WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011000070001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Document Release Date: March 12, 2008
• Sequence Number: 1
• Publication Date: February 14, 1975
• Content Type: SUMMARY

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Secret
Weekly Summary
State Dept. review completed
Secret
No. 0007/75
February 14, 1975
Copy
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 Approved For Release 2008/03/12 : CIA-RDP79-00927A011000070001-4
%we M
CONTENTS (February 14,1975)
KLY SUMMARY, issued every Friday morning by
Special Reports are listed in the
1 Middle East: Setting the Stage
4 Ethiopia: Fighting Less Intense
5 Peru: The Aftermath
6 Cyprus: Turkish Cypriot Autonomy
7 UK: A New Look for the Tories
8 Italy: Fanfani Survives
9 CSCE: At a Crucial Point
Dialogue of the Deaf
11 USSR: Soyuz 17 Cosmonauts Return
12 Berlin: Endless Negotiation
13 Romania-Yugoslavia: Drawing Closer
MIDDLE EAST
AFRICA
14 Egypt: Port Problems Mount
15 Pakistan: Bhutto Cracks Down
16 Malagasy Republic: More Problems
EAST ASIA
PACIFIC
17 Cambodia: The Stranglehold Tightens
18 Australia; South Korea
19 Laos: Pondering a Shift
WESTERN
HEMISPHERE
21 Ecuador: Perils of Prosperity
22 Brazil: Pace of Liberalization
23 Panama; Argentina
24 Venezuela: Oil Diplomacy
25 Canada: Uranium Enrichment
nts of the week through noon on Thursday. It
ludes material coordinated with or prepared by
conomic Research, the Office of Strategic EUROPE
Directorate of Science and Technology.
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Middle East: Setting the Stage
Neither the Egyptians nor the Israelis have
publicly disclosed their terms for achieving a
second-stage disengagement in the Sinai. Early
this week, the Israeli press reported sharp divi-
sions within Prime Minister Rabin's cabinet over
possible concessions to Egypt, and there were
signs of growing Israeli disenchantment with the
step-by-step approach to negotiations. I n Cairo,
the press reacted harshly to Rabin's call for a
formal commitment to non-belligerency by Egypt
as the price for a major Israeli withdrawal in the
Sinai, and Egyptian officials were busy reassuring
Palestinian and Syrian representatives that Egypt
would make no concessions to Israel that could
be construed as a separate peace.
Both sides have done little more than reit-
erate their standard litany of what is required for
a breakthrough in negotiations. Rabin continued
to demand that Egypt guarantee "a protracted
period of calm" in return for the strategic Sinai
passes and the Abu Rudays oilfields; the Egyp-
tians are still insisting that some Israeli satisfac-
tion of Syrian and Palestinian claims be linked to
progress on the Sinai front. President Sadat
amplified this position slightly in a press interview
this week in which he noted his hope that Secre-
tary Kissinger could secure an Israeli "agreement
in principle" on withdrawal from the Golan
Heights and the West Bank prior to the start of
negotiations with Egypt.
Along with the rhetorical posturing, some
hopeful notes were sounded. In his press inter-
view, Sadat said he was o timistic about ne o-
tiations
The obvious
Egyptian concern to reassure the Syrians and
Palestinians this week is probably more a reflec-
tion of Cairo's anxiety to prepare the ground for
a negotiating breakthrough than a sign that it
feels unduly constrained by Arab criticism of
another agreement with Tel Aviv.
The Syrians, who remain suspicious of
Sadat, are continuing to play their cards close.
Damascus appears to have accepted the inevitabil-
ity of another round of separate Egyptian-Israeli
negotiations, however, and may now be hoping to
capitalize on a Sinai agreement to obtain another
partial Israeli withdrawal on the Golan Heights
before going to Geneva.
Rabin has not echoed Sadat's optimism, al-
though he has emphasized the importance of
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rude JGl.~RC I -Now
negotiations and has hinted at some flexibility in
the political concessions that Israel would de-
mand in return for a second agreement. Last
week, he played down the importance of "sym-
bolic acts" such as the passage of Israeli ships
through the Suez Canal, noting instead that
"undefined arrangements in the interest of both
parties" would be more likely to be effective.
If a breakthrough is to be achieved, it ap-
pears almost certain that the Israelis will have to
be satisfied with secret guarantees from Egypt on
such issues as the prolongation of the UN ob-
server force mandate. Sadat is in no position to
make sweeping public concessions, because his
adherence to the step-by-step approach is still
viewed by many other Arabs, particularly the
Palestinians, as indicative of a willingness to aban-
don the Arab cause. Such criticism requires him
to satisfy the other Arabs that a partial Egyptian-
Israeli agreement will not constitute the basis for
a unilateral final settlement with Israel.
Rabin faces a similar but more direct prob-
lem. At a minimum, he must satisfy hard liners
within his own government and the Knesset that
he would not be endangering Israel's security by
agreeing to a further withdrawal. More than that,
he must deal with increasingly strident demands
that Israel not give away something for nothing.
This week, the US embassy in Tel Aviv reported a
growing conviction among Israelis that there need
be no hurry to reach an agreement with Egypt
and that they are in a position to drive a hard
bargain. The conviction is said to be based on the
assumption that war will not necessarily break
out if Secretary Kissinger's mediation effort fails,
and that even if war comes, Israel's military forces
are prepared to handle it.
According to the embassy, many Israeli
politicians doubt that Sadat will be able to make
the necessary concessions, including agreement to
a state of non-belligerency. Sadat himself reit-
erated this week that a declaration of non-
belligerency could only be given as part of a final
settlement. The Israelis also believe that the Egyp-
tians will be unwilling to grant the long-term
guarantees that Israel requires.
If another Egyptian-Israeli agreement fails to
materialize, there is some risk that both Egypt
and Syria, in an effort to increase the pressure on
Israel, would allow the UN observer force's man-
dates to lapse when the present mandates expire
in April and May. None of the parties appears
anxious to provoke hostilities, however, and all
apparently view a return to Geneva as the next
stage if the step-by-step approach falters. The
Syrians have repeatedly called for this, and the
Egyptian press this week reiterated Cairo's com-
mitment to achieving a comprehensive settlement
at Geneva. Now, many politicians in Israel are
reportedly contending that a return to the con-
ference would enable Israel to retain its bar-
gaining leverage until Arab intentions are clarified
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Ethiopia: Fighting Less Intense ,-,-7j
Fighting in Eritrea Province between govern- Insurgent fire has already knocked
ment forces and insurgents, now entering its third power station north of Asmara.
k
h
b
wee
,
as
een light in recent days, but the
tempo could quickly increase. Although govern-
ment forces retain control of urban areas, they
have been unable to prevent raids on the provin-
cial capital of Asmara or to dislodge the rebels
from positions along the roads leading into the
city. Only a few vehicles have managed to enter
Asmara, and government forces continue to rely
mainly on airlifts for resupply.
Early on February 8, the insurgents attacked
two tracts of Kagnew Station, the US communi-
cations complex in Asmara. Rockets were fired at
fuel storage tanks; small arms fire, apparently
aimed at oil barrels, struck trailers occupied by
US personnel, but caused no casualties. Two days
later, the rebels again fired heavy automatic
weapons and rockets into Asmara. For the most
part, they shot at Ethiopian military facilities, but
some rounds were aimed at the US portion of the
Kagnew facility, which is occupied by both a US
naval communications unit and the Ethiopian
army. Kagnew's fuel and generators have ap-
parently become prime targets for the rebels.
Port Sudan'
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Addis Ababa'
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TANZANIA
Government forces are facing supply short-
ages, but they apparently do not have major logis-
tic problems at this time. Some units in areas
north and south of Asmara reportedly continue
to experience shortages of ammunition, fuel, and
food. The air force resumed attacks on rebel
positions early in the week after a standdown of
about three days, probably because of a lack of
fuel.
The performance of the army improved this
week with the arrival in Eritrea of the army
commander to take personal charge of operations.
Troops are showing more fire discipline; their
indiscriminate shooting last week rapidly depleted
ammunition supplies. Government forces still
have serious morale and leadership problems, and
there is serious disaffection in the air force. Many
pilots and technicians are Eritreans or are married
to Eritreans. A large number have defected,
refused to engage in combat operations, or
instituted maintenance slowdowns.
The army has suffered about 1,000 cas-
ualties, including about 75 killed. Rebel losses are
believed to be much lower. Civilian casualties may
exceed 5,000.
President Numayri of neighboring Sudan ap-
pealed to the rebels and to Ethiopia's ruling mili-
tary council on February 8 for an immediate
cease-fire and the beginning of negotiations.
Neither side seems willing to accept his proposal.
Spokesmen for one of the two main rebel factions
rejected Numayri's appeal because it does not
make the principle of Eritrean independence-the
major rebel demand-a precondition for a cease-
fire.
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Ocean
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Peru: The Aftermath
Important issues remain unresolved in the
wake of the violence that shook Lima on Febru-
ary 5 and 6. The civil guard may go on strike
again if, as seems likely, its demands are not met.
Inside the regime, debate undoubtedly continues
over the handling of the trouble and over how to
avoid further outbreaks of violence. President
Velasco's support has been shaken, but his posi-
tion does not yet appear to have been critically
weakened.
One matter that is stirring debate within the
regime is the proposed formation of a pro-govern-
ment political movement to drum up support for
the military's programs and to counter civilian
opposition. Any rush to proclaim a pro-govern-
ment party, however, would exacerbate long-
standing antagonisms between so-called moderate
and radical officers at a time when unity is crucial
to Velasco's ability to govern effectively.
The more moderate officers probably fear
that a government party would be difficult to
control and would be a source of pressure for
C, 8 - ~- 2
even more radical domestic policies. These of-
ficers already are upset over Velasco's increasingly
repressive tactics. The moderates, and probably a
number of radical officers as well, may be con-
cerned that Velasco's continuation in power will
only widen the gulf between the military and the
majority of the population.
Civilian opponents of the government may
be counting on the new prime minister, General
Francisco Morales Bermudez, to assert himself
and either force Velasco from office or persuade
him to pursue a more moderate tack. In the short
term, however, it is highly unlikely that any mili-
tary leader would champion the cause of groups
that were involved in clearly anti-military vio-
lence. The issues underlying the disturbances are
fundamental and no quick solutions are in sight.
Even if no further violence occurs over the short
term, political activity both within the military
and among civilians is certain to intensify. In the
year-old, military-led revolution.
Russian-made T-55 tank patrols downtown Lima
W? k
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 CYPRUS: TURKISH CYPRIOT AUTONOMY
C2r5 -x.101
Prospects for a negotiated settlement appear
dimmer than ever following the announcement on
February 13 by the Turkish Cypriots that they
were establishing an autonomous wing of a pro-
posed federal state.
Turkish Cypriot officials declared in Nicosia
yesterday that it was no longer possible for the
two communities to live together and that the
Turkish Cypriot community would reorganize its
administration and operate as an independent
entity pending a final settlement based on a geo-
graphically based, bi-regional federation. To this
end, a constituent assembly would be formed that
will act as the legislative body under the chair-
manship of Rauf Denktash.
Turkish Cypriots intend to follow up this
action with a position paper setting out terms for
a final settlement. Yesterday's declaration rejects
the Greek Cypriot insistence on a multi-regional
federation and leaves only the powers of the
central government and the size of the Turkish
Cypriot region as topics for further discussion.
Previous Turkish Cypriot statements suggest that
their forthcoming position paper will call for a
weak central government and a substantially
larger zone for themselves than warranted by
their ratio of the population-18 percent.
re
The Turkish Cypriot declaration of au-
tonomy came a few days after Greek Cypriot
negotiator Clerides presented his proposals for a
settlement to the UN special envoy to the talks.
These proposals were to be transmitted to Turk-
ish Cypriot negotiator Denktash, who had asked
for a postponement of the session on February 10
in order to have more time to complete his pro-
posals. The Greek Cypriot draft called for:
? A multi-regional federation with a strong
central government;
? A large Turkish Cypriot zone between
Nicosia and Kyrenia on the north coast, along
with several smaller zones, comprising an area
that would approximate the Turkish Cypriot
proportion of the island's population;
? Strong guarantees for members of the
opposing community living in the Greek and
the various Turkish Cypriot zones;
? Freedom of movement for all Cypriots,
and the right to own property anywhere on
the island.
The draft also called for implementation of
the UN Security Council resolution that provides
for the withdrawal of foreign troops and the
return of refugees to their homes. The Greek
Cypriots cited, moreover, the need for "effective
and wide" internationall guarantees for the final
settlement, suggesting that they were still pressing
for abandonment of the previous arrangement-
which gave Turkey as well as Greece and the UK
the right to intervene-in favor of some type of
UN guarantee.
By presenting the Greek Cypriot proposals
at this time, President Makarios had hoped to
force the Turkish Cypriots to reveal their hand
and provide some clues as to whether a solution
could emerge from the talks. Makarios believed
that if the talks were allowed to drag on incon-
clusively, the Cyprus problem would fade from
the limelight and international pressure on the
Turkish side to make concessions would lessen.
Makarios had already stated his intention to inter-
nationalize the issue and to turn to the UN
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:tea
Security Council if the talks become deadlocked.
The Turkish Cypriot declaration of autonomy
will likely strengthen Makarios' inclination to in-
ternationalize the problem, but he will probably
not make any moves until the contents of the
Turkish Cypriot position paper are revealed.
UK: A NEW LOOK FOR THE TORIES
ritain's Conservative Part appeat Ito
emb-'ace more traditional Tory policies this week
with the victory of 49-year-old Margaret Thatcher
as the party's new leader. Thatcher easily out-
distanced four other contenders, including Wil-
liam Whitelaw, the unofficial candidate of the
party's moderate establishment, by garnering the
support of 146 of the 276 Tories in Parliament.
The desperation of the increasingly dis-
pirited Tories became apparent last October after
former leader Ted Heath led the party to its
second national election defeat in one year. Back-
benchers forced the party to accept a cumber-
some new mechanism for selecting leaders in
place of the "Old Boy" procedure, but Heath
refused to step aside until embarrassed by
Thatcher in the first round of elections on Feb-
ruary 4.
Thatcher has promised both "continuity and
change" to revitalize the Conservatives. Her right-
of-center background suggests that the party
majority expects her to revive the old party com-
mitment to free market policies that Heath,
Douglas-Home, and Macmillan eroded. On the
other hand, she is astute enough to realize that
such policies would further polarize the party and
further restrict its relatively narrow base of pop-
ular support. Her program probably will be
eclectic and will be previewed when she forms her
shadow cabinet in the next few weeks. Sir Keith
Joseph, an outspokenly conservative economist
reportedly in line to become shadow chancellor
of the exchequer, will put a strong imprint on
party strategy. Heath reportedly has refused to
join the shadow cabinet, but Whitelaw has agreed
to be Thatcher's deputy party leader, adding
some liberal balance.
Thatcher's future as party leader is unclear.
National elections probably will not be held for
several years, and the selection procedure for
party leaders could lead to her ouster in the
meantime. On the other hand, even if she takes
the party to the right, the ruling Labor Party and
the opposition LiberaPs may not find her the easy
target that many detractors expect. She is an
accomplished debater and has had considerable
experience in government. Thatcher's political
future depends not only on her effectiveness as
the leader of the opposition to the Wilson govern-
ment, but also on how well the Tories fare in
opinion polls.
Because of the magnitude of the problems
facing Britain, Thatcher will have little time to
bask in her victory. She is committed to keeping
the UK in the EC, but she probably will not
campaign in the referendum this June with the
same enthusiasm as Heath would have demon-
strated. She admits to having virtually no experi-
ence in foreign affairs. With parliamentary debate
on the UK's defense review only a few weeks off,
she presumably will rely on her lieutenants to
lead the party's criticism of the Labor govern-
ment's projected cuts in defense outlays.
RP
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ITALY: FANFANI SURVIVES
he meeting last week of the Christian
Dem crat Party's national council-the party's
highest deliberative body-was marked by a divi-
sive debate over the leadership and policies of
Amintore Fanfani. Fanfani came out on top, but
he will clearly be on trial in the coming weeks as
the Christian Democrats prepare for crucial na-
tionwide local elections to be held in May or
June.
Christian Democrats have always come in
many colors, and it is not unusual for the party's
six highly organized and independently financed
factions to be at odds. Factional strife has in-
tensified during the last year, however, as evi-
dence has mounted that the Christian Democrats
are in danger of losing the dominant position they
have held in Italian politics for 30 years. Many
Christian Democrats hold Fanfani responsible for
the party's losses to the left last year in the
divorce referendum, the Sardinian election, and
other balloting at the local level. They also blame
him for the public disenchantment with the Chris-
tian Democrats and the growing popularity of the
Socialists and Communists, as suggested by recent
polls.
Page 8
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The3deobate within the party focuses on
measures to stop the erosion of the Christian
Democrats' strength. The central question at the
national council meeting was how to avoid a
major loss to the left in the local elections this
spring. Discussion focused on the program put
forward by Fanfani as the basis for the party's
campaign. Its most controversial points were:
? Firm opposition to closer relations with
the Communists. Fanfani flatly ruled out an
accord with them at the national level and
condemned recent moves toward local col-
laboration with the Communists by Christian
Democrat organizations in Venice and three
other localities.
? Rejection of the Socialist Party's recent
demand for more influence in future center-
left coalitions. The Socialists argue that their
recent successes at the ballot box entitle them
to more ministries and to a larger say in the
formulation of legislative proposals.
? Tougher law-and-order measures. Fan-
fani seems determined to make this the cen-
terpiece of his campaign; he insisted last week
that law enforcement should take precedence
over all of Italy's other problems.
Four party factions-about 80 percent of the
membership-eventually lined up behind Fanfani.
The remaining 20 percent, concentrated in two
left-wing factions, continued to oppose him on all
points except his call for support for the Moro
government and for a party assembly this spring
to refine election strategy. The opposition of the
left-wing factions means that they will no longer
be represented in the party secretariat. Thus, for
the first time since Fanfani took over in mid-
1973, the party is divided into formal majority
and minority groupings.
The left contends that Fanfani is wrong in
giving the party a conservative cast at a time when
most evidence indicates that the electorate is in a
mood for change. They believe that events during
the last year demonstrate that the anti-Commu-
nist theme is no longer an effective vote-getter
and that it is time to improve relations with the
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Communists, short of actually bringing them into
the government. Most left-wingers, moreover,
reason that strengthened ties between the Social-
ists and Christian Democrats would be the best
way to avoid having to deal directly with the
Communists.
Although the majority behind Fanfani is
large numerically, there are signs that moderates
in this group share the misgivings of the party
left. Major figures such as Moro and Foreign Min-
ister Rumor supported Fanfani at the meeting,
but they dealt less harshly with the Socialists and
Communists. Moro, for example, is known to
favor preferential treatment for the Socialists. Al-
though Moro and others are not enthusiastic
about Fanfani's ideas, they have apparently con-
cluded that the party cannot afford an internal
fight on the eve of major elections.
The leadership meeting was thus a qualified
success for Fanfani. The question of the party's
relations with the Socialists and Communists is by
no means closed, however, and the continuation
of Fanfani's mandate and policies will depend
above all on whether he can avoid another loss to
the left in the coming elections.
CSCE: AT A CRUCIAL P INT
>3 _D 5 1
Both East and West would like to see the
substantive work of the Conference on Security
and Cooperation in Europe conclude this spring.
If the Soviets maintain their tough stand, how-
ever, this may not be possible despite the West
European willingness to compromise.
Since the beginning of this round on January
20, the Soviets have been digging in their heels on
practically all conference topics. They assume
that their idea of concluding the conference at
the summit level this summer has been accepted
by most of the Western participants. They seem
to think, therefore, that they can buy Western
approval of watered-down proposals by making
only minimal concessions in the final stages of the
conference's substantive work. The Soviets have
continued to scoff at Western proposals on mili-
tary-related "confidence-building measures" and
have been unyielding on "human contacts" issues.
The major West European powers, weary of
the proceedings in Geneva, are clearly in a mood
to compromise. The French, in an effort to be as
forthcoming as possible during the Brezhnev-
Giscard summit in December, came close to agree-
ing to the Soviet demand that the security confer-
ence have a summit finale, and other West Euro-
pean countries are known to be leaning toward
such a conclusion. The British, hoping for the
success of Prime Minister Wilson's visit to Moscow
this week, have suggested a number of con-
cessions the Western side might make. Recently,
there have been signs that the British and french
are becoming less insistent on certain humani-
tarian issues, on which all the West Europeans
have heretofore been particularly stubborn. Only
the Netherlands now appears to be hewing to a
hard line on nearly all these issues.
Moscow may have overestimated the extent
to which the West Europeans are willing to make
concessions, however, as nearly all of them have
conference goals they will be reluctant to aban-
don. If the Soviets do not show signs soon of
being willing to bargain meaningfully, the
compromising mood of the West Europeans could
evaporate and the conference could be prolonged.
Some of the Europeans have already told the
Soviets that if Moscow is not more forthcoming
on the "confidence-building measure" calling for
advance notification of military maneuvers, the
Europeans might hold up progress on security
principles of interest to the Soviets.
Even if real bargaining gets under way soon,
the conferees will have to move briskly in order
to meet the tentative timetable being discussed in
Geneva, which envisages completion of sub-
stantive work in April or May and a formal con-
clusion in June or July. Once agreement is
reached on outstanding issues," there will still be
the laborious process of producing final texts
acceptable to all 35 participants.
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EC-CEMA: DIALOG Y OF THE DEAF
~`i S s)
The first formal meeting between officials of
the EC Commission and CEMA ended last week
in disarray. The session in Moscow confirmed for
the EC the disparate nature of the two organiza-
tions, but even commission officials were sur-
prised by the stubbornness, secretiveness, and
poor preparation on the Communist side.
The Soviets had looked on the meeting,
billed as preparation for a visit to Moscow by EC
Commission President Ortoli, as Western recogni-
tion of equality between the community and
CEMA. Moscow could then hope to delay or
circumvent implementation of EC controls on
trade with the various East European states by
demanding that commerce be governed by EC-
CEMA agreements. At the same time, Moscow
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could use CEMA's enhanced international status
to promote closer economic integration within
the East European bloc. The Soviets have been
having trouble getting the Romanians as well as
other East Europeans to sanction an unlimited
negotiating mandate for CEMA's secretary gen-
eral.
At the three-day Moscow session, the two
sides talked past each other, with the CEMA
group-characterized by one EC official as "unim-
pressive aging bureaucrats -concentrating single-
mindedly on trying to arrange a schedule for
Ortoli's visit and the commission delegation at-
tempting to get a dialogue going in such areas of
possible EC-CEMA cooperation as standardiza-
tion, environmental protection, and statistics. The
commission is anxious to discuss technical areas
in order to underline its view that CEMA has
authority here but, unlike the EC, has no compa-
rable jurisdiction over trade policy.
However disappointed commission officials
are by the meager results of the trip to Moscow,
they feel they at least prevented Ortoli from
being involved in this "disaster" and gained useful
insights into the workings of CEMA. They believe
they also made clear that CEMA members must
deal directly and individually with the commis-
sion in areas where it represents community pol-
icy.
CEMA remains publicly committed to estab-
lishing links with the EC and will probably take
USSR: SOYUZ 17 COSMONAUTS RETURN
5 1) S(.3
Two Soviet cosmonauts returne to
earth on February 9 after 30 days in orbit, 28
of which were spent aboard the Salyut 4
space station. According to Tass, the cosmo-
nauts are in good health. As reported earlier,
the crew completed a wide variety of scien-
tific experiments in astronomy, astro-naviga-
tion, and space biology and medicine during
their four weeks aboard Salyut 4.
up the commission's invitation to send experts to
Brussels to continue the discussions. Soviet media
have already begun to restructure the facts of the
EC-CEMA meeting in order to meet the USSR's
political objectives. Izvestia, for example, claimed
that the session had been "useful" and that "pro-
gress was achieved in preparations for a proposed
meeting of the leaders of the two organizations."
The EC, despite its near contempt for
CEMA, will also seek to develop a dialogue. In the
view of a commission official, public opinion in
the community would not allow the EC to ignore
CEMA overtures. More important, perhaps, is the
EC desire to avoid any snub that could compli-
cate community efforts to reach bilateral arrange-
ments with CEMA members.
The cosmonauts in flight
By agreement with NASA, the results of
medical experiments performed aboard Salyut
4 will be compared with similar tests con-
ducted on the US Skylab. The crew's stay
surpassed the previous Soviet record of nearly
24 days in space set by the Soyuz 11 crew in
Salyut 1. The US still retains the world record
of 84 days, set in early 1974 by the third
crew of astronauts to visit Skylab. F
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ENDLESS NEGOTIATION
In a time of detente, Berlin is no longer the
bunion that the Soviets, in Khrushchev's phrase,
could step on whenever they wanted to give the
West a pain. The passing of the age of sharp
confrontation and the signing of the 1971 Quadri-
partite Agreement on Berlin do not mean, how-
ever, that the Berlin question has disappeared, but
merely that the debate is now conducted on a
different level and in more muted tones. The
Quadripartite Agreement incorporates each side's
philosophy-stating with blithe inconsistency that
West Berlin is not a constituent part of West
Germany and shall not be governed by it, but also
that ties between West Berlin and the FRG shall
be strengthened. Differences in interpretation of
the agreement are therefore inevitable, and, in
fact, were anticipated.
In recent weeks, the Soviets have made a
number of complaints about Berlin matters in
conversations with West German and Allied diplo-
mats. They have protested:
? Plans to establish an EC vocational
center in West Berlin.
a Establishment last year of the FRG Fed-
eral Environmental Agency office in West
Berlin.
O West German extension of the 1972
FRG-.Austrian consular treaty to "Land
Berlin."
? Nomination of West Berlin Governing
Mayor Schuetz as a plenipotentiary in cultural
matters under the 1963 French - West Ger-
man friendship agreement.
? Decisions by the Western Allies to grant
landing rights in West Berlin to airlines of
countries other than the three powers, a long-
standing controversy.
a Allied toleration of the right-wing Bund
Freies Deutschland party in West Berlin.
The Soviets have also expressed disappoint-
ment over the cool Western response to their
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proposals for a lavish celebration in Berlin of the
30th anniversary of V-E Day. The Soviets ap-
parently intended these ceremonies to take place
entirely in West Berlin, thereby strengthening
their role there without a corresponding increase
in the residual Allied presence in East Berlin.
With these protests as a backdrop, Soviet
Deputy Foreign Minister Zemskov recently told
West German Ambassador Sahm that the FRG
was violating the Quadripartite Agreement by
"creating precedents." Sahm was taken aback by
Soviet accusations that the FRG had reneged on
agreements reached during the Schmidt visit to
Moscow last December. Indeed, the West Ger-
mans thought that Schmidt had obtained the
Soviets' agreement that individual West Berliners
would be covered by agreements the FRG made
with third countries.
In a broader sense, the sniping on Berlin
issues reflects a nagging Soviet suspicion that the
idea of a united Germany is still a long way from
extinction in the minds of West Germans. Recent
West German protests over the concept of an East
German citizenship in the consular treaty be-
tween the GDR and Austria may have aroused
underlying Soviet concerns that the German re-
unification issue can still influence West German
policy and, indeed, may never vanish. The
FRG-Soviet dispute over the "peaceful change"
formulation at CSCE has probably had a similar
effect, since the problem essentially concerns
West German efforts to leave open a legal path to
eventual reunification of the two Germanies.
The foreign policy line of detente and the
Soviets' desire for good relations with West
Germany affect the means they employ, but
Moscow's basic objective of defining West Berlin
as a separate entity will remain unchanged. The
Soviets may tolerate certain actions with which
they disagree, such as establishment of the Fed-
eral Environmental Agency in West Berlin, but
they will never legally recognize any step that
seems to violate the dictum that West Berlin is
not a constituent part of the FRG. In a sense, the
adversary process of seeking precedents and estab-
lishing limits amounts to a continuous renegotia-
tion of the Quadripartite Agreement.
ROMAN IA-YUGOSLAVIA: DRAWING CLOSER
1 5- 7, 5T J
Uncertainties about major international de-
velopments are drawing Belgrade and Bucharest
into closer cooperation. At the end of January,
Tito sent Stane Dolanc, his second-in-command in
the party, to Romania for two days of talks with
President Ceausescu on international issues and
bilateral party cooperation. The session was in
keeping with the practice of regular high-level
contact between the two countries, but the
shared concern over a series of major develop-
ments since Dolanc and Ceausescu last met-at
the Romanian party congress in November-may
have caused Belgrade and Bucharest to compare
notes sooner than planned.
The hint of urgency in the meeting gained
substance the next week, when Romanian De-
fense Minister lonita suddenly showed up in
Yugoslavia for three days of discussion of "coop-
eration between the friendly armies." Like the
party talks, regular military contacts are a well-
established practice between the two states, but
lonita's talks were more prolonged than any in
recent years. lonita spent some time near Tito's
current residence at a Montenegrin spa, where he
may have met with the Yugoslav leader.
There are several signs that both sides are
worried by uncertainties over the stability of the
Kremlin leadership and by the future of US-
Soviet detente. These subjects were probably high
on the Dolanc-Ceausescu agenda. The two men
also undoubtedly discussed the Arab-Israeli situa-
tion and Cyprus, both of which could have spill-
over effects in the Balkans. The economic prob-
lems caused by the recession in the West, and
apprehension that Moscow might try to take
advantage of these problems to extend its eco-
nomic influence, were probably also reviewed.
These problems, along with the force reduc-
tion and European security negotiations and the
European Communist party conference, require
the two sides to coordinate their tactics and over-
all strategy as closely as possible. Both regimes
hope to avoid a repetition of the misunder-
standings and bitterness between them that lasted
for six months after the 1973 Arab-Israeli war.
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 The harbor at Alexandria
Acute congestion in the port of Alexandria
continues to cause serious economic problems for
Egypt. Deliveries of consumer goods, raw mate-
rials for industry, and capital goods for develop-
ment programs are being delayed despite govern-
ment efforts to expedite unloading and trans-
shipment.
Facilities in Alexandria have been subject to
increasing strain since the canal area ports of
Ismailia, Port Said, and Suez were evacuated after
the 1967 war. Unloading facilities, warehouse
space, and internal delivery systems were barely
adequate to handle the 3 million tons of cargo
diverted from those ports even during the de-
pressed inter-war years.
Conditions rapidly grew worse after the
1973 war, when extra imports, purchased with
wartime Arab aid, began to arrive. In late June
:1974, with almost a million tons of goods piled
up on the piers and some 40 vessels waiting for
berthing space, the port was placed on 24-hour
operation. To assist overburdened civilian trans-
portation facilities, troops and military vehicles
were called out in November to help remove
goods from the docks. Although the arrival of 22
ships was indefinitely postponed, by mid-
December the queue of ships outside the berthing
POVINS, arIIr,~rx~ ...?yam .,.
17 si
area had almost doubled, and turnaround time
had lengthened from two weeks in 1973 to two
months. The Egyptian government paid stranded
ships nearly $40 million in demurrage penalties in
1974, and, by the end of the year, many carriers
were refusing to handle goods bound for
Alexandria.
According to the US consul in Alexandria,
normal unloading conditions exist only at special-
ized wheat piers, largely because postwar grain
stockpiling appears to be complete, freeing the
area for current deliveries. Congestion elsewhere
remained at peak levels late in January.
Port clearance problems are likely to con-
tinue to hamper Egyptian economic progress. The
reopening of the Suez Canal ports should permit
canal area rehabilitation plans to be implemented
on schedule over the next year or two. Conditions
in Alexandria may be alleviated by more intense
nighttime activity, by elimination of deliberate
"shakedown" attempts by stevedores, and by
acquisition of additional surface transportation
facilities. Until a new port area in the Dekheila
area of Alexandria is completed in late 1977,
however, investment and consumption in the in-
terior will continue to be constrained by inade-
quate port facilities.
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The government has moved to suppress
Pakistan's main opposition party, following the
assassination last weekend of Prime Minister
Bhutto's chief political lieutenant in the North-
West Frontier Province. The crackdown against
the National Awami Party is sure to intensify
friction between Bhutto and his political foes and
is likely to further strain Islamabad's poor rela-
tions with Afghanistan, which has long been a
supporter of the Awami party.
Hayat Mohammad Sherpao, the leader of
Bhutto's party in the North-West Frontier and the
dominant figure in the provincial government,
was killed in a bomb explosion on February 8 in
Peshawar, the provincial capital. Although no one
apparently has been formally charged in Sher-
pao's murder, some Pakistani officials and the
government-controlled media are blaming it on
the National Awami Party and the Afghans. The
party has been outlawed, and its leader, Wali
Khan, has been arrested along with hundreds of
party members.
In the past, Bhutto has frequently accused
the Awami group of seeking, with Afghan sup-
port, to promote secession in the North-West
Frontier and in Pakistan's other border province,
Baluchistan. Most of the party's strength is con-
centrated in these two provinces. Islamabad has
claimed that the Afghans have trained and
equipped Pakistani extremists affiliated with the
party and that these extremists have carried out a
number of bombings in Pakistan in recent months.
Bhutto's government has periodically
arrested Awami party workers, but until last
weekend it had refrained from banning the party
or moving directly against Wali Khan. Bhutto may
have viewed the murder of Sherpao both as an
atrocity that required a show of strength by the
government and as an opportunity for silencing
the National Awami party and Wali Khan, his
most vociferous domestic critic.
Afghanistan has provided propaganda sup-
port and some material backing to the National
Awami Party, but both the Afghans and party
leaders have denied that they support the break-
up of Pakistan or were responsible for the bomb-
Ll(. -13j
ings. They claim to seek-through peaceful
means-greater autonomy for the two border
provinces, whose people are ethnically more
closely related to the Afghans than to other
Pakistanis.
Some observers in Pakistan have suggested
that young pro-Awami extremists, including
students, may have carried out the bombings in
disregard of the wishes of party leaders. There is a
strong possibility that student extremists were
involved in the Sherpao incident, inasmuch as he
was killed inside Peshawar University.
So far, the official Afghan response to the
arrests of Awami partisans has been relatively
restrained. Further Afghan reaction will depend
to a large degree on how far Bhutto goes in
holding Afghanistan responsible for Sherpao's
death. In the North-West Frontier there is little
immediate danger that the provincial coalition
government led by Bhutto's party will collapse.
Awami supporters may resort to further bomb-
ings, however, and Bhutto will be hard pressed to
find another strong and reliable lieutenant to
replace Sherpao.
1) S
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OPEC: TRIPARTITE INVESTMENT
17
(Some members of the Organization of
Petroleum Exporting Countries, in an effort
to diversify investment and blunt criticism by
the developing countries, are turning to tri-
partite investment. Such ventures would bring
together surplus oil funds and Western tech-
nology in third countries, thus enabling the
oil producers to increase safe investments in
the developing countries without using their
own scarce manpower. This sort : of invest-
ment, however, is likely to be concentrated in
a handful of developing countries, mainly
Arab ones.
Among the Middle East producers,
Kuwait is the most likely to pursue tripartite
ventures. At least half a dozen Kuwaiti finan-
cial institutions are already active in develop-
ing countries. The Kuwaitis have recently
agreed to build a power plant in Jordan and
to organize agricultural development in
Yemen, using mainly US consultants and con-
tractors. Kuwait is also involved in joint
projects with the World Bank and its sub-
sidiary, the International Development
Association.
The Saudis plan to channel an increasing
share of their investment into developing
countries. They have already undertaken to
build a sugar-processing complex in Sudan as
a joint venture with Japanese and US firms.
The Saudis also are considering projects in
Egypt in cooperation with US, British, and
Italian firms.-
Tripartite investment will do little to off-
set the current-account deficits of most de-
veloping countries this year. The amount in-
volved will remain small, and will often just
replace funds earmarked for direct - r
loans.
MALAGASY REPUBLIC: MORE PROBLEMS
[x`6,,211
[Continuing ethnic tensions were apparently
the main factor behind the assassination this week
of Colonel Richard Ratsimandrava just six days
after he had assumed power as head of state and
government. A 19-member national military com-
mittee, on which all regional and tribal groups are
represented, has taken over, but a struggle for
power among Madagascar's badly divided military
and civilian leaders appears likely.
Ratsimandrava was fatally wounded on Feb-
ruary 11 in an ambush of his car in Tananarive,
the capital. The new military committee blamed
the slaying on members of a mobile police force
camp that has been the center of anti-government
activity in recent weeks. Army units forced the
camp to surrender on February 13.
The paramilitary police force is made up
mostly of coastal tribesmen who are traditional
rivals of the inland Merina tribe of Ratsimandrava
and his immediate predecessor, General Rama-
nantsoa, who stepped down on February 5. A
group of dissident army officers, also from coastal
tribes, took refuge in the police camp in early
January after failing in an effort to overthrow the
government.
The military committee is headed by Gen-
eral Gilles Andriamahazo, a respected senior offi-
cer of the armed forces. He was a.minister of state
in Ratsimandrava's short-lived cabinet, but is not
regarded as a strong political leader. Former for-
eign minister Ratsiraka-the driving force behind
the militantly nonaligned policy the country has
pursued since 1972-is also on the committee.
army, which is larciely a Merina preserve.
The new government's most urgent task is to
defuse the growing ethnic unrest on the Indian
Ocean island. The coastal people, who make up
the bulk of the population and who were politi-
cally dominant from independence in 1960 until
1972, have been demanding a bigger voice in
public affairs. A widening ethnic split could pose
a serious threat to public order and stability and
could possibly pit the gendarmerie-a significant
military force that is, like the mobile police, pre-
dominantly coastal in composition-against the
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CAMBODIA: THE STRANGLEHOLD TIGHTENS Wwj
-At mid-week, Khmer Communist [forces, the Communist offensive. The insurgents, how-
capt/red the last government position near a vital ever, are keeping the Cambodian army's 7th Divi-
Mekong River narrows some 25 miles southeast of sion northwest of the city under steady pressure
Phnom Penh. Although government troops still and are continuing to launch sporadic rocket at-
hold positions around the Cambodian navy base tacks at Phnom Penh proper and at outlying facil-
at Neak Luong and several beachheads along the ities-including Pochentong airport. Government
lower reaches of the river, the insurgents now commanders in some sectors have felt the am-
control all key riverside terrain below Phnom munition pinch and, on occasion, have reduced
Penh. Government forces will now have to re- artillery fire.
establish at least partial control of the narrows
upstream from Neak Luong before attempting to
regain territory elsewhere along the river.
Meanwhile, ammunition stocks in Phnom
Penh have sunk to the critical level, and civilian
airlines are preparing to double their deliveries of
military equipment. With the prospects for bring-
ing a resupply convoy up the Mekong in the near
future growing dimmer, the government has
implemented electrical blackouts to conserve fuel.
Rice stocks at the beginning of the week stood at
a 36-day level, and the government has not yet
had to increase rationing.
Ground combat around the capital remains
much less intense than during the initial weeks of
Heavy
concentrations
of Communist
forces
SOUTH ffT
0c_ I
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AUSTRALIA: LABOR PARTY CONFERENCE
1 ioy
~In the foreign policy discussions at the
Labo~r- Party's biennial policy conference last
week, Prime Minister Whitlam gave his strongest
defense to date of the presence of US defense and
scientific installations in Australia, which he sees
as benefiting his country. His strong support of
close alliance with the US in this area was diluted,
however, by his lengthy reiteration of his views
on Vietnam, which are at variance with those of
the US.
Whitlarn put down a leftist proposal to
change the wording of the party platform to
imply that the presence of the US bases impinges
on Australian sovereignty and is therefore unac-
ceptable. He declared that changes over the past
year to bring all the bases under joint administra-
tion satisfied Australian sovereignty. Whitlam also
turned aside leftist objections to the secrecy of
some of the installations, saying that he and other
officials with a need to know were fully informed
as to their functions.
The Prime Minister underscored his defense
of the bases by emphasizing that Canberra would
not exercise its option to give notice later this
year of an intention to terminate the lease of one
of the facilities.
While supporting the US on the bases,
Whitlam's lengthy comments on Vietnam at the
conference reflected his opposition to US policies
there and his strong bias against the Saigon gov-
ernment. He made clear his hope for the early
demise of the Thieu regime.
Whitlarn did oppose and lead the defeat of a
proposal for immediate recognition of the Viet
Cong's provisional government made by Deputy
Prime Minister Cairns, the party's most prominent
leftist and a long-time Viet Cong sympathizer.
The Prime Minister emphasized, however, that his
opposition was based on a belief that Australia
should continue its recognition of an incumbent
government as long as it controlled the national
capital and a significant proportion of the popula-
tion. His strongly negative remarks about the
Page 18
Saigon government probably reduced the un-
happiness of Cairns and other leftists over the
rejection of immediate Viet Cong recognition.
Whitlam underlined his sympathies by sup-
porting a subsequent proposal permitting an un-
official Viet Cong information office to be set up
in Australia. Contrary to initial reports, Whitlam
did not merely accede to this proposal, but may
have engineered its submi io
SOUTH KOREA: THE REFERENDUM
TT
t With 73 percent o he ballots in his favor,
President Pak won the national vote of confi-
dence for which the referendum on February 12
was organized. The South Korean political stage is
now set for a series of initiatives designed to
strengthen the government's hand in coping with
its domestic opponents.
It is still unclear exactly how Pak intends to
proceed. According to government strategists, if
his opponents do not become too noisy, Pak may
follow up the referendum with a major restruc-
turing of the government party and dramatic
changes in the cabinet. Pak's victory statement
spoke of a "nonpartisan national political sys-
tem." This appears to be a reference to a rumored
conversion of the party/cabinet system of the
past 12 years into a kind of national front-a
non-partisam coalition of political and functional
groups deemed reliable by the government.
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There have also been reports that Pak might
soon release some political prisoners and
authorize a new government dialogue with the
opposition. If Pak's opponents once again take to
the streets, however, the government hints of a 25X1
"crackdown." At the moment, many South
Korean officials appear to find this the more
likely contin ency.
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'
The non-Communists are considering a
shake-up in their coalition leadership that could
have an important bearing on the matter of suc-
cession, if and when it becomes necessary to
replace Prime Minister Souvanna Phouma.
Rightist Finance Minister Ngon Sananikone,
regional field commander General Vang Pao, and
a number of other prominent non-Communist
political and military officials are
seeking the ouster of southern con-
servative euam Insisiengmay as the coalition's
deputy prime minister and as the official leader of
the non-Communist side. As grounds for dis-
missal, these officials charge that Leuam has con-
sistently failed to defend vital non-Communist
interests and to provide the non-Communists with
the strong leadership required to compete effec-
tively with the Pathet Lao in the coalition's polit-
ical arena.
Their choice as a replacement for Leuam is
Interior Minister Pheng Phongsavan, who has indi-
cated he would gladly accept such an offer. The
opportunistic Pheng has made no bones about the
fact that he would view his new role as a
stepping-stone to the prime ministership, a posi-
tion he covets and one for which he has been
busily grooming himself.
Pheng has long been considered a potential
compromise candidate in the succession sweep-
stakes. He has a reputation as a neutralist and is
rumored to be generally acceptable to the Pathet
Lao and to most of their foreign Communist
supporters. If Pheng becomes one of the coali-
tion's two deputy prime ministers, his chances for
succeeding Souvanna would be significantly en-
hanced.
The non-Communists almost certainly do
not look to Pheng as a panacea for the strong
leadership they so sorely lack. Indeed, the right-
ists and their colleagues in the military have long
suspected the interior minister of harboring pro-
leftist sympathies and, for this and other reasons,
have never fully trusted him. Rather, it would
Pheng Phongsavan
CF.LS'ISG
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appear that they are advancing Pheng's chances
for a shot at the top job as a contingency measure
against the possibility of Communist leader Sou-
phanouvong's becoming prime minister when Sou-
vanna steps down. The non-Communists probably
calculate that Pheng, for all his faults, would be
preferable to Souphanouvong, who remains
anathema to most rightists.
Replacing Leuarn with Pheng may prove to
be easier said than done. Although Leuam's lack-
luster style and general incompetence are well-
documented political liabilities, his southern
rightist benefactors might argue-with some justi-
fication-that he is being made a scapegoat for the
collective failings of the entire non-Communist
side. In any case, the southerners would almost
certainly be reluctant to relinquish their hold on
such a high-level position without some sort of
political compensation.
Souvanna's position on the proposed change
is not known, but he! might logically be expected
to support Pheng-a fellow neutralist and former
political ally-for the position of non-Communist
deputy prime minister. Souvanna, however, 25X1
would no doubt feel compelled to check out the
acceptability of such a move with the Lao Com-
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President Rodriguez meets representatives of the armed forces and national police.
ECUADOR: PERILS OF PROSPERITY
On February 15, the Rodriguez administra-
tion will mark the third anniversary of the coup
that brought it to power. The military govern-
ment's increasingly evident competence, after a
halting start, readily distinguishes the present
regime from its predecessors. In no small way,
this has been made possible by the profitable
exploitation of petroleum, which began in late
1972.
Petroleum has also created problems for the
government. Revenues from oil, some of which
have been channeled into modernizing public
works facilities, transportation, schools, and mili-
tary hardware, have led to excessive expectations
and indirectly to inflation. A chronic teacher
shortage leaves new schools unopened; antiquated
cars and trucks limp along modern highways;
peasant families without plumbing have little use
for new water and sewage treatment plants. Many
Ecuadoreans believe that oil is destined to enrich
their country as it did Venezuela, despite their
government's 210,000-barrel ceiling on daily oil
production. Widespread construction has almost
eliminated unemployment, enlarging the worker's
stake in the future and creating a new mass politi-
cal awareness-at a time when the armed forces
have announced their intention to retain power
indefinitely.
The most significant frustrations are within
the military institution itself. The long-standing
C. j ig 3
rivalry between army and navy officers has
become a government weakness, reinforced by
traditional social and ethnic hostility between the
Andean highlands, which are the army's preserve,
and the coastal lowlands, where the navy domi-
nates.
Rodriguez, an army general, has maintained
the army's control of the government. He had
sought to placate the navy with the governorship
of coastal Guayas Province and control of the
economically important natural resources min-
istry, which manages both petroleum and tuna
fishing. Within the past four months, however,
the powerful and ambitious Admiral Gustavo
Jarrin has been replaced as head of the ministry,
and an army officer has been appointed to the
governorship. In addition, the navy has begun to
realize that much of the country's new wealth is
going into large orders for aircraft, tanks, and
artillery, with only token upgrading of the fleet.
A further irritant to navy and air force officers
and even some army generals is Rodriguez' failure
to honor his early pledge to rotate the presidency
among the services.
Although coup-plotting is a national
sport in Ecuador, the present circumstances may
be more propitious than usual for a change in
leadership because Rodriguez could fairly easily
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StL;Kt
be removed without the necessity for an actual
change of government. A possible scenario would
call for his resignation after designating a suc-
cessor, the latter being carefully selected by the
joint command.
In any event, the military government will
enter its fourth year with an embarrassment of
riches. The treasury has benefited not only from
petroleum, but also from this season's excellent
tuna run, which produces revenue directly
through the Ecuadorean fishing industry and
indirectly through fines of unlicensed foreign
tuna boats. The tension that this wealth produces
within the military is likely to lead to less mono-
lithic government during 1975 and to a cor-
responding lowering of administrative efficiency.
This in turn could fuel existing frustrations, sully
the military's generally good public image, and
provoke a major change in the government's out-
look. At that juncture, inter-service rivalries
would take a back seat to officers' personal
ideologies, with some seeking to emulate the au-
thoritarian Brazilian example and others looking
BRAZIL: PACE OF LIBE ALIZATION
x/2- 0, i k
Recent developm nts appear t have
strengthened the process of gradual relaxation of
social and political controls.
Local observers have noted, for example,
Justice Minister Falcao's response last week to
public and congressional inquiries into the fate of
political prisoners. Although his remarks were
noncommittal, if not a whitewash, they were still
an unprecedented step because the government
heretofore has not reacted at all to this sensitive
issue. Falcao's latest announcement reinforces the
view that the Geisel regime is seeking to centralize
security responsibilities and to lessen the armed
:services' role in such activities. A similar motive
probably was behind Falcao's inordinately promi-
nent role in an earlier announcement of moves
against the Communist Party.
The US embassy also interprets a recent
optimistic speech by the new president of the
Senate as another sign of progress in the liberal-
ization process. The senator stressed that Presi-
dent Geisel is committed to a gradual easing of
political controls in company with the pursuit of
the revolution's other goals. In this process, the
senator noted, the cooperation of politicians is
"indispensable." While this statement-even
though it emanates from the leader of the govern-
ment party-is in no way binding on the admini-
stration, it probably was not issued without the
approval of the President or his closest advisers
and does seem to reflect Geisel's general
intentions.
Other government moves also seem to signal
at least a desire to ease controls in several areas.
Over the last six months, for example, the Labor
Ministry has removed government interventors
from a third of the nation's labor unions. More-
over, formal censorship appears to have ended at
virtually all newspapers, although tacit restric-
tions remain.
Early tests of the commitment to liberal-
ization will come in at least two areas. One stems
from the recent election of an anti-government
slate in an important labor union in Rio de
Janeiro. There is some doubt that the government
will allow the seating of the insurgents, given the
politically turbulent history of the union.
A more far-reaching test will come next
month when congress convenes with vastly in-
creased opposition representation. Defiant atti-
tudes on the part of dissident legislators could
provoke a right-wing reaction that would hinder
further liberalization. Nevertheless, the process of
selectively easing controls, widely known as
"decompression," is an established part of the
Geisel program.
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PANAMA: OPTIMISM ON CANAL TREATY
Panamanian negotiators are o'Ptiasticthat a
draft of a new canal treaty will be completed this
summer. General Torrijos and other government
leaders are focusing public attention in Panama
on the positive aspects of a new treaty.
In a press interview last week, Foreign Min-
ister Juan Tack stressed that a spirit of com-
promise by both sides, but particularly Panama,
has permitted progress to be made since he and
Secretary Kissinger agreed on a treaty framework
a year ago. Tack said that Panama has been forced
to compromise because it is faced with the 1903
treaty that gives the US the right to operate,
maintain, and protect the canal in perpetuity.
Any change in the status quo, he argued, will
advance the government's fundamental objective
of taking control of the canal.
The foreign minister declared that probably
the most important concession the Panamanians
will be asked to make is to allow some US mili-
tary facilities to remain in their country. In his
view, there is absolutely no way the US can be
forced to dismantle them the day after a treaty is
signed. Tack said that Panama is prepared to agree
to a transition period for the US to withdraw
from the present canal zone and to give the US
the use of certain facilities and rights to operate
and protect the canal during the life of a new
treaty. Panama would share in these responsi-
bilities until the pact's expiration and would
thereafter exercise them exclusively.
In response to questions about timing, Tack
said the two sides were working to have a draft
treaty ready this year, but that the concentration
is on substance rather than on a deadline.
The minister's statement is a measure of the
growth of the Torrijos government's commitment
to a new treaty. Torrijos and Tack are strong
nationalists, and recognition of the need to com-
promise has not come easily to them. They now
seem convinced that the treaty evolving from the
current negotiations is probably the best they can
get, and they are trying to sell it to their people as
a bridge between the present US control of the
canal and eventual total Panamanian con-
trol.
ARGENTINA: GUERRILLA SWEEP' 71~ J
After more than a year of resisting presi-
dential efforts to give the army a major role in the
counter-terrorist campaign, army commander
General Anaya is at last preparing to direct a
sweep on one of the guerrilla strongholds. The
turnabout can probably be attributed to the mili-
tary's dissatisfaction with police ineffectiveness
and the conviction among army leaders that
public opinion now is prepared psychologically to
accept the fact that the police alone cannot stamp
out terrorism.
The first target of the army drive is in the
northwest province of Tucuman, where the
People's Revolutionary Army has its stronghold.
The guerrillas have long had the sympathy of
local workers in the depressed sugar industry, and
some of the principal training camps for the in-
surgents are in the nearby mountains. Govern-
ment forces have attempted to destroy this guer-
rilla bastion before, but poor police and military
coordination, a failure to act promptly on intel-
ligence, and difficult mountain and jungle terrain
have hampered them.
The People's Revolutionary Army, which
has suffered setbacks; in Cordoba and elsewhere as
a result of the government crackdown, will prob-
ably have its activities in Tucuman disrupted by
the new campaign. Nevertheless, it can be
expected to react by stepping up terrorism in
Buenos Aires, where the police have been less
effective in dealing with the underground or-
ganizations.
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SbUKh I
VENEZUELA: OIL DIPLOMACY
4 [ (PY,130) 0~]
President Carlos Andres Perez' oil diplomacy
has scored several successes in past weeks. Al-
though Venezuela is increasing its political and
economic influence in the hemisphere through
petroleum and assistance agreements, this is
raising doubts among some Latin countries over
Perez' ultimate intentions.
Last week, a Peruvian delegation led by the
minister of energy and mines, Fernando Mal-
donado, returned to Lima with an agreement
from the Venezuelan state petroleum corporation
to supply Peru with 14.6 million barrels of oil for
the next two years. The Peruvians will pay half in
cash, with the rest to be paid from Peru's growing
oil production after the two years expire. The
agreement comes on the heels of Peru's support
for Venezuela in its dispute with the US over the
Trade Reform Act, and further solidifies coopera-
tion on hemispheric issues between the two
countries.
The most significant agreement, however,
was reached with Surinam. If ratified by both
countries and fully implemented, the accord will
tie Surinam's future economic growth with that
of Venezuela, and will establish a basis for a
special political relationship as well. The agree-
ment provides for joint development of Surinam's
bauxite deposits, with much of the bauxite and
alumina produced to be shipped to Venezuela. In
return, Venezuela is to become Surinam's major,
and perhaps exclusive, supplier of petroleum and
petroleum products. Caracas has also offered to
do a feasibility study on the construction of an
oil refinery, which it would build, finance, and
provide with technical assistance.
Even more pacts may be in the offing when
Perez meets soon with Caribbean leaders and
holds a second round of talks with the Central
American presidents next month. The Caribbean
is vital to Venezuela in terms of security and
economic potential, and Perez has pledged eco-
nomic assistance. He may be prepared to offer the
Caribbean importers of Venezuelan oil a govern-
rnent-to-government arrangement similar to the
agreements reached with the Central American
presidents in early December. At that time, the
Central American countries agreed to pay Vene-
zuela about half the market price for petroleum,
with the difference to be held in local currency in
time deposits. This fund would draw interest for
Caracas and at the same time could be used by
the Central Americans for development projects.
These arrangements, while advantageous to
the Central Americans, are meant primarily to
serve Perez' main economic and political ob-
jectives:
? To become an investing nation on which
other nations depend for capital and badly
needed petroleum.
? To place overseas the surplus oil riches
that would be inflationary and difficult to
invest within the country, and to earn interest
income from abroad.
? To develop a leadership role for Vene-
zuela among the less developed countries that
produce raw materials, and to create client
states that will follow Venezuela's lead on
hemispheric issues.
Although some Latin governments have pri-
vately accused the Venezuelans of "wielding a big
stick" in inter-American affairs and of being a
"nouveau riche" country, their need for Vene-
zuelan petroleum and assistance precludes open
expressions of irritation or opposition to Perez'
claims of leadership. Moreover, Perez has been
adroit in casting the present dispute with the US
in terms of broad Latin interests and unity rather
than as a narrow dispute between Venezuela and
Washington.
In the coming months, Perez evidently in-
tends to accelerate the pace of his oil diplomacy
through additional agreements and personal trips
to several Latin countries. He is already planning
for a summit meeting of all Latin American
states, which will deal with Latin problems and
give Venezuela an opportunity to exploit its self-
assigned role as a leader in hemispheric affairs.
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JClr1_1 C I N
[Plans for a joint Canadian-French uranium-
enrichment plant in Quebec have run up against
Ottawa's reluctance to approve the project. The
French Atomic Energy Commission and two
Canadian firms agreed last fall to participate in a
feasibility study for a $6-billion project in the
James Bay area of Quebec. It would include a
gaseous-diffusion enrichment plant and enlarge-
ment of the James Bay hydroelectric plant to
provide the necessary electric power.
Last week in the House of Commons, Prime
Minister Trudeau was forced to make public his
government's reservations about the project.
Trudeau's admission came as a result of press
leaks of two internal government memoranda
from Energy Minister Macdonald and Deputy
Minister T.K. Shoyama, both written last Novem-
ber, warning of the dangers of the uranium plant
deal.
The Prime Minister emphasized that his
reservations were based on the fact that there is
no domestic need for an enrichment facility, since
the Candu reactors produced by Canada use
natural uranium. Production of enriched uranium
For export, moreover, would undercut foreign
sales of the Candu reactor. Trudeau also indicated
that the large capital expenditures required to
irneet Canadian energy needs give a very low pri-
ority to outlays for enrichment facilities.
Quebec Premier Robert Bourassa took issue
with Trudeau's remarks by informing the press
that his techhical advisers believe it would be
possible to modify the Candu reactor to enable it
to operate with enriched uranium. The Quebec
L133-]3s]
government has urged adoption of the James Bay
proposal because it would lead to a heavy infu-
sion of French capital and expanded employment
opportunities in the province. The project was on
the agenda of Quebec Premier Bourassa's talks
with French officials in Paris last December.
Trudeau maintained that he had explained
his reservations to Bourassa both before the
premier's trip to Paris and again only two weeks
ago. The Prime Minister also informed the French
of Ottawa's position, and Paris has apparently
chosen to bide its time while awaiting a final
decision by federal authorities in Ottawa. The
French are also awaiting the results of the feasi-
bility study, which are due next month.
Trudeau did not, however, entirely close the
door on the project. He told Commons that
Ottawa is still prepared to consider the feasibility
of such a facility if a convincing case can be made
for it. Energy Minister Macdonald said in a recent
interview that he would have to look at the trade-
offs involved if an application is made for a fed-
eral license to build the plant and export the
enriched uranium.
The Prime Minister will have to balance his
reluctance to build the enrichment plant against
certain political considerations, such as the
benefit to Quebec's Liberal government of many
new jobs. He may also be influenced by the
opportunity to expand economic relations with
France as part of his foreign policy goal of
increasing Canada's ties with EC countries.
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