
Page 14 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
`''' SECRET '"ow
BHUTTO'S MOSCOW VISIT ~y9
(Pakistani Prime Minister Bhut'k's recent triV
to tie,
ie Soviet Union fulfilled his limited objectives
and produced no major breakthrough in Paki-
stani-Soviet relations. Bhutto managed, without
antagonizing his hosts, to avoid endorsing their
long-standing proposal for a Soviet-sponsored
Asian collective security system. The Soviets
apparently showed a somewhat greater under-
standing of Pakistan's concerns about its South
Asian neighbors. Finally, Bhutto may have
obtained some new economic assistance. The
over-all atmosphere in his discussions with Brezh-
nev and Kosygin is reported to have been quite
friendly.
On the security issue, the Soviets made their
expected pitch for mutual endorsement of Asian
collective security. When the Pakistanis asked
how they were supposed to subscribe to a pro-
posal that even the Indians refused to ac-
cept, the Soviets dropped their bid and settled for
a more neutral statement. According to the Pak-
istanis, the Soviets did not press hard for their
version.
BHUTTO APPARENTLY GOT THE SO-
VIETS TO SHOW GREATER SENSITIVITY
TO PAKISTAN'S CONCERNS AND
AVOIDED ENDORSEMENT OF THEIR
PROPOSAL FOR A SOVIET-SPONSORED
ASIAN COLLECTIVE SECURITY SYSTEM.
The Pakistanis had been concerned that ac-
ceptance of the Soviet formulation would offend
China and the US. Bhutto, on his return to Is-
lamabad, claimed to newsmen that he had ex-
plicitly told the Soviets that his government
would do nothing to jeopardize its ties with
Peking and Washington.
The Pakistanis apparently were also satisfied
with the discussions on South Asian matters.
Despite Moscow's close ties with India and Af-
ghanistan, the portions of the communique con-
cerning Pakistan's problems with those two coun-
tries were worded in a way that did no serious
violence to Pakistani positions. In addition, the
Soviets reportedly showed some sympathy regard-
ing Pakistan's unresolved problems with Bang-
ladesh. According to a report from the US em-
bassy in Islamabad, the Pakistanis seem to have
come away from Moscow with the conviction
that the Soviets are seeking a stable and peaceful
South Asia and are now more prepared to accept
Pakistan as an important element in such an
equation.
The Soviets reportedly agreed to provide
some new economic aid, including additional as-
sistance to a steel mill project they are sponsoring
in Pakistan. The two sides also agreed to renego-
tiate their existing trade agreement. We have no
evidence that Bhutto asked for a resumption of
Soviet military aid. The final communique did
not break any major new ground on international
issues.
SECRET
Page 15 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
SECRET
Prime Minister Bandaranaike
SRI LANKA: GOING NOWHERE r
Strains inherent in the rcfing United Front
coalition are being aggravated by disagreement
over the means for coping with the nation's
worsening economic problems. While the coali-
tion appears unlikely to collapse, the government
could become increasingly hesitant and erratic in
meeting the economic challenge.
Internal tensions have troubled the coalition
since it was formed in 1970. Prime Minister
Bandaranaike's Sri Lanka Freedom Party, which
by itself has a majority in parliament, is badly
split between an urban-oriented left-wing faction
and a right-wing group that reflects rural interests.
The coalition also includes two small leftist par-
ties that generally make common cause with the
left wing of the Freedom Party.
Mrs. Bandaranaike, who dominates the gov-
ernment, holds socialist views, but sometimes
finds it expedient to adopt policies opposed by
the left. In recent months, for example, she has
sharply increased prices for food and other goods
in response to soaring import prices. More price
increases, and reductions in welfare benefits as
well, may be necessary if the government is to
avoid a massive budget deficit.
Such policies trouble leftist politicians be-
cause they most severely affect city dwellers, the
leftists' principal constituents. The leftists are un-
likely to withdraw from the government, how-
ever, as that would give the opposition United
National Party, a small moderate group, an open-
ing to renew its effort of last spring to force
national elections before they are due in 1977.
Instead, the left apparently has hopes of trading
off continued support for Mrs. Bandaranaike for
speedy adoption by the government of socialist
economic policies, such as nationalization of
banks and textile mills and further controls on
foreign-owned tea companies.
There are no indications that the Prime Min-
ister is planning any early moves to accommodate
the leftists. In recent speeches she put them on
notice that she will not tolerate being pressed too
fast or too far.
Mrs. Bandaranaike's political problems are
sure to grow if, as seems likely, the country's
economic position continues to deteriorate. The
regime is particularly vulnerable to the people's
frustrations over inflation because the govern-
ment sets prices for a wide variety of goods.
Economic stagnation continues, induced in large
part by Sri Lanka's socialist policies. Insufficient
government revenues leave Colombo no alter-
native but to pass on the rising costs of imported
fuels, foods, and fertilizer. Despite reduced con-
sumption of imports, the trade deficit soared to
$122 million during the first six months of 1974
compared with $21 million during the same pe-
riod in 1973.
Sri Lanka needs an estimated $200 million
in new foreign aid just to maintain its present
reduced import levels through 1975. The gov-
ernment has been courting Middle East oil pro-
ducers for price or payment concessions, but so
far has managed to arrange only a $21-million
SECRET
Page 16 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
JLVRL I
PHILIPPINES: MILITARY MORALE
Discipline and morale continue to deterid
rate in Philippine military units operating in the
south against Muslim rebels. The trend, if un-
checked, will further hamper government efforts
against the insurgents and could pose serious
problems for the Marcos government in Manila.
On a number of recent occasions, inter-
service feuding has taken the form of armed
clashes between units of different services. Civil-
ians have also been the victims of military abuse,
including footings and indiscriminate killings.
Such incidents have not been publicized thus far,
but if widely known would be particularly damag-
ing to Marcos' efforts to convince Muslim nations
of Manila's good intentions toward its Muslim
minority.
The unpopularity of service in the southern
islands has contributed to morale problems and to
the military's poor performance against the well-
supplied Muslim rebels. Military commanders
complain that their operations are hampered by
political restraints. Troop annoyance over long
hours of duty and uncertain prospects for promo-
tion is compounded by bad leadership and blatant
graft among officers.
The dissent within the military ranks appar-
ently is not organized, and the government has
thus far been able to repress widespread knowl-
edge of the problems. Following a recent inspec-
tion tour of the area, the armed forces chief of
staff expressed dismay over the situation and or-
dered remedial measures, but it is questionable
whether he can reverse the trend.
About 75 percent of the Philippines' combat
strength is committed against the Muslim insur-
gency. Besides undermining counterinsurgency ef-
forts, widespread and organized disaffection
within the armed forces could weaken the sta-
bility of the Marcos regime, which has received its
strongest support from the military.
SECRET
Page 18 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
1_Iommunist offic ls, are Ow receiving in-
structions on the party's strategy for 1975. Al-
though there has been some discussion of a big
offensive during the coming year, the most credi-
ble reports so far indicate that the party plans to
continue the mix of political and military action
at a level similar to that of 1974.
A document recently captured in the delta
reaffirms the policy outlined earlier this year in
Resolution 12, which directed Communist forces
in the South to try to undermine Saigon's author-
ity with political and military action, but not to
intensify the fighting to a level that would jeop-
ardize the cease-fire agreement. The document
was issued in late August following a head-
quarters-level conference to review the progress of
the "anti-pacification" campaign since the first of
the year. Another conference is scheduled in
about a year to consider the current campaign.
In the review, Communist forces are credited
with succeeding "beyond expectation" in expand-
ing their holdings in the countryside, but the
document concedes that the government still
holds the upper hand. It admits that the southern
Communist command still regards Viet Cong
political forces as the weak link in the revolution,
and notes that the Communists must rely almost
solely on military action and intimidation to
reach the people. The lack of initiative among
leadership elements at the local level is cited as
one of the principal problems. The document
demands that greater attention be given to
strengthening political and military forces in the
countryside. It details a program for recruiting
more people and points out that local units must
be improved without help from outside the area.
Other recent information suggests the Com-
munists plan a higher level of fighting in the
COSVN area than is outlined in the delta docu-
ment0 in Binh Thuan Province claims
that there will be a two-phased "major offensive"
in 1975 aimed at controlling the countryside and
occupying the cities.
SECRET
maintains that "a nationwide general offensive"
will be conducted in January 1975.
Both of these claims, however, were predi-
cated on a "massive" political upheaval in the
South and smack more of a morale-boosting cam-
paign among the troops than a real reflection of
intentions. Even without the rhetoric, however,
both seem to be saying that the Communists will
continue to maintain fairly intense military pres-
sure in the coming months in hopes of compli-
cating the government's problems further.
Noisy National Day?
Antigovernment demonstrations may over-
shadow the usual speech-making and military
hoopla that normally occurs on November 1,
South Vietnam's National Day. Catholic anti-
corruption forces staged a low-key torchlight
parade and other generally quiet demonstrations.
To take the sting out of the anticipated
antigovernment demonstrations, President Thieu
replaced three of his four regional commanders in
midweek. Further, the Saigon police have re-
portedly sealed off much of the downtown area
and have imposed a 24-hour curfew. They have
also attempted to defuse potential demonstra-
tions against government censorship by raiding
the Saigon Press Club. Buddhist leaders have in-
formed government authorities that their activi-
ties will be limited to speeches in Saigon and
seminars in the provinces. Radical fringe ele-
ments, such as Madame Ngo Ba Thanh's move-
ment, can be expected to participate in any ac-
tion that develops. A prominent labor leader has
also joined the ranks of Thieu's critics, but there
is no indication that union members will demon-
strate against the government.
Buddhist and Catholic dissidents may find
themselves at cross purposes during the holiday,
which commemorates the overthrow of the Diem
regime in 1963. The Buddhists, who were largely
responsible for Diem's downfall, traditionally use 25X1
the holiday to denounce the former regime. The
Catholics, however, revere Diem and usually offer
day-long prayers for the former president.
Page 19 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
VENEZUELA: NEW DIALOGUE WITH US,
he Caracas media are giving major att ntion
to statements made last week by President Carlos
Andres Perez in which he called for a "new dia-
logue" with the US. Perez coupled his remarks
with reassurances that foreign investment will be
welcomed and foreigners now working in com-
panies to be nationalized will be encouraged to
remain.
The statements appear designed to relieve
some uneasiness among foreign investors and the
local business community, both of which had
reacted to the President's aggressive defense of
Venezuela's petroleum policy. These latest state-
ments are in direct contrast to those in September
when Perez appeared to be approaching a major
confrontation with the US over this policy. At
that time, he and other Venezuelan officials took
sharp issue with statements by President Ford and
Secretary Kissinger regarding the artificial rigging
of world oil prices.
Since then, there has been a sharp decrease
in critical statements by government and party
officials, suggesting Perez had decided that such
statements were no longer necessary-since the
points at issue had been clearly delineated-but
also that they would be unnecessarily provoca-
tive. Perez continues a strong defense of his
administration's international economic policy
and stresses that his government will use its in-
fluence to solve the energy crisis in the broader
President Perez at recent meeting with US businessmen
context of a better deal for raw material pro-
ducers. Nevertheless, he couples these remarks
with repeated assertions that his administration is
not seeking a fight with the US and is sympa-
thetic to US concern over the possible breakdown
in the world economic order.
In a recent interview with a Caracas news-
paper, Perez said that the US will always be the
number one partner of Venezuela and that "full
harmony and open dialogue" are now necessary
to avoid uncertainty over petroleum prices, which
he said Venezuela does not want to continue to
rise. Perez added his hope that new agreements
could be worked out to transfer technology to
underdeveloped countries and to regulate prices
of all raw materials, including petroleum.
In what may have been a calculated leak to
the press, the influential El National this week
reported statements-vaguely attributed to high
government officials-that Venezuela's new am-
bassador to Washington, Miguel Angel Burelli
Rivas, had encountered a climate of cooperation
and understanding regarding petroleum in Wash-
ington. According to the newspaper, White House
officials reportedly had made known to Burelli
Washington's desire to have Venezuela remain a
secure source of petroleum at least until 1985.
A further indication of Venezuela's eager-
ness to resolve differences with Washington is the
SECRET
Page 20 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
NNW SECRET
fact that Perez will not be going to the World
Food Conference in Rome this month as orig-
inally planned. Although no public explanation
has been given for the change, Perez may well
have feared that the conference could become the
focus for anti-US statements by several delega-
tions and that his presence at such a forum might
be misunderstood.
In the coming months, Perez will be walking
a very thin line, attempting to balance Ven-
ezuela's role as a leading oil producer and spokes-
man for developing countries against its depend-
ence upon access to the US market. Recent state-
ments by Perez indicate an acute awareness of
both US sensitivity on the petroleum issue and
the necessity of maintaining stable economic and
political conditions in Venezuela. They further
indicate that the dialogue with the US is a high
priority objective of the Perez administration.
The success or failure of its efforts could have a
major impact on the current negotiations for the
nationalization of the largely foreign-operated
petroleum industry-negotiations that are ex-
pected to begin in earnest after the beginning of
the year.
25X1 CUBA DRAFTS A CONSTITUTION
47' S'0uRc:ff,6
In a surprise move on O ober 24, Havtna
announced that a committee has been formed to
draft a new constitution for the country. Al-
though talk of formulating a new basic legal
document for the Castro regime has abounded
over the past several years, there had been no
visible movement in that direction since late 1965
when a "constitutional studies commission" was
formed as an appendage of the newly created
Communist Party Central Committee. Little has
been heard from it since, however, and now it has
apparently been superseded by the new group.
The draft constitution is to be ready by
February 24, 1975, at which time it will be
presented to the party's political bureau and to
the Council of Ministries. It is now clear that
Fidel Castro's long-standing resistance to any legal
document that might define-and thus have the
potential to limit-his heretofore unrestricted
power has finally been overcome. Nevertheless, it
is likely to be at least 18 months before the
constitution is formally adopted; it must first be
approved by the party congress, now scheduled
for the second half of 1975, and then will prob-
ably be submitted to the people through the mass
organizations in order to achieve popular support.
Chairman of the drafting committee is Blas
Roca Calderio, who served as secretary general of
the pre-Castro Communist Party for more than a
quarter of a century. He will be assisted by four
other "old" Communists, including the 76-year-
old former president of the pre-Castro Com-
munist Party, Juan Marinello. The committee's
leading "Fidelista," or "new" Communist, is
Belarmino Castilla Mas, a member of Castro's
guerrilla elite who now serves as vice prime minis-
ter for education, science, and culture. The re-
mainder of the committee seems to be made up
of technical advisers having lengthy experience in
the legal field and individuals who will be respon-
sible for "selling" the draft constitution to the
population through the mass organizations.
The political-as opposed to legal and admin-
istrative-representation on the 20-man drafting
committee seems to favor the "old" Communists,
raising the possibility of an attempt by this fac-
tion to place restrictions on the powers of the
prime minister. The mechanics of approval of the
draft, however, apparently allow for total revision
of any portion by such political bodies as the
party's political bureau and the Council of Minis-
ters, which are totally dominated by Castro.
Thus, any attempt to limit his authority by means
of the drafting process is bound to fail. Castro
himself will have the final say on the version that
will eventually be submitted to the party con-
gress.
This personal veto power is presumably the
price Fidel demanded in finally giving his
approval to the drafting of a new constitution; his
total freedom of movement under the current
legal system is a luxury he is not yet ready to
relinquish. At the same time, he will be carrying
out those measures to institutionalize his regime
that have been demanded of him by Mos-
cow.
SECRET
Page 21 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
SECRET
BRAZIL: ECONOMIC POLICY C NGES
President Geisel broke with established
poll on October 24 by announcing liberalized
wage and credit measures. The move had two
purposes: to alleviate economic hardships and to
stave off opposition victories in next month's
congressional elections because of widespread dis-
content with the high cost of living and tight
consumer credit.
The new measures call for an "emergency"
10-percent wage adjustment as of December 1 for
workers at the minimum salary level and a 30-per-
cent increase, in stages, for military and federal
workers. In addition, the central bank is to pro-
vide a special line of credit to finance companies
for consumer purchases. Heavy stress on anti-
inflationary measures has long placed workers and
consumers in an ever-tightening squeeze by
limiting both wage adjustments and expansion of
credit.
The working class was hit first and hardest
but had remained relatively quiet. Recently, how-
ever, workers in Brasilia stoned a number of buses
following a sharp fare increase. Even normally
docile industrial workers have staged work slow-
downs in recent months. The administration's
concern may have grown when it became ap-
parent that the middle and upper classes-particu-
larly in the important industrial and agricultural
areas around Sao Paulo-had become disillusioned
with national economic policies. This attitude, in
the view of the US consul in Sao Paulo, is likely
to produce a victory for the opposition candidate
in the Senate election on November 15. Other
opposition victories are possible in the senatorial
race in Parana State, as well as contests in a
number of state assemblies.
Significantly, the administration's concern
has taken the form of policy changes rather than
suppressive measures. Moreover, Geisel has acted
despite urgings from security officials that the
cure for discontent is more vigilance, not greater
liberalization. Apparently, then, the President
retains both the willingness and the ability to
display relative sensitivity to the basic wants of
the people. Right-wing pressure could increase,
however, if the opposition makes substantial gains
next month in spite.,of the new policy changes.
ARGENTINA: FOCU ON TER ORISM
-,Pxg~
Leftist terrorist re ste i up their
pp g p efforts
to g ad the military into actions that would un-
dermine public support for President Peron's gov-
ernment. Official concern over deteriorating in-
ternal security is evinced by Mrs. Peron's recent
renewal of policy consultations with opposition
parties, a practice that had been abandoned after
Juan Peron's death.
The Marxist People's Revolutionary Army is
reportedly now threatening to kill wives and chil-
dren of army officers. The threats were evidently
made to provoke the military into taking more
repressive measures. The terrorists have failed to
follow through on similar threats in the past.
Nevertheless, the leftists continue to make good
on their intention to assassinate 16 army officers
in reprisal for an equivalent number of guerrillas
killed last month. So far, six officers have been
killed and five others wounded in separate
ambushes.
The continuing high level of violence has
provoked threats from the quasi-official right-
wing anti-terrorist squads after a brief lull in their
activity. According to press reports, one of these
groups, the Argentine Anti-Communist Alliance,
has issued a new series of assassination threats
against several prominent Argentines who are
known for their leftist sympathies.
Terrorism was the main topic of a confer-
ence earlier this week between President Peron
and the leaders of nine opposition parties. This
was the second time Mrs. Peron had called such a
session since assuming the presidency last July.
Because the meetings are intended as a clear
signal to the public and leftist extremists that
opposition leaders are behind the government,
SECRET
Paqe 22 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
some of the participants are being criticized for
their conciliatory stance. Their constituents see
all the advantages going to Mrs. Peron-if her
policies succeed, she gets the credit; if they fail,
the opposition parties can also be tarred with the
failure. Radical party leader Ricardo Balbin is a
good case in point. He is under increasing pressure
from the left wing of his party to break with the
government. His critics charge that the admini-
stration is violating many traditional Radical
precepts-such as intervening provinces by execu-
tive decree and controlling the communications
media. They assert that if dialogue is to be worth
anything, some respect must be shown for Radi-
cal views.
Despite the likelihood of growing strife
within opposition circles and continuing political
criticism of official policy, Mrs. Peron currently
faces little if any opposition from the military.
Although army leaders are frustrated and angry
over the terrorist campaign against them, they
have not insisted on a greater role in internal
security matters. If attacks on officers and their
families increase, the army will retaliate, but there
is no evidence that the high command is in-
creasing its demands on the governmen
OAS: A TOUCHY ISSUE
? 7 1-YI)
Despite the careful groundwork by the spon-
sors of the resolution to lift OAS sanctions
against Cuba, the foreign ministers' meeting in
Quito next week may be a less than tidy affair.
Some Latin American governments have not
been willing to see the sanctions issue addressed
as a mere procedural matter. The drafters of the
motion under study tried to get around the sub-
stance of the question of Cuban subversion by
arguing a changed international situation as the
basis for rescinding the censure of Havana. They
have emphasized that the sanctions have been
invalidated in practice and that OAS members
should be free to deal or not with Havana in
accordance with their own national interests.
Chile and Uruguay, however, are still anti-
pathetic toward Havana and have been concerned
that this approach would in effect vindicate
Castro. They therefore insisted on presenting
evidence to the OAS council that Havana con-
tinues to train terrorists and generally to meddle
in other governments' affairs. These new charges
against Cuba have raised concern among some
members that the Quito session will amount to no
more than another abortive effort to get the nag-
ging Cuba issue behind them.
Another threat to the tranquility of the pro-
ceedings lies in the provocativeness of the sub-
version theme at this particular time. Publicity
about clandestine US activities in Chile has raised
sharp criticism of US policy in Latin America and
created speculation that the US rather than Cuba
will be made the defendant at Quito. At one
point, Panama appeared to be preparing a brief
against the US but the Torrijos government has
publicly denied this suggestion.
In general, the Latin Americans probably
prefer the Quito meeting to go smoothly and
would not welcome the intrusion of another
contentious issue. Yet, if Chile and Uruguay press
hard on their anti-Cuban theme, Castro's ad-
vocates may find it difficult to refrain from
countering with charges of US intervention in
Latin America.
The mood of the Latin Americans could be
receptive to this theme if it were raised. Old
resentments against the US have again surfaced
because of revelations about the US role in Chile,
recent disagreements over resource policies, and
the news that Secretary Kissinger will not be in
attendance at Quito. Together, these develop-
ments have created an uncomfortable atmosphere
for US - Latin American relations.)
SECRET
Page 23 WEEKLY SUMMARY
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
VI_VI 1L_ I
PERU: MILITARY UNREST SERIOUS
~a-7Q.
he
possibility tha dis ident fcer
s will
attept a move against President Velasco has
increased substantially in recent days. The num-
ber of moderate army officers who would support
such action is still unclear, however. Their sup-
port would be vital to a successful coup, but even
then the outcome would be uncertain; important
army troop commands apparently remain in the
hands of officers personally loyal to Velasco.
Moderate officers in the government believe
that Velasco is moving the country too far to the
left and that he is trying to undercut their
influence. The President may be forcing a
showdown between moderates and radicals in
order to ensure the continuation of his policies.
The risks involved in such a plan, however, are
high. Recently enacted changes in military retire-
ment procedures, designed to place more radicals
in top posts, are coalescing the dissidents. One
measure already approved by Velasco's cabinet
gives the three service chiefs broad power to retire
a limited number of top officers in any given year
without having to show cause. Additional changes
reportedly are under consideration.
Some of these moves clearly are aimed at
preventing army Chief of Staff Morales
Bermudez-a leading moderate-from becoming
prime minister and army commander next Feb-
ruary. The current prime minister, General
Mercado Jarrin, is scheduled to retire at that time,
and Morales Bermudez is next in line to replace
him.
Velasco already has begun to purge the navy
of top officers he considers unacceptable in order
to ensure that one of his supporters is next in line
to become navy minister. It appears that the
President is planning similar action in the army to
block Morales Bermudez' promotion to prime
minister.
The President certainly is aware of the
chance he is taking by attempting to purge the
government of unacceptable officers. During the
past year, however, Velasco has accelerated the
pace of radical reforms and may believe that the
time has come to undercut the moderates' power
decisively to ensure the continuation of his
policies.
A coup attempt by navy and air force of-
ficers without substantial support from army
moderates would stand virtually no chance of
success. Velasco could use an unsuccessful move
against him as evidence that all moderates, in-
cluding those in the army, must be removed from
important government posts. This would greatly
strengthen the influence of the radicals in setting
government policies.
Morales Bermudez is undoubtedly aware of 25X1
the dilemma he is in, but events are progressing in
such a manner that he will have to act soon or
risk losing his power and influence.
SECRET
Page 24 WEEKLY SUMMARY Nov 1, 74
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 25X1 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
 Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8
Secret
Secret
Approved For Release 2008/08/05: CIA-RDP79-00927A010900140001-8