WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011200090001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 26
• Document Creation Date: December 21, 2016
• Document Release Date: January 3, 2008
• Sequence Number: 1
• Publication Date: November 28, 1975
• Content Type: SUMMARY

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Weekly Summary
Secret
Secret
No. 0048 / 75
November 28, 1975
Copy
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%UMMARY. issued every Fsidey morning by the
rrent intelligence, reports and analyzes sinifi-
rents of the week through noon on Thurso
cludet mcateriol crie~vdinr+ted with or ore
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ihere?
CONTENTS (November 28, 1975)
MIDDLE EAST
AFRICA
1 Angola: New Turn; Cuban Involvement
3 Lebanon: Talks Suspended; Soviet Attitude
5 Bangladesh-India: Tensions Rising
6 Spanish Sahara: Algiers Reacts
7 Portugal: Clipping the Left Wing
8 Spain: Juan Carlos Takes Over
10 EC: The Nine Go to Rome
12 Communist Conference Lurches On
13 USSR: Central Committee To Meet
14 USSR: Massive Trade Deficit
WESTERN
HEMISPHERE
16 Panama: Slow Going in Canal Talks
17 Guatemala-Belize: The UN Vote
17 Argentina: Military Role Grows
18 Australia: Campaign Issues
19 Laos-Thailand: Border Clash
20 China: Aid Policies
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ANGOLA: NEW TURN
The recent arrival of substantial amounts of
new Soviet and Cuban military aid for the leftist
Popular Movement for the Liberation of Angola is
beginning to have an impact on the fighting. After
suffering military reverses at the hands of its allied
foes for the past month, the Movement began this
week to battle back.
In the area north of Luanda around
Quifangando, where the fighting had been
stalemated for some time, the Zairian-supported
National Front for the Liberation of Angola
appears to be coming under growing pressure
from the Popular Movement. Front forces may
have been forced to give ground. There has also
been bitter seesaw fighting some 60 miles from
the Front stronghold of Carmona.
In the central sector, the situation is confused
with heavy fighting reported between the Popular
Movement and the joint forces of the National
Front and the National Union for the Total
Independence of Angola operating near Malanje,
Dondo, and Quibala. The Popular Movement
appears to be at least holding its own in the sec-
tor; it still controls the vital Cambambe dam near
Dondo that supplies Luanda's electric power. Ac-
cording to press reports, National Front - National
Union troops spearheaded by South African ad-
visers and white mercenaries, which had been
sweeping toward Luanda from the south, have
been stalled.
In eastern Angola, a large Popular Movement
force moving south from the Movement's base at
Henrique de Carvalho reportedly has advanced to
within 65 miles of Luso, a National Union-held
city astride the Benguela railway. Guerrilla units
of the Popular Movement are said to have
appeared near the rail line between Luso and the
key railhead of Teixeira de Sousa.
On the political scene, the joint regime
proclaimed by National Front and National Union
leaders on November 11 in opposition to
Agostinho Neto's Luanda-based government
finally unveiled a leadership slate of 16 officials
this week. The post of prime minister in the coali-
tion regime, which is based in Nova Lisboa, is to
be rotated monthly between Johnny Eduardo Pin-
nock of the National Front and Jose N'Dele of the
National Union, the ranking representatives of
their respective groups in the Angolan tran-
sitional government that collapsed last summer
under military pressure from the Popular Front.
Neither National Front leader Holden Rober-
to nor the National Union's Jonas Savimbi took
positions in their regime, which clearly remains a
fragile structure. It has not been recognized by
any foreign country. Neto's regime, on the other
hand, has now been formally accepted by 27
states.
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Nigeria this week became the eleventh
African country to recognize the Popular Move-
rnent, citing growing public attention to South
Africa's involvement with the Movement's op-
ponents as the main reason for its action. Lagos'
example may sway other nonradical African
governments to follow suit despite the concern
many of them share over Soviet and Cuban sup-
port for the Popular Movement.
Meanwhile, the Africans' dilemma over the
Angolan crisis may lead to an emergency summit
meeting of the organization of African Unity.
Support for holding such a conference spurted
this week and now seems likely to attain eventual-
ly the required approval of two thirds of the 46
member states. Backers of the Popular
Movement-led by Somalia, Guinea, Congo, and
Mozambique-have led the drive, clearly hoping
to use the meeting to change OAU policy from
neutrality in the Angolan conflict to endorsement
of Neto's group as the country's sole legitimate
government. If a summit is held, it will probably
result in open quarreling among the Africans
rather than progress toward a settlement in
Angola.
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/2- i 3
LEBANON: TALKS SUSPENDED
Negotiations among Lebanon's bitterly an-
tagonistic major political groups broke down this
week in the wake of renewed fighting between
the Christian militias and Muslim leftists. The
national dialogue committee, created to devise a
compromise to end the protracted internal crisis,
has not met since November 24 when it adjourn-
ed after an acrimonious debate over which group
was responsible for the collapse late last week of
the three-week-old cease-fire. The refusal of the
Christian leaders to discuss reforms that would
give the Muslims a greater share of political
power continues to be the principal stumbling
block to a solution.
Christian Interior Minister Shamun, who is
head of the National Liberal Party and the most
powerful Christian in the cabinet, boycotted the
meeting of the committee on November 24 in a
show of anger over what Christians consider ef-
forts by the leftists to intensify the fighting. Prime
Minister Karami responded sharply in a speech
the next day in parliament in which he denounc-
ed the Christian leaders for their refusal to allow
political reform and for the references some have
made to possible partition of Lebanon. Karami
acknowledged that his government's failure to
restrict the flow of arms to all combatants had
contributed to the resumption of hostilities, but
defended his continued refusal to call in the ar-
my. He insisted the army is incapable of acting as a
neutral force.
Shamun, in turn, defended his militia's in-
volvement in the current fighting. He told parlia-
ment that the private Christian militias have had
to take matters into their own hands because
government security forces are inadequate to
restore order or to prevent "destructive
elements" from overthrowing the government.
The unrestrained activity of Shamun's group
apparently has embarrassed even the right-wing
Christian Phalanges Party. Phalangist leader
f umayyil has tried to calm Muslim tempers by
playing up the importance of the dialogue com-
mittee and by calling for an end to "ideological
disputes."
CVz S
Renewed antagonism between Karami and
Shamun will further delay proposed talks
between the Prime Minister and Christian Presi-
dent Franjiyah that are supposed to result in
agreed recommendations for significant political
and economic changes. The new squabble will
also almost certainly prolong the fighting.
As of midweek, fighting was still heavy and
widespread, although it had not reached the level
of late October. The collapse of the cease-fire and
press reports that Egyptian Foreign Minister
Fahmi will undertake a conciliatory mission may
prompt Syria to revive its mediation effort.
France, too, may make a further attempt to
arrange a settlement in Lebanon following the re-
cent fact-finding mission by French mediator
Couve de Murville. The French emissary
reportedly encountered stiff Christian resistance
to even the consideration of adjustments in the
Lebanese political system, which now favors the
Christians. Christian spokesmen apparently re-
jected outright a tentative suggestion that they
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SECRET ,
might offer the Muslims a 50-50 split in parlia-
ment. The continued fighting and inability of
government bodies to function effectively appear
to have reinforced the determination of Christian
leaders to stay in office and resist making con-
cessions.
/--/ - / 7
The Soviets have come out publicly in sup-
port of efforts to end the fighting in Lebanon.
Although Moscow clearly would prefer to see a
more leftist Lebanon emerge from the current
crisis, it fears this cannot be accomplished without
taking the lid off the Arab-Israeli powderkeg.
? turmoil in Lebanon might trigger
Syrian and Israeli intervention.
? civil war and foreign intervention
could force the fedayeen to disperse to
other Arab countries, diluting Moscow's
already limited influence with the
Palestinians.
? the Lebanese situation is distracting
the fedayeen and Syrians from objectives
more important to the Soviets, specifically
undercutting US influence in the Middle
East and isolating Egypt.
The conflict between Soviet interest in sup-
porting the left and avoiding an intensification of
the fighting has led the Soviets to employ mixed
tactics.
They have praised the Palestinian Liberation
Organization for staying out of the fighting.
Privately, Moscow has even warned the PLO of
the dangers of Israeli intervention and advised it
to support the efforts of the Lebanese govern-
ment to assert control. At the same time, the
Soviets have made it clear that they will support
the PLO if its freedom to operate in Lebanon is
threatened.
The Soviets have also commended Syrian
attempts to mediate the crisis and evidently told
Asad last month in Moscow that they supported
his efforts to reduce tensions.
The Soviets, however, have not forgotten
their friends on the left. Moscow has consistently
championed Lebanese "progressive forces." The
Soviets hope the crisis will increase leftist in-
fluence in Lebanese political life and strengthen
the position of the relatively small, pro-Soviet
Lebanese Communist Party (LCP).
The USSR acquiesced in the decision of the
LCP to enhance the party's standing with the
Lebanese left by participating in the fighting, and,
particularly in the early stages of the fighting, the
Communists were prominent behind the
barricades.
But the Soviets have apparently not given the
party all the help it wanted and may not be able to
control younger party militants. In September,
Lebanese party leaders complained about the lack
of stronger, more direct Soviet backing.
There is no indication that Moscow has rush-
ed guns to the leftist combatants, but neither is
there any sign that the USSR has sought to halt the
flow of Soviet-made arms from Arab countries
and the PLO to them. Furthermore, Kamal
Jumblatt's Progressive Socialist Party has con-
tinued buying arms directly from East European
countries, while the sources of East European -
made arms for the Phalangists have dried up.
Moscow undoubtedly thinks that as long as
the Phalangists are heavily armed, the Lebanese
left must have the wherewithal to protect its in-
terests and forestall a right-wing threat to the
Palestinians. In any event, the Soviets recognize
they cannot close Syrian, PLO, Libyan, and Iraqi
arsenals to the left.
Moscow apparently hopes that the Lebanese
crisis can be ended through political and social
changes that will improve the position of the
Muslim left, but which will not jeopardize
Lebanon's territorial integrity or stability. The
Soviets seem pessimistic, however, that the latter
will happen and recognize that their ability to in-
fluence events is marginal.
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BANGLADESH-INDIA: TENSIONS RISING
Tensions between the two countries
mounted over the past week, increasing the
possibility of eventual Indian military intervention
in Bangladesh. Growing signs of anti-Indian senti-
ment in Dacca were highlighted by the wounding
of the Indian high commissioner on November 26
by unknown assailants. Even before the shooting,
Bengalee concern about Indian intentions had
been fueled by indications in New Delhi that
Prime Minister Gandhi's government had been
taking an increasingly critical view of
developments in Bangladesh.
New Delhi may have been reacting in part to
recent implied criticism of the Indian government
by two of Bangladesh's deputy martial law ad-
ministrators, General Zia and Commodore Khan.
In calling on their countrymen for discipline and
support, both leaders emphasized that external
forces-a clear reference to India-were behind
some of Bangladesh's problems. Zia and Khan
may have played up the Indian angle in an effort
to unify the population and the mutiny-wracked
army, both reservoirs of anti-Indian sentiment.
Anti-Indian wall posters and graffiti have also
appeared recently in several Bangladesh cities.
Prior to the attack on the Indian diplomat, a
number of Bengalee officials in both Dacca and
New Delhi were voicing concern about India to
US embassy officers. The Bengalees alleged that
India has increased its forces on the border and is
attempting to subvert the Dacca government.
They saw as particularly ominous the more
emotional and pessimistic tone that has been
adopted by the censored Indian press in its recent
coverage of events in their country. The press has
emphasized the continuing instability in
Bangladesh and New Delhi's concern for its of-
ficial personnel and other nationals there. This
week, two Calcutta papers, for the first time, ac-
cused the Dacca government of conducting an
"anti-Indian campaign."
New Delhi's attitude is also reflected in com-
ments by an Indian official to a US embassy officer
this week that small groups of refugees from
Bangladesh's minority Hindu community have
begun crossing the border into India. Although
the Indian official said that the departure "had
not yet reached the proportion of an exodus," he
complained that some Hindus have been harass-
ed and that the community, in general, is uneasy.
Bangladesh's Hindus, who total about ten
million, are surely worried about what may be
coming, and some may be leaving the country. A
few Hindus reportedly were roughed up in Dacca
shortly after a wave of mutinies within the armed
forces began over two weeks ago. The assassina-
tion attempt will heighten the Hindus' concern.
Indian spokesmen have frequently warned that a
flight of Hindu refugees to India like that in 1971
would force New Delhi to intervene militarily.
A high-level Bengalee official, in a conversa-
tion with a US embassy officer, subsequently
claimed that no unusual movement of Hindus
into India has occurred and insisted his govern-
ment is not pursuing an anti-Indian policy. He
also denied an Indian report that Bangladesh
would soon declare itself an Islamic republic, a
move that would upset India and Bangladesh25X1
Hindus.
There have also been reports that Bengalee
military units have clashed near the Indian border
with a guerrilla group led by Qader Siddiqui, a
diehard supporter of former president Mujib. Sid-
diqui is apparently receiving aid and sanctuary
from New Delhi. The Bengalees have been
frustrated by Siddiqui's ability to elude a con-
certed government effort to capture him follow-
ing his successful ambush of an army unit last
month.
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Meanwhile, conditions have remained
relatively calm over the past week at the Dacca
base and other military posts where mutinies
flared earlier this month. It is unlikely, however,
that the long-standing economic and other
grievances of the enlisted men that precipitated
the mutinies have been resolved, and tensions
between officers and troops are probably just
below the surface. Many officers, keenly aware of
the killing of several of their colleagues during
the mutinies, may be reluctant to test their
authority, and overall morale within the armed
services will probably remain low for some time.
SPANISH SAHARA: ALGIERS REACTS
Algeria's sharp denunciation at the UN last
week of the recent Spanish-Moroccan-Maurita-
nian accord on the future of Spanish Sahara was
the opening salvo of a campaign for a full-scale
General Assembly debate on the issue. Algiers
wants the assembly to reject the agreement,
which provides for a phased turnover of the
territory's administration to Rabat and
Nouakchott, and call for a referendum on
self-determination. Madrid, Rabat, and
Nouakchott, on the other hand, want UN ap-
proval to limit promised consultations with
Saharans to hand-picked tribal leaders. The issue
is currently joined in the trusteeship committee.
In a formal note circulated at the UN last
week, Algeria declared the tripartite accord null
and void and denounced Spain for agreeing to it.
Algiers contended that Spain could transfer ad-
nministrative responsibilities only to the Saharan
people or to the UN itself. Algeria further argued
that Morocco and Mauritania did not have any
right to exercise authority in the territory unless
the General Assembly officially accords their
claims precedence over the principle of
self-determination. The Algerians want the
assembly to reaffirm earlier resolutions and en-
dorse a referendum in the territory.
Madrid has defended its action by main-
taining that, under the accord, it would only be
turning over administration of its Saharan
territory to the other two countries and that
sovereignty is a separate issue to be decided by
the UN. In the trusteeship committee, Spain's
representatives are arguing that the tripartite ac-
cord resulted from their government's com-
pliance with resolutions adopted by the Security
Council to avoid a conflict. Spain insists,
moreover, the view of the Saharan people will be
"respected" through the territorial general
assembly, a group of Saharan leaders expected to
be responsive to the new joint administration.
Morocco and Mauritania have buttressed their
case with statements by Saharan spokesmen that
support the accord.
Algeria's demand for a referendum under
UN auspices is being supported in the committee
by the Polisario Front, a pro-independence
Saharan political group supported by Algiers. Last
week, a spokesman for the Front threatened that
his group will use force to achieve its goal. His
remarks, coupled with recent Algerian press
statements, provide fresh indications that the
Boumediene regime may be preparing to back
the Front in a sustained guerrilla effort.
Within the disputed territory, Polisario
guerrillas are quietly establishing a foothold in the
vacuum created by Spain's recent withdrawal
from two thirds of the territory. They have oc-
cupied a town in the south and have established
themselves along the Mauritanian-Saharan
border. They are also active in the northeast,
where they have clashed with Moroccan forces
who moved into this border area as Spanish
troops withdrew.
Meanwhile, Moroccan and Mauritanian of-
ficials have arrived in the territorial capital of El
Aaiun to serve as assistant governors in the
provisional administration headed by the Spanish
governor general. The provisional administration
will govern the territory until the Spanish
withdrawal next February. The Moroccan is one
of King Hassan's most trusted advisers, attesting to
the importance the King attaches to his regime's
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PORTUGAL: CLIPPING THE LEFT WING
Anti-Communists in the Portuguese military
appear to be in a stronger position following an
unsuccessful rebellion on November 25 by leftist
paratroopers. Order will return to Portugal,
however, only if anti-Communist officers follow
up and install loyal officers in the key military un-
its that have long been dominated by leftists.
By midday on November 26, the government
had retaken the three air bases and the Lisbon air
region headquarters that had been occupied by
the rebels. Commandos loyal to the government
later forced the surrender of radical military
police and the leftist-dominated light artillery
regiments in Lisbon that had sided with the
paratroopers. Radio and television stations taken
over by radical troops shortly after the rebellion
started were later cut off the air by the govern-
ment, which substituted programs beamed from
Porto.
Backed by several members of the
Revolutionary Council-including a subdued
Otelo de Carvalho-President Costa Gomes im-
posed a state of siege on the Lisbon military
region on the evening of November 25. He
ordered a midnight-to-five curfew, restricted
freedom of assembly, and banned the publication
of area newspapers for November 26. Although
the curfew was not strictly enforced, the capital
was quiet and activity was normal the next day.
The paratroopers' rebellion was apparently
planned in advance, but was not widely coor-
dinated with other leftist military or civilian
groups. The rebels focused on demanding the
removal of anti-Communists in the air force high
command-including chief of staff Morals da
Silva-who were held responsible for disbanding
the dissident paratrooper unit at Tancos, about 70
miles northeast of Lisbon, last weekend.
Efforts by a few leftist soldiers to attract ad-
ditional backing by calling for opposition to the
Revolutionary Council's decision to replace the
left-leaning Carvalho as head of the Lisbon
military region with an anti-Communist officer
received only scant support. There were in-
dications that Carvalho also lost his position as
L) PI
head of the internal security forces and that the
internal security command itself had been
abolished.
The pleas by leftists for the people to take to
the streets in support of the paratroopers went
largely unanswered. The only significant par-
ticipation by civilians occurred at Monte Real,
some 75 miles north of Lisbon, where pro-govern-
ment civilians reportedly assisted in recapturing
the local base from the rebels. The Communist
Party alerted its militants, but took no action.
The Communists' failure to join in the
rebellion has prompted Labor Minister Tomas
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Rosa to speculate that the party may have en-
couraged the feeble effort in the hope it would
spark a countercoup from the right. The Com-
munists may have reasoned that the rightists
would meet swift resistance and the Communists
would be able to reclaim some popular support.
The events of midweek represent a reversal for
the Communists, but the party still has most of its
political assets intact-particularly in labor.
Anti-Communists in the military, as well as
the non-Communist political parties, are in a
strong position to exploit the rebellion, just as the
left exploited the abortive rightist coup last March
11. The campaign to restore discipline in the
military by purging radical leftist officers will be
given a strong boost if the anti-Communists are
prepared to follow through on their success.
President Costa Gomes appears to have read the
trend in time to join the winning side, but he
prefers a balance of forces and may try to rein in
any group that seeks to capitalize on the situation.
The threat remains that rightists may make a
move that would confuse the situation, but con-
servative exile groups apparently were not ready
to act during the tense hours on. November 25.
Similarly, there was no effort by separatists in the
Azores to, take advantage of Lisbon's preoccupa-
tion with the rebel paratroopers. Either group,
however, still retains a potential for disruption
that could ultimately aid the left.
SPAIN: JUAN CARLOS TAKES OVER
The death of Generalissimo Franco on
November 20 and the investiture of King Juan
Carlos I last weekend have set the stage in Spain
for a struggle between the ultra right, which will
fiercely resist any moves toward liberalization,
and those within the establishment who hope to
bring about a gradual opening of Spain's political
system.
The spotlight is now on Juan Carlos. The new
King does not have Franco's absolute power-he
cannot, for example, issue decree laws without
reference to the cabinet, Council of the Realm, or
parliament. Nevertheless, he will be in a position
to play a strong role, especially during these
crucial early days of his reign.
Juan Carlos' most pressing problem will be to
convince the moderates that he supports
liberalization without completely alienating the
far right. In his first address to the nation after be-
ing proclaimed King, Juan Carlos spoke in
carefully guarded terms of evolutionary change.
Speaking to the conservative parliament, the King
was constrained to avoid words like
"democracy," but he did project the need for a
pluralistic society and, by implication, for
evolutionary change.. Significantly, he made no
mention of the National Movement-Spain's only
legal political party. The speech was well receiv-
ed, and Juan Carlos astutely avoided offending
any but the most extreme elements of the right
and left.
During the next two weeks the King will have
to make decisions on two crucial appointments:
the prime minister and the president of the parlia-
ment. Prime Minister Arias is expected to submit
his resignation as soon as the dust settles. Though
identified with the Franco regime, Arias has not
alienated those seeking a more open society, and
it would be difficult to find a viable replacement
at this time. Arias may be kept on at least until the
parliamentary election scheduled for next spring.
The cabinet, on the other hand, is likely to be
reshuffled with some portfolios going to the more
liberal-minded members of the establishment.
Juan Carlos has 10 days in which to select a
new president of the parliament, a position which
fell vacant on November 26. The office is impor-
tant because the incumbent automatically
becomes president of the 17-man Council of the
Realm, which is instrumental in the choice of a
prime minister. The outgoing president,
Rodriguez de Valcarcel, is marshaling regime
forces to pressure the King into reappointing him
for another six-year term, but Juan Carlos is
believed to be looking for a less conservative in-
dividual for this position.
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Juan Carlos (r) and Prime Minister Arias attend a cabinet meeting
Political horse-trading could result in Arias
being appointed to the presidency of the parlia-
ment. If Rodriguez de Valcarcel is retained, it will
be interpreted by the Spanish left as Francoism
without Franco. If someone else is chosen, his
political credentials will be carefully examined for
clues to the direction in which Juan Carlos plans
to take Spain.
Juan Carlos is under considerable
pressure-mostly from the left, but also from
some in the establishment-to open up the
political process. The two most immediate issues
facing the King are calls for amnesty for political
prisoners and legalization of political parties. The
King made a good-will gesture on November 26
by issuing a royal amnesty decree reducing prison
sentences for both political and common
prisoners-except for crimes involving
terrorism-and commuting the death sentence
for crimes committed prior to his investiture on
November 22. Many opposition leaders welcom-
ed the decree as a "positive step," but spokesmen
for the major socialist party denounced it, saying
it fell far short of the complete pardon for all
political prisoners demanded by the left.
There are deep disagreements among es-
tablishment leaders over the question of legaliz-
ing political parties and whether the Communists
should be included. At this point, Juan Carlos
UPI
seems likely to draw the line at the Communists in
order to retain the support of the center-right.
The Communists would almost certainly react to
such exclusion by stepping up their opposition
activities, perhaps by calling a general strike.
The left remains fragmented, however, and
initially, at least, it is the hard-line regime sup-
porters and violence-prone groups of the far right
that pose the greatest obstacle to evolutionary
change. Although still a minority in the govern-
ment, over the past year the ultra right has had
sufficient clout to play a major role in scuttling
Arias' limited moves toward political pluralism.
Since the death of Franco, leaders of the Falangist
faction of the National Movement have publicly
condemned the idea of allowing political parties.
Juan Carlos would, on the other hand, have
considerable support for a program of gradual
liberalization-from the vast Spanish middle class,
from the Church, from many members of the es-
tablishment, from many oppositionist Christian
Democrats and Socialists, and, at least tacitly, from
the military. The new King is off to a good start,
but the main tests lie ahead. If he can gradually
liberalize the political process while still main-
taining order, he will gain stature and support,
but the task is a formidable one, and it is far from
certain that he has the ability to succeed.
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EC: THE NINE GO TO ROME
The EC heads of government will consider
their meeting in Rome on December 1 and 2 a
success if Britain can be persuaded to give up its
demand for a separate seat and accept EC
representation at the mid-December Conference
on International Economic Cooperation. The
conference will bring together a number of
nations representing producers and consumers of
oil and other raw materials. Continued UK in-
sistence on a separate seat in Paris, will pro-
voke acrimonious discussion on the worth of Lon-
don's commitment to the EC, especially because
it comes at a time when the small EC members are
still smarting over their exclusion from the meet-
ing at Rambouillet last week of the "Big Six"
industrial countries. The issue of Britain's role
in the EC and its attitude toward community action
could overshadow the entire meeting in Rome.
Both Prime Minister Wilson and Foreign
Secretary Callaghan have steadfastly maintained
that the UK would not give up its demand for a
separate seat. They hold that the UK potential as
an oil producer differentiates British interests
from those of other EC members and precludes
representation of British interests by an EC
delegate. If the UK's position has been designed
to win concessions from Britain's partners on a
minimum support price for North Sea oil, the
meeting in Rome provides the last reasonable oc-
casion for working out details of the bargain.
Foreign Secretary Callaghan C E) t! 4 t
The European Parliament Issue Pr ASS P k? 1S
France, West Germany, Italy, the Benelux
countries, and Ireland all favor a proposed 1978
date for substituting direct elections to the Euro-
pean Parliament for the present system of ap-
pointment from the national legislatures. Only
Denmark supports Britain in seeking delay.
Remaining problems include the number of
members of parliament to be allotted each coun-
try, the date and procedures for the election,
and whether members should be elected to both
national and European parliaments.
Supporters of direct elections, including
West German critics of other aspects of the EC,
believe that an elected parliament will demand a
stronger role and that closer working relations
between fraternal parties will foster gradual Euro-
pean unification.
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Other Institutional Topics
Belgian Prime Minister Tindemans, who was
charged at the Paris summit last December with
drawing up a report on attitudes within the com-
munity toward European union, plans his final
report for year's end and will give only an oral
progress report at Rome. He has found that
almost all political, business, and labor leaders are
interested in discussing Europe's prospects but
that most European leaders have little inclination
to subordinate immediate national aims to ad-
vance European integration. He himself believes
it would be worth considering reform of the EC
Council of Ministers to provide consistent
leadership and eliminate the semi-annual rotation
of the presidency among EC member states.
The heads-of-government meeting in Rome
is the last major event in Italy's six-month EC
presidency, a period marked more by drift than
by leadership in EC affairs, as Italian ministers
have shown nearly exclusive preoccupation with
domestic politics. Italy's record and the prospect
of Luxembourg's presidency in the first half of
1976 may stimulate serious consideration of
Tindemans' suggestion. Luxembourg Prime
Minister and Foreign Minister Thorn, who will be
the key figure in the Luxembourg presidency, is
simultaneously General Assembly president at the
UN and is already under attack for absenteeism
there.
Ideas for reform of the EC Commission may
also be aired at Rome. Chancellor Schmidt, for
example, is arguing that the commission presi-
dent should be a first-rank political figure and
should influence the selection of other commis-
sion members. Schmidt has also suggested a
stronger commissioner for finance and budget, a
suggestion reflecting the West German emphasis
on improving management of EC financing. A
possible decision on the form of a proposed com-
mon EC passport, which may be issued in 1978,
may be announced as a symbolic gesture toward
European union.
The Nine-and particularly the
British-prefer discussions of political coopera-
tion to the sometimes arcane debate over EC trea-
ty matters. Although protocol severely cuts work-
ing time at EC heads-of-government meetings,
consideration of some political cooperation issues
is likely. Discussion of the.Euro-Arab dialogue in
the light of the working level discussions of
November 22-27 in Abu Dhabi may entail further
movement toward recognition of the Palestine
Liberation Organization. Also in prospect is an ex-25X1
change of views on developments in Portugal and
Spain and on possible ways to encourage
democracy in those countries.
pan" 11 WPPVI V CI IItAAAADV Nnv 752 147c
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COMMUNIST CONFERENCE LURCHES ON
Another snag has been hit in the
preparations for the already much-delayed
European Communist conference. The
meeting in East Berlin on November 17-19 that
was supposed to have completed work on the
concluding conference document and set a
date for the conference postponed these
decisions until January.
The current impasse was reached over two
key points in the document: the nature of the
relationship between communist and socialist
parties and the nature of the relationship
between the countries of Western Europe,
Eastern Europe, and the United States. This
revival of bickering surprised many of the
delegations at the Berlin meeting, and the
Italians, for their part, ascribed it to a feeling
among the Soviets and loyal East Europeans
that too many concessions had been made and
that perhaps the conference project may be
getting out of control.
As things stand now, an editorial working
group will convene in East Berlin in
mid-December to continue work on the final
document. Such meetings have been held with
less publicity than those of the full editorial
committee and have been the forum for sharp
conflicts in the past. For this reason the target
date of mid-January for wrapping up the details
appears overly optimistic. Even with smooth
sailing in the preparations over the next two
months, the Soviets will be hard pressed to
meet their target of convening the conference
before their party congress in February.
Pan. 1 7 %AI PVI V CI IKAAAADV K1- ')Q 107G
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General Secretary Brezhnev
USSR: CENTRAL COMMITTEE TO MEET C l/,- C -5
With less than three months to go before the
Soviet party congress in February, the Central
Committee meeting next Monday will probably
shed some light on politics in Moscow. No agen-
da has been announced, but the one-day plenum
will divide its time between current business and
preparations for the congress.
The Central Committee members will hear a
report on leadership activity since the last plenum
in April and discuss next year's economic plan
and budget-subjects to be taken up at the ses-
sion of the Supreme Soviet that opens on
December 2. The leadership report may be rather
somber on both foreign and domestic affairs. In
foreign affairs, the Soviets have suffered setbacks
in the Middle East and they have apparently been
put off by the aggressive response in the West to
CSCE. Prospects for a new SALT agreement and a
Washington summit before the party congress are
significantly diminished, and the difficulties en-
countered in trying to convene a conference of
European communist parties are probably a
source of embarrassment.
The poor performance of Soviet agriculture
this year and indications that the spring harvest
may already be in trouble will have a dispiriting
effect at the plenum. The shortfalls in agriculture
will spotlight the failure to meet the overall goals
of the consumer program. The discussion of the
economic plan and budget may give some indica-
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Lion of how the leadership intends to handle
problems in these areas over the next year. It
should also suggest some priorities for the next
five-year plan.
Most attention, however, will locus on
preparations for the party congress. The Central
Committee is expected to announce the agenda
and speakers for the February conclave, thus
providing some meaningful evidence on the sub-
ject of leadership change. In addition, the plenum
may take action to fill some slots, such as party
secretary for culture, that have been vacant for
some time.
The relative stability of the Central Com-
mittee since the last congress argues for continui-
ty at the top. No patterns have emerged in per-
sonnel changes that either strongly favor or
detract from one or another leader. The local and
regional party elections that precede the congress
are moving along on schedule.
Despite policy difficulties and the advanced
age of several senior leaders, the plenum is likely
to be content with leaving the basic features of
foreign and domestic policies and their executors
intact
USSR: MASSIVE TRADE DEFICIT
We now expect the Soviet hard-currency
trade deficit in 1975 to be close to $5 billion. A
weak gold market this fall has forced Moscow to
borrow heavily in Western money markets, and
the Soviets are already lining up credits for 1976. If
Soviet exports continue to be sluggish, Moscow
may be forced to trim imports at some point next
year.
The USSR has continued to increase imports
at a time when growth in its exports has been
limited by recession in the West. Total imports for
1975 are estimated at $12.8 billion. In the first nine
months of 1975, imports from its six major
Western trading partners were running 58 per-
cent above last year. Imports of machinery and
equipment are up about 70 percent over last
year's $2.3 billion, and may reach $4 billion in
1975. Imports of grain will be about $1
billion-roughly double the 1974 figure. Steel
purchases may also reach record levels.
Soviet hard currency exports will probably
rise by no more than 5 percent, to an estimated
$8.1 billion. Exports to its six major Western
trading partners in the first eight months of this
year were down 6 percent from the same period
last year. We expect a considerable rise in the
final four months because of reduced Soviet
prices on diamonds, platinum, and palladium,
among others; stepped-up exports of Soviet oil;
and the gradual revival in economic activity in the
West.
The USSR will finance its 1975 deficit through
a combination of Western credits, gold sales,
revenues from shipping and tourism, and a
probable reduction in foreign exchange holdings.
Arms sales should provide substantial earnings
this year-perhaps $300 million in hard currency.
The USSR may earn about $1 billion from
gold sales in 1975. Confirmed and rumored sales
through July totaled 125 tons, valued at roughly
$675 million. We believe that Moscow continued
to sell gold in August-perhaps 20 tons worth
$100 million. Sales were probably small in
September as gold prices plunged. The USSR may
have re-entered the market in October when
prices partially recovered and appeared to
stabilize at approximately $145 per troy ounce.
Sales of 20 tons per month in the last quarter, a
reasonable prospect, would yield Moscow
another $275 million.
Borrowing from the West
From $2.5 billion to $3 billion of the hard-
currency deficit will probably be financed by a
combination of Soviet borrowing in the West and
a reduction in foreign exchange holdings. The
USSR appears to have secured adequate financing
to meet this year's obligations.
? By June, the USSR had drawn down
$360 million of the $1.3 billion deposited in
London as of January 1.
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v SECRET N%Wsor
? Medium- and long-term credits ex-
tended in earlier years are covering a major
share of Soviet imports of Western capital
goods and large diameter pipe. Drawings
should exceed $2.5 billion in 1975, yielding
more than $1.4 billion in net credits.
? Early in 1975, Moscow arranged for
three five-year loans from Western banking
consortiums, totaling $400 million.
? The Soviets have arranged for ad-
ditional bank-to-bank credits in Europe and
Soviet efforts to raise loans in Europe and in
the US have shown a marked upswing since
midyear. These efforts are probably geared
toward meeting next year's anticipated
obligations. Grain imports, judging from
purchases already consummated or anticipated,
will amount to between $3 and $4 billion in 1976.
Increasing Exports
The size of the 1976 deficit will depend large-
ly upon the ability of the Soviet Union to
stimulate hard-currency exports to the West. Re-
cent discussions presage an increase in Soviet oil
exports in 1976, and signed contracts call for a
sizable increase in Soviet natural gas deliveries to
Western Europe. Moscow can also be expected to
intensify current efforts to boost export earnings
by shaving prices and pressuring Western
governments to correct current trade imbalances.
Use of Eurocurrency borrowing for grain
purchases may reduce Soviet access to the
Eurocurrency market to finance capital goods
purchases. Moscow may be forced to pay higher
rates for Eurocurrency loans and to be more
selective in its Eurodollar borrowing for this pur-
pose. As a result, Moscow may push for even
larger commitments from Western governments
for subsidized credit lines to cover Soviet
purchases in 1976-80.
25X1
25X1
Soviet medium- and long-term debt will
grow substantially during 1975-76 as a result of the
massive borrowing-perhaps to more than $7
billion by the end of 1975 and to nearly $10 billion
by the end of 1976. If exports prove weak and the
USSR incurs another large trade deficit in 1976,
the leadership will face unpleasant alternatives
such as a possible cutback of imports, a delay in
delivery schedules for equipment already
ordered and not covered by long-term credit, and
a cutback in ca ital goods orders requiring cash
payment. 25X1
OC-Z
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U C 1
PANAMA: SLOW GOING IN CANAL TALKS
The session that opened in Panama last week
received none of the fanfare that preceded US
Ambassador Bunker's arrival for the September
session, reflecting a clear expectation by Panama-
nian officialdom that this round will yield little.
Official indications that Bunker's visit would
receive only routine public notice have been
borne out by the restrained press coverage and
the absence of statements by government
spokesmen. The one exception was a negotiation
adviser's charge in Mexico last week that the US
has deliberately jammed the negotiations and is
seeking Torrijos' overthrow. This was privately
disclaimed by Panamanian chief negotiator Juan
Tack, who told US officials the adviser had
departed from established guidance.
The advance publicity given Bunker's
September visit generated unfulfilled expec-
tations of a breakthrough in the negotiations. By
contrast, the press this month has virtually ig-
nored several changes announced in US Canal
Zone practices that might have been portrayed as
indicating a more forthcoming US position. The
changes include reducing the number of security
positions and thereby opening more jobs to
Panamanians, integrating the Latin American
schools in the zone into the American system, and
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providing for equal competition for housing
without regard to nationality.
Panamanian spokesmen and the controlled
press have been increasingly blunt in making the
point that they expect little progress until after
the US elections in 1976, believing that political
considerations will prevent US compromise on
sensitive treaty issues. The Panamanians may well
see the current round not as a time for com-
promise but for hammering away at their major
points-whose central aim is an end to the US
presence by the end of the century.
e~2 -r7-3
GUATEMALA-BELIZE: THE UN VOTE
Guatemalan officials are taking the UN vote
on Belize in stride. Soon after the UK-Caribbean
sponsored resolution passed overwhelmingly in
the UN committee on trusteeships last Friday, the
government announced that it will simply refuse
to heed it. Officials said the resolution, which call-
ed for Belizean independence, self-determina-
tion, and territorial integrity, was no more than a
"recommendation" and had no legal force. Until
recent weeks, Guatemala had been threatening to
use military force against Belize if the UN ap-
proved a "humiliating" resolution.
The Guatemalans have not yet responded to
the British offer to resume negotiations early next
year. Negotiations will be difficult for them so
soon after the defeat in the UN. Guatemala may
next try to get the Organization of American
States or the International Court of justice to con-
sider the matter.
The press in Guatemala, meanwhile, has
begun a search for scapegoats. Its targets are
Foreign Minister Molina and his colleagues. They
are being criticized for not anticipating that Mex-
ico would reassert its long-dormant claim to the
top part of Belize and for inadequately presenting
Guatemala's argument in the UN.
ARGENTINA: MILITARY ROLE GROWS
President Peron, still fighting to remain in of-
fice, is temporarily benefiting from increased
military participation in the anti-terrorist struggle.
Military leaders seem pleased that the ad-
ministration finally acceded to their long-standing
wish for greater participation in the counterin-
surgency effort. The armed forces are acting on
the basis of last month's presidential decrees es-
tablishing national defense and internal security
councils. Intensified counterinsurgency
operations may divert those officers who
otherwise might be plotting against the President.
In recent weeks, the police and the military
services have carried out large-scale operations in
Tucuman Province, long a terrorist stronghold.
They have also conducted numerous searches in
urban and rural areas elsewhere, and road and
highway checkpoints have been set up all over
the country. Hundreds of suspected subversives
reportedly have been arrested, and some have
been killed in sweeps that for the first time have
been supported by helicopters and other aircraft.
For the moment, the increased military role
in the conterinsurgency effort seems to be25X1
alleviating the pressure on Peron. In the longer
run, however, it could pave the way for greater
military influence in national affairs.
Searching operation against Argentine terrorists
A) T11 C_
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AUSTRALIA: CAMPAIGN ISSUES
The latest polls show public opinion about
equally divided between the two major parties.
The outcome of the national elections on
December 13 will probably be determined by the
reactions of swing voters to two leading issues:
the state of the economy and the controversy
over the constitutional powers of the Senate and
the Governor General. Foreign policy questions
are receiving relatively little attention, and it is
unlikely that there will be any significant
short-term effects on Australia's relations with the
US. The somewhat more independent posture in
world affairs that emerged over the last three
years under the Whitlam government would
probably be retained by a new Liberal-Country
administration.
The differences over domestic policies and
the administrative capacities of the rival parties
are probably not as important as the long-term
effects of the manner in which the election was
forced-the Governor General's unprecedented
dismissal of Prime Minister Whitlam. Labor Party
iccaders and the rank and file have been deeply
embittered by what they regard as the improper
tactics of the Liberal-Country coalition and the
Governor General.
It was Whitlam's avowed aim to make the
constitutional issue of his ouster from office "the
great issue, almost the sole issue" of the cam-
paign. He and his supporters have been placing
heavy emphasis on the alleged threat to political
stability from the recent maneuvers of
Liberal-Country party leaders as well as on the
constitutional impropriety of the present
Liberal-Country government.
Right now, these themes seem to be having
considerable impact among the swing voters. The
impact is wearing off, however, and, as the
Liberal-Country candidates aim their fire at
Labor's mismanagement of the economy,
Laborites are concluding that they cannot avoid
addressing the economic issues.
The state of the economy is Labor's greatest
liability and gives the Liberal-Country coalition its
strongest argument that a change is needed.
When Labor first took over in December 1972, the
Australian economy was riding high. Now
Australia is suffering from a very serious inflation,
the highest unemployment since the depression
of the 1930s, and a record budget deficit.
The main question is whether the swing
voters will hold the Laborites responsible for the
economic decline. Caretaker Prime Minister
Fraser and his allies are blaming the Whitlam
cabinet for driving off new foreign capital,
destroying business confidence, and generally
mishandling the administration of the economy.
Fraser, using government figures to back his
claims, is charging that under a new Labor
government the national deficit, inflation, and
unemployment will become far worse than
anyone had forecast.
Labor is responding that the economy was in-
evitably the victim of international pressures that
have damaged many other economies as well,
that Labor had been coping effectively, and that
recovery was well on the way at the time of
Whitlam's ouster. The most recent budget
presented by the last Labor cabinet is regarded by
economists as sound and not providing an easy
target. Major changes in fiscal policy by a
Liberal-Country government are unlikely, and the
main justification for a change to Liberal-Country
management of the economy would not be a
greatly different budget but possibly a better
team of managers implementing the budget.
While both contenders attempt to steer
debate to the most favorable issues, neither can
be sure of voter attitudes in the wake of the tur-
bulent political scene of the past several weeks.
Labor has taken heart, however, from the latest
public opinion polls placing it about even with
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the Liberal-Country coalition, a dramatic recovery
from the 30 percent lead accorded the coalition
last July.
A Labor defeat in the elections will generate a
strong reaction in the labor movement that
could:
? prompt widespread strikes and
violence;
? weaken the authority of moderate
party leaders and enhance the strength of
the leftists within the labor movement; and
? deepen class divisions within
Australian society and in labor-management
relations.
Regardless of the outcome, the way the elec-
tions were forced will leave a long-term legacy of
vindictiveness and hostility that will inevitably
affect the atmosphere of Australian politics and
confront the next government with greater dif-
ficulties in overcoming intractable economic
problems.
LAOS-THAILAND: BORDER CLASH
A border clash along the Mekong has added
to the already strained relations between
Bangkok and Vientiane.
Pathet Lao forces badly damaged a Thai
patrol boat, killed a Thai sailor, and wounded
several others during the clash which began on
November 17. Thai troops, tanks, and artillery
were sent to the scene, and Thai aircraft provided
cover during nine hours of skirmishing as Thai
forces attempted to recover the body and patrol
craft. The Lao also moved reinforcements, in-
cluding tanks, to the area.
Clashes along the Mekong began in late 1972
when the first communist troops reached the
banks of the river. Incidents have increased in
number and intensity since the collapse of the Lao
coalition government last spring. Over 40 clashes
have been reported since last April, but no
casualties occurred until October 9 when five Lao
were killed.
Several factors besides mutual antagonism
contribute to the trouble:
? Pathet Lao troops are cocky and
belligerent, ready for any real or imagined
intrusion into their territory.
? A series of old Franco-Thai
agreements gives the navigable channel in
most areas to the Lao, but Thai commercial
and naval craft have always used these
waters fairly freely.
? Thai troops have for years been
engaged in smuggling in some areas, and
discipline has long been a problem.
In the past, the Thai government has tried to
play down the significance of the skirmishing
along the Mekong, but this time Bangkok
ordered its ambassador to Laos home "for con-
sultations" and has closed the border opposite
the Vientiane area to all travel and transit of
goods. If the border is closed long, it would have
considerable impact. Vientiane depends on tran-
sit across Thailand for its fuel and much of its
food. Bangkok has also renewed calls for
high-level talks to resolve border problems.
The Lao have rejected all Thai calls for
negotiations on the Mekong problem and in
numerous propaganda blasts have blamed the
Thai for all incidents. On November 26, however,
the Lao moved to ease tensions by announcing a
willingness to allow the Thai to retrieve a patrol
boat which had been beached on a small island25X1
following the skirmishes of November 17-18. The
Lao probably expect that the Thai will reciprocate
by reopening the border
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CHINA
The visit of Burma's President Ne Win to Pek-
ing last week brings into focus China's new
emphasis on improving economic relations and
enhancing its political position with its Asian
neighbors. The Burmese President, on his first
visit to China in five years, reportedly negotiated
new Chinese support for Burma's hard pressed
economy. Over the past two years, Peking has
concluded initial economic agreements with
Malaysia, the Philippines, and Thailand and is
providing continuing support to Cambodia and
Laos.
The bulk of the Chinese aid program,
however, is directed toward Africa. From 1970 to
1975, China pledged two thirds of its $2.7-billion
aid total to African countries. A $400-million
credit for the Tan-Zam railroad gave Tanzania and
Zambia first and second rank among Chinese
clients after 1969. South Asia, principally through
pledges to Pakistan, has claimed an additional 20
percent of Chinese commitments, trailed by the
Near East, with 10 percent. China began a small
effort in Latin America in 1971, but has done little
to implement the agreements.
In 1970, Peking abandoned its ideological
criteria for support, i.e., that the recipients must
be leftist oriented, and began seeking a broader
economic role among Third-World countries. In
that year, Peking pledged more than $700 million
in new aid, a record commitment almost ten times
larger than average annual aid in previous years.
Despite its modest size, Chinese economic
assistance has carved a niche for Peking in the
global aid scheme of things. Although deliveries
under the program have averaged only about
CHINA:Economic Aid to Developing Free World Countries
1. Burma
2. Cambodia
1. Afghanistan
2. Bangladesh
3. Nepal
4. Pakistan
5. Sri Lanka
1. Algeria
13. Kenya
25. Tanzania
2. Burundi
14. Malagasy Republic
26. Togo
3. Cameroon
15. Mali
27. Tunisia
4. Central African Republic
16. Mauritania
28. Uganda
5. Chad
17. Mauritius
29. Upper Volta
6. Congo
18. Mozambique
30. Zaire
7. Dahomey
19. Niger
31. Zambia
8. Equatorial Guinea
20. Rwanda
9. Ethiopia
21. Senegal
10. Gambia
22. Sierra Leone
11. Guinea
23. Somalia
12. Guinea Bissau
24. Sudan
3. Indonesia
4. Laos
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Chinese Economic Aid
to Developing Countries
(Million US $)
Africa
Somalia
Zaire
Zambia
376
22
1,698
112
100
262
East Asia
Europe
Latin America
Near East
South Asia
287
526
Nepal
66
117
Pakistan
141
250
Sri Lanka
41
114
$165 million annually over the past five years,
comparable to the efforts of Belgium and the
Netherlands, China's aid has been highly visible
and has had considerable impact. The image of
China's support to Africa is one that few major
powers are effectively challenging. China has
gained stature among developing countries by
focusing on countries where China's skills and
technology are applicable, by offering a carefully
supported aid package, and by providing low
cost, quick return projects on easy payment
terms.
China's development assistance provides
easily perceived benefits in a short time. Profiting
from its own postwar experiences, China has
emphasized labor-intensive agricultural,
transportation, and light-industry projects that
require minimum skills for construction and
operation. Plants, such as textile, plywood, paper,
and food-processing facilities are built at low cost
and put into production rapidly.
China compensates for shortages of local
funds and skills as part of its assistance package.
Peking provides commodities to finance local
construction costs and administrators, skilled per-
sonnel, and large numbers of unskilled laborers
to carry out construction.
Peking's aid terms are far more attractive than
those of other Communist donors, approaching
those offered by the West. Grants account for
about 15 percent of the total, compared with less
than 2 percent in other Communist programs.
China also has provided the equivalent of $1
billion in free technical services to development
projects.
China's aid program has been quite
successful. African countries are quick to praise
the economic contributions of Chinese projects,
which provide employment for large numbers of
local workers and whose output often consists of
products formerly imported for hard currency.
For China, international political gains have loom-
ed large in proportion to actual expenditures for
aid. China's economic importance among poorer
countries will continue to grow as it carries out
projects under the $2.4 billion of aid still in the
pipeline.
Page 21 WEEKLY SUMMARY Nov 28, 1975
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