WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011000030001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

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~..~ '??x
Weekly Summary
State Dept. review completed
Secret
Secret
No. 0003/75
January 17, 1975
copy Nd
1170
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t3irectorate' of Science and Technology.
on~c Research, the Otfice of Strategic
~riai coordinated with ar prepared by
requiring :snore ctzmprehensive treatment and theretore
~d< setrarateBy as Special Reports are listed in the
CONTENTS (January 17, 1975)
EAST ASIA
PACIFIC
4
South Vietnam: Military; Economic
7
Laos: ?'roubles in Thakhek
8
Cambodia: Focus on the Mekong
9
Taiwan: Slumping Economy
EUROPE
9
China: Congress; Grain
11
USSR: Trade Bill; Transpor
t
13
Cyprus: Political Talks Begin
14
Greece~?Turkey: Aegean Dispute Revived
15
Denmairk: Election Outcome
16
Spain: Military and Labor Problems
17
UK: EC Debate Heats Up
MIDDLE EAST
AFRICA
18
Angola: Agreement Announced
19
Iran - P~rab States: Getting Closer
20
Egypt-USSR: Uneven Course
21
Ethiopua: Imperiled Truce
WESTERN
HEMISPHERE
22
Latin America: Relations With US
22
Cuba: Detente, Havana Style
23
Chile: Easing Up
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SOVIET
UNION:
FAR
EAST
RELATIONS
~~~
Sino-Soviet relations continue to be stale-
mat~d on all substantive issues, although the
polemics of last yezir on the border issue have
died down.
Direct contacts between the two countries
remain at a bare minimum. Soviet Deputy For-
eign Minister Ilichev, who is Moscow's chief nego-
tiator at the border talks held intermittently in
Peking since 1969, came home in August. He has
since been involved in a number of other duties,
and there is no indication that he will soon take
up the negotiations again. Soviet Ambassador
Tolstikov recently returned to Peking, but
appears to be transacting little if any business.
The annual conference of the Sino-Soviet Border
River Navigation Joint Commission, which will
meet in Peking early this year, will probably be
marked by mutual irecriminations, if past meet-
ings are any guide.
Sino-Soviet trade has leveled off, running at
about a quarter billion dollars per annum for the
past three years. According to the Soviet embassy
in Peking, China has shown no desire to increase
trade beyond this figure. There have been no
recent changes in the size or the status of the
military forces facing each other across the Sino-
Soviet border.
The fate of the three Soviet helicopter crew
members apprehended inside China last March
remains uncertain. l-he last known Soviet diplo-
matic approach to Peking on this issue took place
in mid-October; Peking evidently failed to
respond to the demarche. Moscow has also at-
tempted unsuccessfully to arrange contact with
the crew members through the Red Cross. Peking
still has given no firm indication of how it intends
to deal with the prisoners, but diplomatic specula-
tion continues to center on an eventual trial.
A major area of contention that is likely to
come to the fore over the next year is the role of
the Soviet and Chinese parties in the international
Communist movement. Soviet statements
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concerning the conference of European Commu-
nist parties, due to be held later this year, suggest
that Moscow looks to this conference and to the
hoped-for subsequent world conference as forums
at which certain Chinese policies, if not China
directly, can be attacked. Moscow recognizes that
it will not be able to obtain a formal condemna-
tion of China or its policies at either conference,
but it hopes to get endorsements of Soviet foreign
policy initiatives such as SALT and CSCE and
-thereby isolate Peking from the mainstream of
the Communist movement.
Peking is warning other Communist states of
the dangers to their independence should Moscow
be successful in isolating China. Mindful of Soviet
efforts to convene a conference, the Chinese some
time ago began to make an effort to improve their
relations with Romania and Yugoslavia and to
encourage them to maintain their independent
policies.
Page 2
By all appearances, both sides foresee little
chance for a significant change in relations. Pros-
pects for improvement at this time are particu-
larly dim because Mao is determined to perpet-
uate anti-Soviet policies in China, and hostility
toward the USSR has become an important
element in China's leadership struggle. Border
clashes could again occur, but it is more likely
that Moscow and Peking will seek to keep their
relations somewhat below the boiling point as
they maneuver for political advantage:'
~-
Foreign Minister Nliyazawa's visit to Moscow
from January 15-17 probably accomplished little.
It seemed designed primarily to keep alive the
dialogue on a World W'ar I I peace treaty. Tokyo
feels constrained only to demonstrate that it is at
least making an effort to achieve progress in
relations with the USSR at the same time that
Gromyko welcomes Miyazawa
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relations with China are moving ahead. The
Soviets, for their part, probably see some value in
pursuing direct contacts with the new political
leadership in Tokyo.
The Matter of a Peace Treaty
Tokyo's claim to the small islands north of
Hokkaido, seized by the Soviets at the end of
World War I I, has persistently blocked progress on
this and other bilateral political issues. The
Soviets had been taking await-and-see attitude
toward the new Miki government on the territo-
rial issue, but what they have seen so far probably
gives them no reason to expect any sort of break-
through. Early this week, Prime Minister Miki
ordered Miyazawa to "stand pat" on Japan's
claim to the "northern territories." The Prime
Minister's chief assistant, moreover, personally
assured audiences in eastern Hokkaido of Miki's
determination to seek the return of the islands.
Press reports also indicate that Miki has asked for
a record appropriation for propaganda activities
aimed at bringing pressure on Moscow on the
issue.
The Soviets, in an effort to counter Japanese
arguments for a territorial settlement as a prereq-
uisite to any peace treaty, have tried to draw a
contrast with rumored Japanese plans for early
conclusion of apeace-and-friendship treaty with
Peking. Moscow has chided Tokyo for its
apparent willingness to overlook such territorial
problems as the conflicting Sino-Japanese claims
to the Senkaku Islands-an area of potential oil
wealth near the Ryukyus--in its treaty discussions
with Peking.
From the Japanese point of view, there are
several distinctions between the two issues. First,
Tokyo actually controls the Senkakus and feels
that it has a good legal case in any subsequent
territorial negotiation with China. Second, and
more important, the Senkaku problem is a com-
ponent of the larger issue of the division of the
Asian continental shelf for purposes of oil ex-
ploration.
Some anti-Peking elements in Japan's ruling
party also see advantage in trying to link the two
proposed peace treaties. They are trying to delay
a China treaty by claiming that if territorial issues
are overlooked in those discussions, Japan could
no longer insist on prior resolution of the territo-
rial issue with Moscow. To counter such tactics-
at home and in Moscow-the Miki government
will soon begin emphasizing the "friendship"
aspect of the proposed China treaty, playing
down the idea that it represents any attempt to
resolve specific issues.
In view of the probable political deadlock in
Moscow, both sides no doubt spent most of the
time discussing ways to keep economic relations
on an even keel. From Tokyo's viewpoint, how-
ever, the cancellation of the 1972 Soviet-US trade
agreement and the consequent lack of further US
Export-Import Bank credits is a severe setback for
the proposed Yakutsk natural gas project, in
which Japanese participation has been contingent
on such credits.
Although bilateral economic relations have
grown steadily, the Soviets may well have over-
estimated the degree to which the Japanese need
or want Siberian resources.
For its part, Tokyo may have overestimated
the extent to which the Soviets, to encourage
Japan to balance its relations with Moscow and
Peking, would make concessions on the economic
details of Siberian development.
In any case, looking at the hard economics
of Soviet proposals, the Japanese have decided in
some cases that the terms were unattractive and
the rewards inadequate. Moreover, Tokyo has
been reluctant to offend China-and, to some
extent, the US-by meeting certain Soviet condi-
tions. Finally, the Japanese have clearly been
apprehensive over 'the possibility of becoming
excessively dependent on Soviet energy resources.
Thus, although economic relations should
continue to expand gradually, no ingredients
seem to be present to produce any major break-
throughs. The Miyazawa visit may have provided
confirmation of this somewhat pessimistic view of
the course of Japanese-Soviet relations.
SE-GREY
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SOME LOSSES, SOME GAINS j _ ~ ,,, `
'r
~Presideni: Thieu is attempting to rally both
domestic and international support for his govern-
ment in the ~Nake of increased Communist mili-
tary pressure. Late last week, Thieu went on radio
and television appealing for national unity and
greater popular support following the loss of
Phuoc Long Province. The President's most im-
mediate concE~rn, however, appears to be obtain-
ing increased US aid.
Communist regiments involved in the action re-
portedly suffered a large number of casualties,
primarily from air and artillery strikes. In coastal
Binh Dinh Province, government operations have
been increasingly successful in cutting Communist
supply routes and neutralizing the activities of the
North Vietnamese 3rd Division.
The South Vietnamese air force also in-
flicted heavy losses on a convoy of some 400
trucks in the triborder area of Military Region 2
early this week. The government believes the
During ~tFie past week, Communist military
action increased in the delta provinces, and
heavier fighting will develop if the Communists
move against urban centers in the area. The
shelling of the provincial capital of Moc Hoa near
the Cambodian border last week with field artil-
lery pieces-their first use in the delta-could
presage a ground assault against the town. The
shellings may be designed, however, only to tie
down governrrrent forces while the Communists
consolidate anti expand their infiltration corridors
deeper into the delta. There has also been astep-
up in fighting iin Tay Ninh Province northwest of
Saigon, and sharp skirmishes have erupted in
several of the northernmost provinces.
Despite the well-publicized reverses of recent
weeks, there have also been notable government
successes. Early this week, government forces
broke a montr~-long siege of a district capital in
Birch Tuy Province east of Saigon. The two
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convoy was bringing units of the North Vietna-
mese 968th Division from Laos into South Viet-
nam. The 968th has been in southern Laos for
about two years and is not rated as one of Hanoi's
better units. Its movement, nevertheless, appears
in line with known Communist plans for a round
of sham attacks in the highlands later in the dry
season.]
LIVING WITH UNCERTAINTY
I `~' _ ~ ~'
~erious economic problems-declining US
aid, `depressed business conditions, unemploy-
ment, and decreasing real incomes in urban
areas-continue to plague South Vietnam, but
these do not pose a specific danger to the Thieu
administration over the coming year. Recent
changes in South Vietnam's economic leadership,
including the appointment of an economic czar,
are unlikely to lead to much inprovement. Nota-
ble gains have been made in agriculture, and re-
cent Communist military actions do not seem to
have had a significant effect in the countryside.
Still, the country's economic future remains
essentially dependent on foreign aid.
South Vietnam's total production today is
essentially what it was in 1972, but in the mean-
time, its population has grown 5-6 percent.
Soaring world prices have spurred both inflation
and recession by pushing up import costs and
reducing import volume. As a result, many private
firms are working well below capacity, and some
have gone out of business. Industrial production
is some 30 percent below 1971 peaks, with the
hardest hit industries including textiles, soft
drinks, glass bottles, plastics, flour, detergents,
and paper products.
Other economic difficulties include tight
credit controls, which have prevented business-
men from obtaining loans to finance production
and capital improvements and to hold unsold
inventories. In addition, some 15-20 percent of
the urban labor force of 3-4 million appears to be
unemployed; many more are underemployed.
Moreover, inflation has been unusually high for
the last two years. Cost-of-living increases came to
65 percent in 1973 and 40 percent in 1974; real
incomes of most of the urban working class
dropped, and demand for all but the basic neces-
sities fell.
The large standing army also continues to
strain the economy, with almost half of the re-
cently enacted 197!i budget going for the mili-
tary. Saigon optimistically estimates a budget
deficit of about $11Fi million, but it is likely to be
considerably higher sunless the economy improves
markedly and the tax base is broadened.
In the past, the remedy for these problems
has been a strong dose of foreign-largely US-aid.
Foreign economic aid this year, will amount to
about $700 million, and South Vietnam's exports
may add another $100 million, but this is
$200-400 million less than needed to revive indus-
trial production and guarantee adequate supplies
to farmers for a good crop year. Nevertheless, the
foreign aid should be enough to arrest further
economic decline-at least temporarily-if the
weather is as favorable for farmers as in 1974.
The obvious aBternative to such heavy re-
liance on foreign support is to earn substantially
more foreign exchange, but the outlook for this is
not good. Exports grew from $12 million in 1971
to $60 million in 1973, but only to $75-80 mil-
lion in 1974. Saigoin's monthly earnings abroad
began to decline Iasi: May, largely because of the
high cost of industrial raw materials, especially
fuels, insecurity in the timber-producing areas,
and a drop in foreign demand for fish and wood
products.
Bright Spots
Agriculture, the mainstay of the economy,
has had two good years in succession. The current
rice crop should reach a record 7 million tons,
and it does not appeear that the recent increase in
fighting will seriously affect the harvest. The need
for US rice should be minimal this year. In fact, if
weather permits and sufficient fertilizer can be
imported, the South Vietnamese might be able to
export some rice in the next few years. Sugar
production, too, hzis increased substantially in
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recent years-though not to pre-war levels-and is
replacing over $50 million in sugar imports.
E>cports of sugar are still several years off.
Prices appear to have leveled off in the last
several months. More than half of the 1974 price
increases occurred in the first three months of the
year, as high petroleum prices worked their way
through the market place. Since August, the price
index has risen at an annual rate of only 9 per-
cent, despite expected seasonal increases that
should have occurred toward the end of 1974.
Rice prices rose 24 percent in 1974, compared
with 82 percent the previous year.
Some progress has been made in reducing
unemployment through government-sponsored
programs in Saigon and Danang. These employ
some 16,000 in each of the cities, and recruit-
ment is continuing. The programs are concen-
trating right now on labor-intensive projects such
as garbage removal, building and street clean-up,
trnd maintenance and repair of drainage ditches.
increasing emphasis, however, is being given to
longer term projects such as construction of dikes
and irrigation networks, land reclamation, and
restoration of railways.
Foreign exchange reserves are about $200
million, up from $150 million at the start of
1974. Much of the increase, however, came from
one-time payments from oil companies and from
repatriation of foreign funds by cash-short
businessmen. The reserves are equivalent to about
three months' imports at the current rate, and
provide some elbow room. Additional oil explora-
tion earnings and the production of more goods
to substitute for imports should make it easier for
the government to cope with the drop in aid and
the slowdown in exports.
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~+ VLVIIL I
Economic Prospects
President Thieu is obviously concerned that
the economy might be a convenient rallying point
for political dissidents. He knows that the man-
in-the-street can identify much more easily with
high prices, unemployment, commodity short-
ages, and graft than with ideologies or even the
conduct of the war outside his environs.
The most pressing need is for visible progress
rather than any broad new programs. The ex-
tensive reforms of 1971 and 1972 provide a suit-
able framework for change. The exchange rate is
flexible, interest rates and credit policies are
easily regulated, and stiff tariffs and taxes already
provide ample leverage over imports. Curbing un-
employment may require an expansion of credit
and more work programs, but the remaining basic
problems--such as inadequate taxation of farmers
and a need for a vast expansion of exports-
cannot be seriously altered in the next fPVy years.
LAOS: TROUBLES AT THAKHEK
~ ~~ ~
Civil unrest, apparently fanned by the Pathet
Lao or their sympathizers, continues to flare up
in some non-Communist controlled urban areas,
The Royal Lao Army recently placed the pro-
vincial capital of Thakhek in central Laos under
martial law following an outbreak of civil disorder
there.
The disturbances in Thakhek began on
January 6 when a small group of local workers
and student activists staged a demonstration over
economic and political grievances. The protest
appears to have been masterminded by a local
leftist who has been a leading instigator of labor
unrest in Thakhek over the past several months.
Fearing a repetition of the events last month
in the northwestern provincial capital of Ban
Houei Sai, which developed into a major embar-
rassment to the non-Communist establishment,
Royal Lao Army forces moved with unchar-
acteristic swiftness in dealing with the Thakhek
protesters. Troop reinforcements were dispatched
to seal off the town, and the protesters were
isolated in the government compounds they had
seized.
Unlike the uprising at Ban Houei Sai, no
dissident non-Comrrrunist forces or Pathet Lao
troops have been involved. In the wake of a
shooting incident along the approaches to
Thakhek, however, public sympathy and support
for the protesters has spread to other urban areas
in the non-Communist zone as well as to the
neutralized city of Vientiane. The Thakhek in-
cident occurred whf;n Royal Lao Army troops,
apparently acting in self-defense, fired into a
group of several hundred villagers attempting to
march on the city in a show of support for the
protesters. At least one villager was killed and ten
others wounded.
The non-Communists insist that they are
firmly in control at Thakhek, but prolonged oc-
cupation of the city by the Royal Lao Army-
especially if aggravated by any further shooting
incidents-could backfire politically. Moreover,
there is a chance that local Pathet Lao troops in
the Thakhek area might support the protesters-as
they did at Ban Houei SaiJthus raising the pos-
sibility of a military confrontation.
Senior non-Communist political and military
leaders are attempting to minimize the potential
seriousness of the situation at Thakhek in an
effort to prevent the Pathet Lao from capitalizing
on it. Prime Minisi:er Souvanna Phouma has
ordered non-Communist military authorities to
exercise restraint and to make every effort to
avoid further bloodsried. He has also decided to
convene a special meeting of the coalition cabinet
in Luang Prabang to deal with the latest urban
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CAMBODIA: FOCUS ON THE MEKONG
~~~~
1F-leavy fiighting along the Mekong River near
the navy base at Neak Luong and continued
Khmer Communist control of the riverbanks far-
ther south forced the government at midweek to
postpone a scheduled resupply convoy. Phnom
Penh has afive-week supply of rice and enough
fuel and amimunition to sustain military opera-
tions through the end of the month. Military
stocks are being supplemented by increased air
deliveries. Despite the tightening supply situation,
sporadic rocket attacks, and continued skirmishes
along Phnom Penh's outer defenses, the capital
remains calm.,
The situation at Neak Luong is tense, how-
ever. Communist ground units have kept heavy
pressure on government positions on the west
bank of the river opposite the navy base and on
the nearby riverside town of Banam. The fighting
in these areas, has caused over 20,000 civilians to
flee to Neak Luong, which has itself been shelled.
Convoys from Phnom Penh were still getting
i~~'
\~//-M
1,\ a
~, ._._
~~ji~ Heavy'^---~
~i l' afCommuntsts
I j Farces
,~
through to Neak Luong but are encountering
heavy fire en route. At week's end, a government
force trying to push down Route 1 toward the
base was bogged down in the face of stiff resis-
tance.
Prince Sihanouk's recent interview by Swed-
ish newsmen in Peking, in which he alleged that
several leading members of the Lon Nol govern-
ment had in the past indicated a willingness to
join him, has caused a stir in Phnom Penh. The
Prince actually devoted more of the interview to
his thoughts on resolving the conflict, and he may
have been trying to signal some new flexibility
when he said he could accept some Phnom Penh
leaders in an "enlarged government." Local press
accounts of the interview, however, focused on
the alleged offers of defection. Government lead-
ers took the interview as an attempt to sow dis-
sension in the capital and closed down three
newspaypers that carried the story.
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Government clearing
~ operation stalled
~, ~,
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TAIWAN: SLUMPING ECONOMY
~~~-31]
Sagging US and Japanese demand for
Taiwan's exports has led to a sharp economic
downturn. Real growth last year fell below 4
percent, the lowest in over 20 years.
Many small- and medium-sized companies,
facing mounting inventories and cash shortages,
are struggling to avoid plant closings or bank-
ruptcy. Many firms have cut production, laid off
workers, and are paying partial salaries; some tem-
porary plant shutdowns have occurred. Hardest
hit have been the export-oriented industries such
as textiles, electronics, plywood, and petro-
chemicals. Unemployment in these sectors now
probably exceeds 12 percent. Iron and steel pro-
duction has also slumped, with many workers on
partial pay and nearly half of all plants reportedly
shut down. Unemployment and production cuts
are likely to increase in the months ahead.
Taipei is attempting to stimulate economic
activity in order to hold down unemployment.
The government is providing loans to financially
pressed companies and is buying excess stocks to
ease the cash squeeze. Fe~v import restrictions
have been imposed, but firms are being en-
couraged to "buy local." Major government
projects may be accelerated to provide more jobs.
Exporters have been given lower interest rates on
loans as well as more favorable duty and fee
treatment, but any upturn in exports will depend
on renewed demand in the US and Japan, which
together account for more than half of Taiwan's
overseas sales. Meanwhile, a reduced growth in
imports will probably hold down the trade deficit
to less than the $1.3 billion of last year.
Increased government spending on public
projects is not likely to add much to inflation
because of the slack in the economy. Inflation is
already showing signs of easing-consumer prices
rose less than 10 percent during the second half
of 1974, compared with 25 percent in the first
half, and vuhol e an declinin in the
fourth quarter.
PEOPLE'S CONGRESS-AT LAST?~~3~-~I 7
The convening of the National People's
Congress appears irr~minent, if it is not already
under way.
Suspected congress delegates from the com-
munist suspected congress delegates from the
communist communities in Hong Kong and
Macao left for Peking within the past few days,
and Hong Kong residents are being refused per-
mission to travel to Peking. No National People's
Congress has been Meld for the past decade, and
conflict among leaders forced repeated abandon-
ment of previous efforts to hold the meeting. The
congress is expected to hear and approve reports
on the economy, foreign policy, a new state con-
stitution, and other tissues.
A National People's Congress deals strictly
with government-as opposed to party-affairs.
Mao, who holds no government post, need not
attend, although he has done so in the past. Mao
has been absent from Peking for about six
months. Premier Chou En-lai is in the hospital,
but would probably attend, if not preside over, as
much of the congress as his health permits.
The reports to the congress, when released,
should spell out China's programs and policies,
particularly in the domestic area, in greater detail
than at any time since the onset of the Cultural
Revolution. A number of important appoint-
ments may be announced, including a new de-
fense minister, a past vacant for over three years.
Several aspects of this, the fourth congress,
differ markedly from earlier ones. In the past,
congresses were wide-open affairs, greeted with
much fanfare and attended by foreign visitors.
This one apparently is to be held in secrecy. The
joint New Year's C)ay editorial in Peking's press
made no mention of it, no banners bedeck Peking
to welcome the delegates, and no foreigners ap-
parently have been invited to attend.
All this suggests that convening the congress
should not be takers as a sign that Peking's divided
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leadership has now composed its differences, al-
though some progress in this direction has prob-
ably been made. The pattern of secrecy surround-
ing this National People's Congress closely paral-
lels that of the Tenth Party Congress of
mid-1973. That congress papered over leadership
differences, which quickly resurfaced in the divi-
sive anti-Confucius campaigns.
GRAN IMPORTS RESUMED
w~+~ ~al'?C~g7
China's ~~rain harvest for 1974 was little if
any higher than the almost 250 million tons har-
vested the year before, and foreign grain suppliers
now are being urged to speed up shipments.
Peking had asked its major suppliers to postpone
delivery of almost 2 million tons of grain from
the fourth quarter of 1974 to the second half of
1975. Because of the favorable prospects for the
fall harvest at that time, Peking apparently be-
lieved these shipments could be delayed in order
to ease its tight foreign-exchange position.
The winter wheat crop last year was hurt by
drought during the growing season and by wind
and rainfall at the time of harvest. As a result,
output failed to measure up to past years, despite
the record acreage planted. Early rice was set
back by frost, but recovered in time to yield a
good crop. The more important fall harvest,
about two thirds of China's annual grain output,
was unusually late. Early growing conditions were
generally favorable, but then drought, heavy rain,
and insects over extensive areas of south and
central China and prolonged rainfall in north
China damaged crops before they could be har-
China harvest-not enough
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USSR
SOVIETS REJECT TRADE AGREEMENT
z-f~~.y~
}~ he Soviets' unhappiness wit provisions of
the liS trade bill has been known for some time,
but the final decision to renounce the 1972 agree-
ment may have been made only in the past few
weeks. The limits placed on Export-Import Bank
guarantees of credit available to the USSR, as well
as emigration requirements, were a factor in the
Soviet decision.
It was not until December 18, when Con-
gress was about to vote on the trade reform
legislation, that Moscow made public the letter
Foreign Minister Gromyko had sent to Secretary
Kissinger on October 26 denying any obligation
to alter emigration policy. Two days before the
publication of the Gromyko letter, the issue may
have been considered at the Central Committee's
plenary session. The Central Committee may have
approved a tougher line, but it is more likely that
the Soviets did not decide to take the final step
until some time last week. Until very recently, for
example, some knowledgeable Soviet officials
have been telling their US counterparts that all
would be well in US-Soviet economic relations.
Thus far, the Soviets seem to be playing
down the broader implications for detente of
their rejection of the US-Soviet agreement. Pre-
mier Kosygin, in the course of a banquet speech
on January 14 honoring Australian Prime Minister
Whitlam, made repeated references to the neces-
sity of continuing detente and specifically reiter-
US and Soviet trade negotiators
ated the Soviet goal of making detente "irrevers-
ible." The communique issued at the end of Whit-
lam's visit on Thursday also went out of its way
to stress the importance of Soviet-American rela-
tions, `above all the agreements on prevention of
nuclear war and strategic arms limitation."
In a Tass summary broadcast 12 hours after
the Soviet announcement, Moscow informed its
domestic audience of Secretary Kissinger's reac-
tion. The Tass surrimary, carried in the central
press on January 15 and 16, said the Secretary
noted the Soviet government's message that it
does not intend to accept a trade status that is
discriminatory and subject to political conditions,
and accordingly would not bring into force the
1972 trade agreement. The report concluded with
the Secretary's assurance that the administration
would continue to pursue all avenues, including
legislation, to prorriote mutually beneficial trade
relations.
The decision riot to accept the conditions of
the US trade and I.xport-Import Bank bills and
the events that led up to it were a sharp setback
to a major element of Brezhnev's detente policy
and may ultimately affect his basic political posi-
tion. He has also suffered a recent setback in his
consumer program and an embarrassing postpone-
ment of his visit to Egypt.
Party boss Brezhnev has been out of public
sight since December 24, except when he at-
tended his mother's funeral on January 8. Presi-
dent Podgorny and Premier Kosygin were the
principal Soviet leaders to meet with Whitlam,
who was in the USSR for four days this week.
There is no evidence of a crisis atmosphere within
the leadership nor are there visible signs of a
concerted challenge to Brezhnev's position. He
faces the problem, however, of keeping the com-
bination of policy setbacks and poor health from
leading to an erosion of his authority. To prevent
this, he must resume an active work schedule and
give new impetus to domestic and foreign poli-
cies. The pressurf:s to take an active role will
increase as politic4cing for the party congress next
year picks up.~
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NEW TRANSPORT OPERATIONAL ~ ~ i ~
_ _ WhICh arP ti~rhnnY.,., ~~.-,.,...si ee___ .. ._ - _
I L-75 Candid, now a - -~ _~ ~_r,,. ~ ~" `'' ?' `~ uie
Faur Candids were seep at an opebatiopal ba~e of
the Military Transport Aviation forces in
September.
The IL-76 is afour-engine jet aircraft similar
in appearance 'to the US C-141 Starlifter. It is a
high-wing, short-takeoff-and-landing (STOL) air-
craft with ahigh-flotation landing gear that allows
operations fronn unimproved fields. The Candid
has a maximum payload of about 88,000 pounds
and a range of about 2,800 nautical miles. This is
about twice the payload of the AN-12, but only
about half that. of the AN-22-the two current
mainstays of Soviet military transport service.
Neither the AN-12 nor early models of the
AN~~22 have a pressurized cargo compartment-as
does the IL-76--which severely limits their use as
long-range troop transports at altitudes above
10.000 feet. Ths~ AN-22B, however, does have a
pressurized compartment. The IL-76 is also a
faster plane than the AN-12 and AN-22, both of
r,~vuauiy nas improved handling systems for load-
ing, unloading, and paradropping cargo.
At least ten Candids have been built thus far,
and the current production rate is about one
aircraft per month. In addition to its role as a
military transport, the Candid may also be
modified for use as a tanker to support longer
range operations of other aircraft and can be used
as a cargo carrier for the Soviet civilian airline,
Aeroflot
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~7CVflL i
CYPRUS: POLITICAL TALKS BEGIN,
5 ~-s - ~~~
President Makarios-this week announced the
formation of a new cabinet composed of men
who have proved their loyalty to him in the past.
7~he Greek Cypriot side will now be ready to
devote its attention to the intercommunal talks,
which this week turned to substantive political
issues for the first time since the intercommunal
fighting last summer.
The New Cabinet
Most of the new ministers held cabinet port-
i~olios or high posts in the bureaucracy at the time
of the coup last July. None owe their political
allegiance to former acting president Clerides,
who is now a potential rival to Makarios for the
presidency. Makarios had earlier considered form-
ing agovernment of national unity, composed of
representatives of all political groups, including
the far left and far right. He abandoned the idea
when he was unable to get the agreement of the
various political groups on appointments, par-
ticularly to the important ministries of foreign
affairs and interior.
Having excluded all but his supporters from
the cabinet, Makarios will probably seek regular
consultations with political party leaders in order
to maintain a semblance of Greek Cypriot unity.
The Intercommunal Tallcs
After agreeing to a faster pace for the talks
of two meetings per week, Clerides and Denktash
began preliminary discussions of political issues
on January 14 and will meet again today to
discuss reopening Nicosia airport and the island's
seaports, particularly Famagusta. The Greek
Cypriots, who make up 80 percent of the island's
population, are likely to call for proportional
representation of the two communities in the
operation of the airport under UN auspices, and
joint control of Famagusta port.
The Turkish Cypriots, for their part, are
likely to insist on equal represenation in the
operation of the airport. They may offer the use
of Famagusta port to Greek Cypriots, but they
are not likely to consent to Greek Cypriot partici-
pation in its operation. The Turkish Cypriot side
will be under pressure to make concessions, how-
ever, because of the impending cut-off of US
military aid to Turkey on February 5. Once the
airport and seaport issues are settled, the negotia-
tors will begin to tal4~: about the powers of the
central government in the proposed federation.
Clerides and Denktash also agreed at their last
meeting to set up a sub-committee to discuss
remaining humanitarian issues.
The British, in the meantime, are planning to
begin on January 18 the evacuation to Turkey of
the 8-9,000 Turkish Cypriots living in the sov-
ereign British base area in the south of Cyprus.
The refugees are then expected to be settled in
the Turkish Cypriot sector of Cyprus. Turkish
and Turkish Cypriot leaders had earlier voiced
concern about the plight of Turkish Cypriots on
the base. They will now be under pressure to
reciprocate by responding to the humanitarian
concerns of GreeN: Cypriots.
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GREECE-TURKEY: AEGEAN DfSPUTE REV--D~IVED
Tensions between Greece ~d~Turkey ver
mineral rights in the Aegean arose again this week
when the Turkish government responded to a
tough statement by the Greek defense minister
with tough statements of its own. Ankara backed
up its statements with aloes-level military alert
and a public announcement that Turkey will soon
initiate oil exploration in the Aegean,
The dispute, which had been relatively quiet
white Turkey and Greece concentrated on the
Cyprus problem, was rekindled when Greek De-
fense Minister Averoff said in a speech on January
9 that Greece would aggressively defend its posi-
tion in the Aegean, which he referred to as a
Greek sea. The following day, the Greeks an-
nounced that they had authorized a foreign con-
tractor to conduct oil exploration in the Aegean.
There was no indication, however, that the
seismic exploration vessel would venture into the
disputed zone.
The Turks" initial reaction came on January
11 when the defense minister warned the Greeks
that Turkey was fully capable of retaliating
against any aggressive acts in the Aegean. To back
up this warning, several air and paramilitary units
were placed on alert. By midweek, there were
"I'f;NSIONS O[/ER MINTS'1ZAI. RIGHTS
RENFWF.D ,4S 130TH COUNTRIES AN-
NU11NC1 OIL F.XPI,ORATION PLANS.
indications i:hat the Turks had begun to relax
-their stance,
The Irrnak government's initial restrained
response drew political fire from former prime
sinister Ecevit, who charged that the Greeks
were taking advantage of Turkish timidity. Ap-
r.~arently stung by these charges, Prime Minister
Irmak stated that his government was prepared to
take all necessary measures to protect Turkish
rights in the Aegean. He also announced that
"before long" Turkey, too, would begin oil ex-
ploration in the Aegean.
Tiran
0
4 V Hey Jl/S11 Y0
o.:p~tea.ea .,(
xploreTion area' r
~ ,;,
then
r~'~
R
I rmak's reference was apparently to a
Norwegian seismic exploration ship, the Longva,
which for Borne weeks took soundings off the
southern coast of Turkey in the Mediterranean.
According to Irmak, the Longva, which is under
contract to the Turkish government, will soon
begin to move north to the Bay of Soros and the
Aegean off the western coast of Turkey.
No timing was given for the Longva's entry
into the Aegean, although one Turkish pilot
claimed that the alert was called to protect the
ship during its movement from the Mediter-
ranean. The Greek defense minister's statement
may have coincided with the already scheduled
movement of the Longva, prompting the Turks to
take defensive measures.
In any event, the Turks may now feel that
their prestige is on the line and their legal claim in
jeopardy. The reported itinerary of the Longva
will place it near the disputed zone, where it
could be used to reinforce the Turkish claim and
salve nationalistic pride. The Turks have urged the
Greeks to negotiate a demarcation line drawn
along the median between the Greek and Turkish
mainlands, or to agree to joint prospecting. They
may believe that: forcing the issue now will bring
the Greeks to the bargaining table.
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~ Jc~...nr_: i ...'
DENMARK: ELECTION OUTCOME,
~(~l-~3]
lThe ruling Moderate Liberals were the big
gainers in the Danish parliamentary election on
January 9, nearly doubling their parliamentary
strength. Nevertheless, Prime Minister Hartling
will probably have to make some compromises in
order to get majority backing for his economic
"crisis plan."
A general shift to the left and a stronger
tFian expected showing by the conservative Pro-
gressive Party reduced the overall strength of the
non-socialist parties of the political center that
have been Hartling's traditional source of support.
With the exception of the Moderate Liberals and
the tiny Christian Peoples Party, all of the non-
socialist parties lost ground. The center bloc was
reduced to 78 seats in the 179-seat parliament.
The Moderate Liberals, who have governed the
country for the past 13 months with only 22
seats, increased their representation to 42.
The parties of the left and right held their
own. The Social Democrats, Hartling's traditional
opponents and the largest party in parliament,
picked up 7 new seats for a total of 53. The
anti-tax Progressive Party lost only two seats
despite the indictment of party leader Mogens
Glistrup for income tax evasion and Hartling's
success at reducing income taxes during his 13
months in office.
Hartling has officially informed the Queen
that his government will continue, despite a call
for his resignation by Social Democrat leader
Jorgensen on the grounds that the country de-
serves amajority government. Hartling intends to
spend the days before January 23, when parlia-
ment reconvenes, negotiating with all nine parties
in parliament for a coalition combination or, lack-
ing that, unofficial support for his plan.
Hartling called the election last month when
it became clear that his austerity program would
not receive majority backing. The program calls
for a wage and price freeze, suspension of the link
between wages and the cost-of-living index, and
strict control of agricultural prices. The Prime
Minister maintains that his is the only plan that
will bite into the country's annual 15-percent
inflation rate, 5-percent unemployment rate, and
huge trade deficit.
If Hartling continues as the head of a mi-
nority Liberal government, he will have to modify
his economic program in order to appease the
Social Democrats, who oppose Hartling's proposal
for a wage and price freeze. The poor election
performance of the nori-socialist parties and the
traditional conflict between socialists and non-
socialists indicate a precarious life for a new
government headed by Hartling.
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SPAIN: N9ILITARY, LABOR CAUSE CONCERN
L ~`1= _ ~~-~~
~In his traditional year-end speech
Chief of
,
State Franco described 1974 as a "troubled year
for all of us." Speculation over possible political
activity irr the armed forces, arr increase in Basque
terrorism, and the worst labor agitation in over a
decade suggest that 1975 will be equally trouble-
some.
Conjecture that political activity among the
military may be serious arose as a result of the
warnings against the impropriety of such activity
issued by the ministers of the three services at
their annual New Year's recerations_
The army minister's warning against support-
ing a "definite political position" may well have
been aimecl at high-ranking officers who are active
in the neuvly formed rightist Unified Veterans
Organization. This is a potentially powerful pres-
sure group opposed to any liberalization of the
present system. In addition, several officers who
are members of liberal "study groups" have re-
portedly bE:en called on the carpet.
A spate of strikes-which are illegal-took
place last month and is continuing. The strikes
began largely over wages but took on political
overtones .as protests over police violence and
treatment of political prisoners were added. The
highlight was aone-day general strike held in the
Basque area on December 11 to commemorate
the fourth anniversary of the famous trial in
Burgos of 16 Basque terrorists. The strike was
organized by a coalition of extremist political
organizations-including the terrorist group,
Basque Fatherland and Liberty--and various
moderate clandestine labor organizations. In-
volving some 150,000 workers, this was the first
relatively successful general strike in the Basque
provinces since the Civil War. Large police rein-
forcements from Madrid kept violence at a
minimum.
Adding to tension from labor turmoil in the
Basque area were several terrorist arts believed to
have been perpetrated by Basque Fatherland and
Liberty militants to dramatize their anti-regime
fight. Last month, two policemen were machine-
gunried to death from a passing car and two Civil
Guards were wounded by machine-gun fire. The
police responded by arresting a number of sus-
pected terrorists.
POLITICAL ACTIVITY IN 7HI ARMED
FORCES, FsASQUE TERRORISTS, AND
ILLEGAL STRIKIS .SUGGEST A TROU-
BI_,E.SOME 1975.
The Basque area strikes have been accom-
panied by work stoppages in various important
cities, including Madrid and Barcelona. The spot-
light is now on the 6arcelona area, particularly
the ,Seat automobile plant. Strikes there, which
have provoked retaliatory company lockouts,
involve a host of labor grievances, including wage
negotiations, management proposals for a reduced
work. week, and worker demands for recognition
of illegal worker groups. Company efforts to fire
400 activist workers and other anti-labor
measures are likely to intensify agitation.
Other than some strong police action against
strikers, the government has remained inactive in
face of the labor turmoil. The labor minister
continues to promise to unveil the draft of a
revised labor law, possibly cantaining a limited
right-to-strike provision, but this has been held up
by opposition from conservatives in the govern- 25X1
ment. Continued labor agitation is likely at least
through early February when most contract nego-
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UK: EC DEBATE HEATS UP
Forces on bo~h sides of the question of
Britain's continued EC membership have begun to
organize in anticipation of the referendum due
sometime before October. The debate now ap-
pears to be centered on the question of British
sovereignty even though the issues being renego-
tiated with the EC are concerned with less emo-
tional matters, such as British contributions to
the EC budget, the EC's common agricultural
policy, and EC relations with the Commonwealth
countries.
The pre-referendum campaign appears to be
in full swing even though the renegotiations in
Brussels are not expected to be completed for at
least two months. Prime Minister Wilson and For-
eign Secretary Callaghan have recently said that,
if a new accord is reached with the EC, they
intend to recommend continued membership.
This pro-EC stand by the two government leaders
coupled with opinion polls indicating that the
public will follow the government's lead, has
aroused the anti-EC forces.
Industry Minister Benn launched the current
phase of the debate by sending an open letter to
his constituents alleging that EC membership
diminishes British sovereignty. Subsequently, but
not in response to Benn, a high-level Foreign
Office official--undoubtedly with Prime Minister
Wilson's blessing-argued that, by pooling their
formal sovereignty in the EC, the members retain
a voice in decisions vital to their interests and
together wield an influence that none of them
individually now has.
Britain's two EC commissioners-one from
each of the two major parties-have announced
that they plan to campaign on behalf of the
pro-EC forces. Both are nominally EC civil serv-
ants, and they have come under heavy criticism
for engaging in such quasi-political activity.
Domestic politicking by EC commissioners, while
rare, is not unprecedented, and both Britishers
seem to feel strongly that the country cannot
afford to withdraw from the EC.
Last week, several anti-EC groups announced
that they have formed an umbrella organization,
the National Referendum Campaign. Because it
' j I ~~
Wilson
includes representatives from all three British
political parties, the group may have difficulty
holding together. Spokesmen for the group have
made it clear that they expect the government to
provide equal radio and television time for pro-
and anti-marketeers. The group also wants to have
limits set on spending during the referendum
campaign.
The cabinet has not yet decided whether
members will be allowed to publicize minority
views during the referendum campaign. Although
Wilson has not addressed himself directly to the
question of cabinet solidarity on the referendum
issue, he did announce several months ago that
cabinet officials must publicly support govern-
ment decisions or return to the back
benches.
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ANGOLA: AGREEMENT ANNOUNCED (~ ~,~ 77 J
~~'ortuguese officials and leaders of the three
rival Angolan liberation groups signed an accord
on January 15 giving the territory a transitional
government and providing for full independence
on November :L 1. The transitional government is
scheduled to be installed on January 31.
The accord climaxed five days of hard bar-
gaining among the parties at a resort hotel in
southern Portugal. During the transitional phase,
the territory will be governed by a Portuguese
high commissioner and a presidential council
composed of the deputies to the leaders of the
three insurgent groups. A cabinet of 12 ministers
will also be established, with portfolios divided
equally among the Portuguese and the three
grora ps.
The leaders themselves-Holden Roberto of
the National Front for the Liberation of Angola,
Agostinho Neto of the Popular Movement for the
Liberation of Angola, and Jonas Savimbi of the
National Union for the Total Independence of
Angola--will not participate directly in the transi-
tional government. Presumably, they will concen-
trate on building up the political structures of
their organizations.
The accord calls for a defense commission
composed of the high commissioner, the presiden-
tial council, and a joint general staff. Forces of
the three insurgent groups are to be integrated
into an Angolan national army, and Portugal is to
begirt a phased withdrawal of its troops before
Apri I.
The transitional government is charged with
organizing elections for a constituent assembly
sometime before independence. A central com-
mission will be established to draft an electoral
law. Only the three liberation groups can submit
candidates for the constituent assembly. The ac-
cord provides for a presidential election, but is
vague on when it is to be held.
Under the accord, the three liberation
groups guarantee to respect the rights and prop-
erty of Angola's 500,000 whites, but no provision
is made for the participation of the whites in
political activities. In the past, the three groups
have argued that Angola's whites must cease
thinking of themselves as a separate power bloc
and join one of the liberation organizations.
Angola is the last of Portugal's African terri-
tories to work out an agreement for independence
since Portugal embarked on its decolonization
campaign following the coup last April. The proc-
ess was delayed largely by the rivalries among the
insurgent leaders. Those rivalries have certainly
not been put to rest by the present accord, and
they could upset the delicately balanced machin-
ery for sharing power.
Angola's whites, who were not invited to
participate in negotiating the accord, will see their
political options as very limited and might begin
looking far ways to disrupt the transition. At
present, however, the whites appear to be poorly
organized and do not seem likely to pose a serious
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Visits to Jordan and Egypt last week by
Iran"s Shah Mohammed Reza Pahlavi served clear
notice of his desire to increase the influence of his
non-Arab country in the Middle East. The Iranian
ruler sought to demonstrate his support for the
moderate leadership of King Husayn and Presi-
dent Sadat, to further the split between Egypt
and the USSR, and to isolate the radical Arab
regime in Iraq.
~ ~