WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011200100001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 21, 2016
• Document Release Date: January 11, 2008
• Sequence Number: 1
• Publication Date: December 5, 1975
• Content Type: SUMMARY

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State Dept. review completed
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Secret
Weekly Summary
State Dept. review completed
Secret
No. 0049/75
December 5, 1975
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CONTENTS (Deccmher.5, 1975)
MIDDLE EAST
AFRICA
1 Angola
3 Rhodesia: Settlement Talks
4 Spanish Sahara: Rabat Moves In
5 l,iael: Reaction to UN Resolution
6 USSR-Palestine: Arafat in Moscow
I I ohanon: Qualified Optimism
8 OPFC Countries: Import Development,
9 Bangladesh-India: Unease Continues
10 Iran-USSR: Expanding Economic Ties
1.2 Portugal: Tightening the Grip
13 Spain: Juan Carlos Maneuvers
15 EC: The Rome Summit
16 Finland: Back to Square One
17 lcoland: The NATO Link
18 Top Soviet Bodies Meet
19 USSR-Yugoslavia: Mending Walls
20 Poland: On the Eve of the Congress
EAST ASIA
PACIFIC
22 1 Dios: Completing the Revolution
23 1 imor: Death of Diplomacy
WESTERN
HEMISPHERE
24 Venezuela: Reaction to US Trade Act
24 Chile: Church-State Tension Eases
25 Ecuador: Political Uncertainty
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,WWI SECRET
ANGOLA
Angola's civil war continues to lurch along in
its characteristic tug-of-war fashion. Despite an
array of self-serving claims and counterclaims, it is
apparent that neither of the two opposing forces
has yet achieved the upper hand.
An advance along the coast from southern
Angola by the National Front for the Liberation of
Angola and the National Union for the Total
Independence of Angola appears to have tem-
porarily run out of steam around Novo Redondo,
some 200 miles south of Luanda. Earlier claims by
the National Union that it had advanced as far
north as Porto Amboim were apparently un-
founded.
North of Luanda, fighting between the
Popular Movement and the Zairian-backed
National Front has remained in a state of flux for
several weeks, with inconclusive fighting around
the Lifune River near the coast and some 60 miles
southeast of Carmona.
Political Maneuvering
On the political scene, the Popular Move-
ment continues to make slow but steady progress.
During the past week the People's Republic of
Benin (formerly Dahomey) became the twelfth
African state to recognize the regime established
by the Popular Movement on November 11.
The most notable military development dur-
ing the past week was the capture of Luso by the
Popular Movement for the Liberation of Angola.
Luso sits astride the Benguela railroad, and its cap-
ture effectively dashes any early hopes on the part
of the National Union to restore traffic along the
line. A large Popular Movement force moving
westward from Luso has been stalled ap-
proximately halfway between Luso and Silva Por-
to by a National Union counterattack.
Somalia, along with other backers of the
Popular Movement-Guinea, Congo, and
Mozambique-hopes to change the Organization
of African Unity's policy from neutrality to en-
dorsement of the Popular Movement regime in
Angola as the legitimate government. An OAU
summit meeting was proposed by Somalia last
month, and it now appears likely to receive ap-
proval of the two thirds of the organization's 46
member states necessary for it to be convened.
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SECRET
Ugandan President Idi Amin, in his capacity
as chairman of the OAU, is seeking to postpone
the summit meeting. Amin announced on
November 27 that Uganda will not play host to the
summit.
Amin would prefer to avoid contention-and
a possible OAU policy shift-by convening the ad
hoc military advisory commission on Angola in-
stead of a summit meeting. It seems unlikely,
however, that Amin could accomplish anything at
a meeting of the commission.
In any case, it appears that the OAU may be
moving away from the effort to mediate and will
focus instead on the issue of outside intervention,
particularly that of South Africa.
The growing publicity about South African
military support for the National Front and the
National Union is becoming a serious political
liability for the two Angolan groups. Continued
publicity of South African activities in Angola
could well convince more African countries to
recognize the Popular Movement. Many African
states are concerned about Soviet involvement in
Angola, but view it as an extension of long-stan-
ding Soviet support for the Popular Movement
during the insurgency against Portugal. Their con-
'No'
UD6da
l
i
ro a uao
;g
cern over the Soviet role is outweighed by their
concern about the South Africans.
The Soviet central press is giving heavy play
to allegations of extensive US military interven-
tion in Angola on behalf of the Popular
Movement's rivals. This may be Moscow's way of
responding to Secretary Kissinger's recent public
warnings that continued Soviet and Cuban sup-
port for the Popular Movement could have
serious consequences for detente.
The Soviet media have concentrated on
replaying charges made by various American and
African journals. Pravda, however, broke stride
earlier this week by running an article which
asserted that US (and NATO) "servicemen," along
with weapons and other military equipment, were
being "rushed" to Angola to reinforce the ranks
of "foreign interventionists" fighting there.
In an apparent effort to further justify Soviet
involvement in Angola, Kremlin propagandists
are continuing to refer to US-Chinese collusion in
the former Portuguese territory. Pravda, for ex-
ample, has speculated that Angola might be high
on the agenda in the talks this week between
President Ford, Secretary Kissinger, and Chinese
leaders in Peking. The Communist Party daily had
earlier charged that the Chinese had approached
the US to suggest "parallel or joint efforts" against
the Soviet-backed Popular Movement.
Soviet commentators are also going to great
lengths to emphasize that detente with the West
in no way precludes Soviet support for national
liberation struggles elsewhere in the world. In an
editorial on the limits of detente, Izvestia on
December 2 said that "some people would like to
have us believe that the process of easing tension
in the world and support for the national libera-
tion struggle are incompatible things. They have
tried to assert this in the past but in vain." The
editorial closed by noting that "the detente
process does not mean-and never has
meant-the freezing of the socio-political status
SECRET
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 Ian Smith and Joshua Nkomo at signing ceremony in Salisbury
RHODESIA: SETTLEMENT TALKS
Rhodesian Prime Minister Ian Smith and
Joshua Nkomo, the leader of a major faction of
the black nationalist African National Council,
this week signed a "declaration of intent" to
begin substantive negotiations on a constitutional
settlement for Rhodesia. The declaration, worked
out by Smith and Nkomo in several private
sessions, states that they will undertake a series of
meetings in Rhodesia to discuss all constitutional
issues and to work for a settlement "acceptable to
all" of the Rhodesian people. Smith and Nkomo
are to meet again next week to plan for the
negotiations.
Under the declaration, the Rhodesian
government agreed to grant immunity from arrest
and freedom to enter and leave the country to all
nationalists named by Nkomo to participate in the
settlement talks. Smith's refusal to grant such im-
munity caused the failure of the Victoria Falls con-
ference last August between the Prime Minister
and a broad coalition of nationalists. Nkomo may
have persuaded Smith to change his position on
immunity by promising not to invite nationalist
leaders who are anathema to the Rhodesian
regime-such as Ndabaningi Sithole-to par-
ticipate in the talks. Both Sithole and Bishop
Muzorewa continue to challenge Nkomo's elec-
tion last September as head of the council and his
right to negotiate with Smith on behalf of the
nationalists. Sithole has already denounced the
Smith-Nkomo declaration and has asserted that
the militant faction he heads will soon resume
guerrilla warfare against the Rhodesian regime.
~k V,
Nkomo reportedly is trying to strengthen his
support by wooing disaffected members of
Sithole's faction who live in Rhodesia and in exile.
He reportedly has had some limited success, even
though he has not indicated whether he will in-
vite any rival nationalist leaders to join in the
settlement talks. Nkomo also has been seeking
support from the four African presidents who
have been trying to arrange a Rhodesian settle-
ment in collaboration with South African Prime
Minister Vorster. Zambian President Kaunda and
Botswanan President Khama apparently favor
Nkomo, but Tanzanian President Nyerere and
Mozambican President Machel have been sym-
pathetic to Sithole and Muzorewa. Nkomo
believes, however, that Nyerere will not oppose
the settlement talks even though Nyerere seems
to feel the negotiations will be fruitless. Nkomo
hopes that Machel will adopt a similar posture.
Settlement talks will be prolonged and dif-
ficult, and could collapse. Both sides will have to
bargain over such tough issues as extending the
voter franchise to more blacks and establishing a
transitional period leading to majority rule.
Nkomo has indicated that he will press for early
majority rule-publicly he has referred to a transi-
tion period of a year-but Smith is unlikely to
agree to such a time frame, which probably would
be opposed by many white Rhodesians. Until
now, Smith has successfully played upon the 25X1
nationalists' disarray to delay talks, and he can be
expected to employ tactics aimed at avoidin a
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p
23
SPANISH SAHARA: RABAT MOVES IN
Morocco is moving rapidly to establish an ad-
ministrative apparatus and a military security
force in northern Spanish Sahara. Rabat is also
seeking UN acquiescence in the recent
Spanish-Moroccan-Mauritanian agreement,
which provides for a phased turnover of the
territory's administration to Rabat and
Nouakchott. Algeria, meanwhile, is continuing its
support for a Saharan independence movement
and is trying to block implementation of the
agreement by lobbying at the UN fora referen-
dum on self-determination.
Morocco's top official in the Sahara, assistant
governor Ahmed Bensouda, has played an active
role since his arrival in the territorial capital of El
Aaiun last week. Numerous Moroccan officials
have traveled to El Aaiun to participate in ad-
ministering the territory, and postal service, air
line connections, and telephone links have been
quickly set up. Morocco's claim that Saharan
views are being taken into account was buttressed
on November 29 when the Saharan territorial
general assembly formally approved the trilateral
agreement and announced its allegiance to King
Hassan.
Last week Hassan publicly acknowledged that
Morocco was conducting "security operations" in
the Sahara. Clashes are continuing in areas of
northern Sahara between Moroccan forces and
elements of the Polisario Front, the
pro-independence Saharan group supported by
Algeria. Polisario spokesmen claim their forces
are fighting in the northeast against a Moroccan
-,Rabat
Morocco
Mauritania
"invasion force" of eight battalions reinforced by
several companies of marines and heliborne
paratroopers. Moroccan troops occupied the
town of Semara on November 27.
Algeria is continuing propaganda attacks
against Morocco. The press and radio are
highlighting claims by Polisario spokesmen of
Moroccan atrocities against civilians in the Sahara.
The media are also charging that Spanish officials
aided in Rabat's take-over of Semara and some
outposts in the northern part of the territory.
At the UN, Algeria and Morocco are suppor-
ting competing proposals for a resolution the
trusteeship committee would submit to the
General Assembly. The Algerian-Tanzanian draft
calls for Madrid to transfer administration of
Spanish Sahara to the UN next February and to
leave its military forces in place under UN control.
The UN would govern the territory for six months,
while a commission consisting of the UN
representatives of the four countries involved in
the dispute would "determine the will of the
people." A draft supported by Morocco would
have the UN in effect acquiesce in the tripartite 25X1
agreement by merely taking note of it. An African
working group is trying to hammer out a com-
promise, so far without success.
Algeria;
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NOW =_LKtt
z?-z5
ISRAEL: REACTION TO UN RESOLUTION
The UN Security Council resolution of
November 30 on the Middle East drew an angry
reaction from Israeli official and public circles.
The resolution, which renewed the mandate of
the UN force on the Golan Heights for another six
months, calls for a debate in January on the Mid-
dle East problem, "including the Palestine
question." A separate statement of understan-
ding, supported by a majority of the council but
opposed by the US, urged participation by the
Palestine Liberation Organization in the debate.
Rejecting the council's linkage of the renewal
of the UN mandate with broader political issues
involving the Palestinians, the Israeli cabinet
denounced the resolution as "likely to disrupt"
progress toward peace. While the cabinet
accepted the extension of the UN mandate, it an-
nounced that it would boycott the January
debate.
Much of the anger and dismay in Israel over
the resolution appeared to be directed not so
much at the Security Council as at the United
States. According to the diplomatic correspon-
dent for the Jerusalem Post, Israeli officials fear
that the US vote in favor of the resolution heralds
further moves by Washington toward accom-
modating the PLO. Other Israeli papers decried
the vote as "capitulation," and some private
citizens characterized the vote in conversations
with a US embassy officer as "a Munich-type
sell-out."
Israeli unhappiness with the vote may force
the government to take greater account of the
sentiments of those opposed to any concessions
on territorial questions. A decision on December
1 by a cabinet committee authorizing establish-
ment of four new settlements on the Golan
Heights was clearly designed to dramatize the
government's firmness. The move, however, also
serves to appease Prime Minister Rabin's
hard-line critics. The government had already
come under pressure from powerful pro-settle-
ment groups to permit increased settlement in
Secretary of the Israeli cabinet reads communique
rejecting the UN resolution
the occupied territories following earlier an-
ti-Israeli UN resolutions, especially the one in ear-
ly November equating Zionism with racism.
The cabinet has long been divided on the
settlement issue. The kibbutz movement affiliated
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with the dominant faction of Rabin's Labor Party
announced its intention last month to sponsor an
additional Golan settlement, as did the kibbutz
movement associated with Labor's leftist coalition
partner, Mapam.
Faced with the task of attempting to placate
the powerful pro-settlement forces while also
seeking to leave open the possibility of peace
negotiations with the Arabs, Rabin has been anx-
ious to keep the settlement question from
becoming a major political issue. By giving in to
the pro-settlement groups on the establishment
of the four settlements on the Golan, the Prime
Minister may hope to ease the pressure for ad-
ditional settlements on the West Bank and in
northern Sinai.
Air strikes earlier this week on fedayeen
camps in northern and southern Sinai, while
probably intended primarily as retaliation for a
fedayeen attack on a Golan settlement late last
month, may have also been a reflection of Israeli
anger over the Securit Council action.
3/
USSR-PALESTINE ARAFAT IN MOSCOW
The USSR sought to use the visit to Moscow
last week of a PLO delegation headed by Yasir
Arafat to stake out a more prominent role in Mid-
dle East diplomacy. The Soviets made little
headway, however, in promoting the proposal
they made on November 9 for reconvening the
Geneva conference.
The communique marking the end of the
visit indicates that Arafat gave little more than lip
service to Moscow's initiative. The Palestinians
seem to be looking to the UN to generate
momentum for their cause, but Moscow is cool to
pursuing Middle East issues in a forum where its
influence will be diluted.
The already slim prospects for Geneva were
further reduced when Moscow indirectly re-
jected a US proposal for a preliminary meeting to
consider Palestinian participation at Geneva. In a
speech on December 2, Soviet Foreign Minister
Gromyko labeled preliminary talks an "evasion"
and said the PLO's participation was "obligatory"
at any meeting or conference on the Middle East.
Gromyko's response marks a continued harden-
ing of the Soviet position on peace talks and is
one more sign that Moscow sees little prospect
for serious negotiations in the near future.
During Arafat's visit, the Soviets apparently
again pressed the PLO to make some move
toward affirming Israel's right to exist. The com-
munique said that a Middle East settlement could
be achieved on the basis of UN resolutions and
the UN charter if Israel withdrew its forces from
occupied Arab territories. This implicit
acknowledgement of Israel's existence within its
1967 borders was sufficiently ambiguous,
however, to leave Arafat considerable room for
maneuver.
Although the communique predictably
knocked Sinai II and castigated "certain quarters"
for undermining Arab unity, it did not criticize
either Sadat or the US by name.
Arafat had no conversations with any official
higher than Foreign Minister Gromyko and party
secretary Ponomarev, and the Soviets continue to
withhold formal endorsement of the PLO as the
sole legitimate representative of the Palestinians.
As a result, Moscow is able to maneuver among
different fedayeen factions, and exercise some
leverage over Arafat.
The situation in Lebanon and Soviet arms
supplies to the fedayeen were undoubtedly dis-
cussed but were not mentioned in the com-
munique. Three fedayeen leaders with military
responsibilities went to Moscow with Arafat,
suggesting that the Palestinians intended to press
given to Lebanese leftists.
for additional arms supplies to replace weapons
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President Franjiyah
LEBANON: QUALIFIED OPTIMISM
A reconciliation between President Franjiyah
and Prime Minister Karami last weekend and their
joint decision to bring major political groups into
the cabinet have given the Lebanese some hope
of easing the country's civil strife. Optimism over
the government's new initiative was qualified,
however, by renewed fighting in cities north and
east of Beirut and by heavy Israeli air strikes on
Palestinian camps in Lebanon.
In back-to-back speeches televised last Satur-
day, Karami and Franjiyah joined in an appeal for
national unity and public support for a govern-
ment program to initiate political reform-the
first step of which is to be expansion of the
government to include all of the country's main
political factions. Discord between the Muslim
Prime Minister and the Christian President has in
many respects mirrored the bitter antagonisms
underlying Lebanon's turmoil; the unusual show
of unity between the two consequently has given
an important boost to public morale.
The reconciliation will make Karami's task of
putting together a more representative govern-
ment easier. However, he still faces serious
resistance from Socialist leader Kama] Jumblatt
and other Muslim leftists who believe an enlarged
cabinet will work to the advantage of the
Christians.
Expansion of the cabinet would reduce the
importance of the national dialogue committee,
in which Lebanese leftists are overrepresented.
The Christians would also have a better chance to
delay or at least set the terms of any agreement on
political changes that might erode their dominant
position.
Jumblatt or someone representing him will
have to be included in a new government if it is
to be at all effective. Jumblatt reportedly is back-
ing down from his refusal to be represented in a
government that includes the Christian Phalanges
Party, but he apparently is still holding out for
guarantees that adjustments favoring Muslims will
be made in the political system.
Karami is moving as quickly as he can to put
together an acceptable cabinet, but his effort may
drag on for some time. Renewed tensions around
Tripoli and Zagharta and fighting in Zahlah will in-
crease the reluctance of leaders of warring fac-
tions to cooperate with him. A flareup in Zahlah
triggered the collapse of the cease-fire last
August. Although this time, security forces have
moved to contain the fighting, it nevertheless
could again threaten the relative calm in Beirut.
The uncertain political and security situation
has been further complicated by heavy Israeli air
strikes on December 2 against several Palestinian
camps in northern and southern Lebanon. The at-
tacks were the first in about three months and
were the farthest north that the Israelis have
bombed in nearly three years. According to US
officials in Beirut, well over 100 people are feared
dead, many of whom were apparently civilian
noncombatants.
The raids, by shifting attention to the Israeli
challenge, have stalled efforts by the Lebanese
army and Palestinian security forces to bring
radical elements under control. The government
has called for a special LIN Security Council ses-
sion to discuss the raids, a departure from
Lebanon's usual practice of simply issuing formal
complaints against the Israelis.
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OPEC COUNTRIES: IMPORT DEVELOPMENTS
Recent data indicate that, overall, OPEC im-
ports have leveled off since June. The food seg-
ment, however, which constitutes about 10 per-
cent of the total, will continue to grow about 15
percent a year and will have an increasing impact
on world food markets.
Merchandise Imports Level Off
OPEC imports, which totaled $28 billion in
the first half of 1975, compared with $11 billion in
the second half of 1973, appear to have leveled off
in the third quarter at approximately $15 billion.
Fragmentary data indicate that Saudi Arabia was
the only country whose imports continued to in-
crease rapidly in the third quarter. The imports of
Iran, Nigeria, and Kuwait grew at only a fraction
of previous rates, while imports of the remaining
OPEC countries declined. Port congestion and
emerging financial constraints in some countries
were largely responsible for the lack of growth in
the third quarter; these factors will continue to
impede imports in the fourth quarter. The slow-
down may also be partly seasonal. We expect
OPEC imports to total $56 to $58 billion for the
year, up 60 percent from 1974.
OPEC countries have increased purchases of
foreign goods at a dizzy pace since the oil price
hikes of 1973-74. The rise through mid-1975 was
fastest-annual rates of 130 percent or more-in
Iran, Iraq, and Nigeria, where the availability of
foreign exchange had previously been a con-
straint on imports. Saudi Arabia's ambitious
development plans also stimulated import growth
at an annual rate above 100 percent. Venezuela
OPEC: Imports from OECD Countries
Kuwait Ecuador
4% 11 2%
Iran
aatar`UAE - \
Venezuela
13%
3D'% SVt~di indorses'
f Arabia'/ Algeria \ 11%
101A/ 11% \
OPEC Imports
zadcr
Kuwait
Qatar-UAE \ {
Libya
;nn
23%
11 111 IV
11-474
11 111
1975 ( Est.)
Saudi 9%
Venezuela Arabia
9% 9% ?,
23 Billion US$
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and Indonesia, where oil production is smaller
relative to the size of the economy, experienced
the lowest rates of import growth-about 50 per-
cent annually.
In a number of cases the slowdown probably
reflects the end of the initial spending spree as
import bills approach export earnings. Indonesia
imposed import controls in July. Algeria and
Ecuador are running current account deficits, and
Venezuela's surplus has largely evaporated.
Further import growth in all these countries will
be limited unless they choose to borrow or cut
into reserves.
In other cases the imports have been held
down because of administrative and transporta-
tion bottlenecks. Port restrictions in Iran, Nigeria,
and Iraq and congestion in Saudi Arabia make a
resumption of rapid OPEC import growth in the
fourth quarter unlikely. Without these four coun-
tries, which account for 40 percent of OPEC
purchases, aggregate OPEC imports would have
declined in the third quarter. Through September
the delays in unloading resulted more in a
lengthening of the queue than in a reduction of
shipments to the four. We estimate that, at best,
overall OPEC imports will increase only slightly in
the fourth quarter.
Food Purchases Grow
Rapidly expanding demand, lagging
domestic agricultural production, and enormous
oil wealth are making OPEC members a much
more important force in international food
markets. The 15-percent annual growth in both
food and grain imports experienced in the early
1970s seems likely to continue for the next few
years.
We project OPEC food imports in 1978 at
about $10 billion at 1974 prices, more than double
the 1974 level. OPEC countries purchased one
third of their food imports from the US in 1974,
and we expect this share to increase by 1978. If
consumer demand were the sole criterion, im-
ports would increase even faster than projected.
Physical and financial constraints in certain coun-
tries almost certainly will limit growth.
We estimate that OPEC imports of grain will
reach 17 million tons in 1978, compared with
nearly 10 million tons in 1974. Last year one fourth
of world rice exports and one tenth of wheat ex-
ports went to OPEC countries, and these two
grains will constitute the bulk of new demand.
Imports of processed foods, including meat, dairy
products, and bakery goods, will boom because
OPEC countries will not be able to expand
domestic output of these goods sufficiently in the
short run. Iran and Iraq will increase their food
imports faster than will other OPEC countries, ac-
counting for nearly half of OPEC grain imports by
1978.
Agricultural production within OPEC can be
expected to increase only about 3 percent a year.
Imports will account for an increasing share of
OPEC consumption. 25X1
BANGLADESH-INDIA: UNEASE CONTINUES
Some Bangladesh leaders, increasingly fearful
of the possibility of Indian military intervention in
the aftermath of the wounding of the Indian high
commissioner in Dacca last week, have been try-
ing to ease tensions with New Delhi. Their efforts
have hit some snags, both at home and abroad.
New Delhi is still deeply disturbed over the
unstable situation in Bangladesh, but apparently
has not yet decided to intervene militarily.
SECRET
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The wounding of the high commissioner ap-
parently forced Dacca to face up to its weak posi-
tion vis-a-vis India. Since that event, Bengalee
leaders have generally sought to avoid action
which would antagonize India. The Dacca
government has, for example, kept the
Bangladesh press generally free of stories that
would aggravate New Delhi. Members of the
martial law administration have ceased making
speeches that, at least implicitly, were critical of
India. The government has also attempted to ease
the concern of the Hindu community in
Bangladesh by increasing police protection for
that minority. At the same time, however, Dacca is
trying to line up diplomatic support among
several friendly countries including Pakistan,
China, and some Islamic states.
Evidence in Dacca supports the Bangladesh
government's contention that the Indian high
commissioner was shot during an attempt to kid-
nap him by members of a Bangladesh radical op-
position party. The plan apparently called for the
Indian high commissioner to be held until
the government released party leaders recently
jailed.
Although Indian press coverage of events in
Bangladesh has dropped off over the past week,
newspapers continue to feature pessimistic ac-
counts of the Bangladesh situation. Indian of-
ficials also are still voicing worry over the safety of
Bangladesh's Hindu community and have warned
they would be forced to intervene if communal
violence flared and a Hindu exodus into India
began. They have conceded that so far there has
been no flight of Hindus, but the community is
reported to be fearful, especially following the
wounding of the high commissioner. Hindu as
well as Indian apprehensions could be fueled
even further by leaflets circulating in Dacca an-
nouncing a pro-Muslim, anti-Indian rally this
weekend sponsored by a veteran radical opposi-
In the absence of communal violence, of-
ficials in New Delhi continue to deny that India is
about to intervene in Bangladesh. The Indian
commander of forces in eastern India maintains
that he has not moved any additional troops to
the border-as the Bengalees have alleged-and
that he is not preparing for a possible move into
Bangladesh. The commander cautioned,
however, that if India did decide to intervene, it
"would do it quickly and get out quickly."
IRAN-USSR: EXPANDING ECONOMIC TIES
Soviet-Iranian economic relations are enter-
ing a new phase as Tehran, with its increased
wealth, is shedding its client status. A recent
agreement calls for cooperative efforts to under-
take projects in both countries, with the cost es-
timated as high as $3 billion. Tehran has also
become an aid donor, having recently agreed in
principle to provide credits for a paper complex
in the USSR.
The changing relationship is evolving from
more than a decade of mutually beneficial
arrangements made possible by their common
border. Beginning with a border dam agreement
in 1963, Soviet aid has expanded to about $800
million and includes a steel mill, a gas pipeline,
and smaller industrial and agro-industrial
facilities.
The hydroelectric power and water for irriga-
tion from the dam are allocated equally to Iran
and the USSR. The pipeline from Iranian gas fields
to the Soviet border enables Iran to sell a former
waste product to service its economic and military
debt to the USSR. Moscow uses the gas to meet
the growing energy requirements in Azer-
baidzhan and the Transcaucasus, while saving the
costs of transporting gas from distant fields. The
arrangement also frees Soviet gas to be sold at a
higher price to Western Europe. The steel mill was
provided by the Soviets at a time when no other
country was willing to finance it.
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Soviet Aid Projects In Iran
Projects contemplated under the 15-year
cooperation agreement signed in 1972 are a
further expression of their mutual economic in-
terests. A second border dam and gas pipeline are
planned, and capacity at the. steel mill is to be
nearly tripled by 1978. September protocols
provide for electrifying a 90-mile rail line from
Tabriz in Iran tojolfaon the Soviet border and for
studies to build a 100-mile railroad from Mashhad
in Iran toTedzhen in the USSR. Negotiations are in
progress for another 200-mile rail line from Qaz-
vin to Astara on the Soviet border. These
transport links will help accommodate the grow-
ing Soviet-Iranian trade as well as the increasing
amount of European goods being shipped to Iran
through the USSR.
There is still $250 to $300 million in aid out-
standing under old credits, enough to cover some
of these new projects. Moscow has usually carried
through with its aid pledges and will be willing to
accept payment in natural gas. Some projects will
likely be financed by Iran or jointly, but the
Soviets will continue to provide the equipment
and technical assistance.
Tehran relies on the West for all sophisticated
weapons, but it has purchased $825 million worth
of Soviet military support equipment and arms
since 1967 for its ground forces. The ability to pay
for military goods with natural gas was an impor-
tant factor in Iran's decision to buy this equip-
ment.
Rising trade between the two countries has
been the consistent by-product of the expanding
Soviet aid program. By 1973, trade had increased
to eight times the 1962 level; total trade shot up
another 75 percent in 1974. For the first time in
three years, the USSR ran a trade surplus-$47
million-as increased exports of machinery and
equipment, building materials,, chemicals, and
edible oils outran expanding imports.
Trade is small, however, in relation to each
country's total foreign trade. It is less than 3 per-
cent of both Soviet exports and imports and 1 per-
cent and 5 percent of Iran's. Iran in 1974,
nevertheless, was the USSR's third largest trading
partner in the Third World.
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PORTUGAL: TIGHTENING THE GRIP
Anti-Communists in the Portuguese govern-
ment are continuing efforts to consolidate their
power in the wake of the unsuccessful mutiny by
leftist paratroops on November 25. A diminished
threat from the left does not necessarily portend
political stability for Portugal, however, since
political differences within the anti-Communist
ranks are already beginning to surface and
promise to create new frictions.
After mopping up the last vestiges of
rebellion with little difficulty, the victorious an-
ti-Communists have moved with surprising speed
to bring strongholds of left-wing influence under
government control. In the first stage of the
wideranging crackdown, leftist officers and
soldiers involved in the mutiny were rounded up
and shipped to a prison in the conservative north,
where the possibility of leftist crowds marching to
demand their release is greatly reduced. A purge
of pro-Communists in the military who were not
directly involved in the rebellion is also under
way in an effort to remove troublesome elements
from the military leadership. Security chief
General Carvalho, Army Chief of Staff General
Fabiao, and Admiral Rosa Coutinho, all of whom
anti-Communists had long sought to remove,
were among the first to go.
The pro-Communist media, largely responsi-
ble for stirring up political emotions and hard
feelings against the Azevedo government, were
another prime target for the anti-Communist
clean-up. The cabinet on December 2 completed
Armored car stands in front of Air Police barracks after rebellious paratroopers occupied air bases around Lisbon
Paae 19 WEEKLY SUMMARY na,- F 7Fi
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the nationalization of the television network and
nationalized most privately owned radio stations,
bringing them all under a single government-
controlled corporation. Eight newspapers in
which the government has a controlling interest
as the result of bank nationalizations last
spring-most of them pro-Communist-have
been suspended until new managers and editorial
boards are appointed.
The government is determined to reassert its
predominance in the economic sector as well and
intends to impose austerity measures in an effort
to stave off further deterioration. Earlier efforts
had been effectively sabotaged by Com-
munist-led labor demonstrations in which
workers demanded and usually received higher
wages. All contract negotiations have been frozen
until the end of the year, when the government
hopes to have enough strength to impose its will.
Communist strength in the military and the
media has been reduced, but the party retains an
effective organization as well as substantial sup-
port within many labor unions and among
agricultural workers in the south. These assets will
undoubtedly be used in an effort to regain lost in-
fluence, but for now the party is being forced to
ease up on its attacks against the Azevedo govern-
ment and to assume a conciliatory stance in the
hope of retaining its position in the present
cabinet. Party communiques have denied any
Communist role in the paratrooper rebellion, but
it is generally accepted that Communist efforts to
weaken the Azevedo government created the
conditions for the mutiny.
The Socialists and Popular Democrats are
seeking to capitalize on the retreat of the Com-
munists. Socialist leader Soares has insisted that
the Communists repudiate the uprising and affirm
their loyalty to the Azevedo government as the
price for remaining in the cabinet. The Popular
Democrats-bitterly opposed to the Com-
munists-are taking a harder line and want the
Communists out of the government altogether.
Differences are also surfacing between the
democratic political parties who want to end the
military's dominance of Portuguese politics and
the officers now in power, like Foreign Minister
Antunes, who apparently hope to continue to
lead Portugal for some time. The Socialists and
Popular Democrats by no means see eye to eye on
these issues, however, and their differences are
coming increasingly into the open. Nor is the
military immune to divisions on these issues. Now
that the immediate threat from the left has been
all but eliminated, old differences are beginning
to resurface. More conservative officers are
beginning to question the Armed Forces
Movement's commitment to socialism as well as
its continuing role in politics.
These new frictions created by the diverging
interests within the ranks of the anti-Communists
will ensure that factional struggles for political
power will continue for some time, and are likely
to aid the Communists in their effort to make a
comeback. 25X1
SPAIN: JUAN CARLOS MANEUVERS
King Juan Carlos' initial moves appear to be
part of an effort to gain more room in which to
maneuver, but he is incurring some disapproval,
especially among leftists.
The King won the first round in the fight to
get his own men in the government with his ap-
pointment this week of Torcuato Fer-
nandez-Miranda as president of the Cortes. Fer-
nandez-Miranda also automatically becomes
president of the Council of the Realm, the in-
fluential body that plays a major role in top
government appointments. The council is said to
have followed the King's wishes when Fer-
nandez-Miranda was included among the three
nominees presented to the King.
A struggle reportedly took place in the coun-
cil where militant rightists pushed to renominate
the more conservative outgoing president
Rodriguez de Valcarcel. Leftists have also express-
ed disapproval because of Fernandez-Miranda's
association with Franco's National Movement, the
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only legal political party. He served as minister
secretary-general of the Movement and deput
prime minister under the late Carrero Blanco.
The limited pardon issued by Juan Carlos on
November 26 appears to have done little to heal
political wounds. Many leftists reacted angrily to
the restrictions on the pardon and demonstrated
for a general amnesty. The decree has come un-
der heavy criticism for its vagueness, and its scope
will depend on how the Justice Ministry interprets
the law. Opposition lawyers fear the pardon will
free more common criminals than political
prisoners.
To show its good faith, the government im-
mediately released several hundred prisoners, in-
cluding some jailed for political offenses. Among
these was Marcelino Camacho, a top leader of the
Communist-dominated Workers' Commissions.
Communist Party leader Santiago Carrillo
may soon provide a test of the government's
political tolerance. He announced on November
30 that he intended to return to Spain soon,
regardless of whether he had the government's
permission. According to press reports, the
Spanish border police have been alerted to pre-
vent his entry, a move that is likely to provoke
more leftist anger.
The Communist Party reportedly is concern-
ed about what it views as an effort by the govern-
ment to isolate it from the rest of the left and is
trying to stir up broad opposition to the regime.
The Communists have had little success so far,
and the Workers' Commissions reportedly
backtracked on their earlier call for a general
strike within a week or ten days after Franco's
death and will wait until conditions are more
favorable.
In any case, Fernandez-Miranda is expected
to be responsive to the King. They have retained
close ties since the days when Fernandez-Miran-
da, then professor of law, was Juan Carlos' tutor in
political theory. He will play an important role in
promoting the King's choice for prime minister,
should Juan Carlos decide to replace Carlos Arias.
The King's next move is expected to be a
cabinet shuffle that would bring new faces into
the government, including some politicians more
acceptable to the opposition.
In the meantime, the Communist Party and
the Workers' Commissions plan to instigate a
series of local "days of struggle" to prepare for a
general strike. The first of these localized strikes is
planned for early December and will be limited to
construction and metal workers in the Madrid
area. The strikes are ostensibly intended to
protest the government's recently announced
decision to limit wage increases to no more than 3
percent above the annual increase in the official
cost-of-living index.
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EC: THE ROME SUMMIT
The heads of government of the EC Nine,
who convened in Rome on December 1-2 for
their triannual European Council, resolved a
critical dispute with Britain that could spell a net
advantage for community cohesion once the dust
settles from the long and sometimes bitter ex-
changes at the summit. The compromise with the
UK in effect marked progress towards a common
energy policy that has been stalled for years.
Decisions were also reached which signal a
long-overdue improvement in the management
of EC finances and potentially enhance
democratic control of community institutions.
The most significant development was the
ten-hour confrontation with Prime Minister
Wilson over London's demand for its own
seat-in addition to the one allocated to the
EC-at the mid-December Conference on Inter-
Major Elements of the Compromise
Britain dropped its demand for a separate
seat. The EC will be represented by the Presidents
of the EC Council and the Commission. British
Foreign Minister Callaghan will also be a part of
the delegation, as will an official from Luxem-
bourg, which assumes the EC presidency at the
end of this month. The summit agreement
provides that statements by "a member of the
community delegation" must sta within the
community mandate.
In a notable French concession, London's
partners apparently accepted the concept of a
minimum floor price for oil. The leaders agreed to
"decide as soon as possible on appropriate
mechanisms to protect and ensure the develop-
ment of alternative sources of community
energy." According to Wilson, this means that the
principle of a minimum safeguard price was
accepted. If the level is set high enough, it would
ensure the profitability of North Sea oil should
world prices fall. The Belgian and German leaders
told the press that a safeguard price of $7 a barrel
may be agreed upon.
Paris also made an important concession to
Britain and to its other EC partners in agreeing to
a scheme for community oil-sharing in an
emergency, along the lines of the plan adopted
by the International Energy Agency. Although
France does not intend to join the agency, its
acceptance of an oil-sharing scheme-although
under EC aegis-obviously brings it more in line
with the agency's work programs.
Commission proposals for a common energy
policy are expected to be submitted to an EC
Energy Council next month. The community's
guidelines for the conference are at present ex-
cessively general, reflecting the inability of the
members to reach a consensus on key issues. The
summit agreements may now aid commission ef-
forts to put together a package which will
facilitate cooperation regarding energy
developments in the community.
Although energy-related matters dominated
the summit, the Nine (leaders addressed other
substantive issues.
It was agreed, in addition, to hold direct elec-
tions to the European Parliament-as provided by
the Rome Treaties-in the summer of 1978. The
date was set despite British and Danish pleas that
earned them a one-time exemption; they
nevertheless must conform to community prac-
tice for the 1982 elections and may in fact now
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come under pressure to adhere to the earlier
date. Direct elections are expected to provide a
strong impetus for a meaningful increase in
parliament's role.
Agreement was reached on introducing a un-
iform EC passport in 1978. This has mainly a sym-
bolic value in that it makes visible some progress
toward "community citizenship."
The leaders, however, agreed upon several
measures intended at least to partially placate
German and British concerns over EC spending
and overall problems of financial management,
although the Germans withdrew a demand for
further budget reductions. The commission was
charged with working out by January 1977 the
specific terms of reference for a budget com-
missar within the commission. The European
Parliament is to be asked to consider establishing
a committee on public expenditure, and the Nine
will press ratification of a treaty which establishes
a European Court of Auditors.
The Nine, following a British suggestion, also
called for an early EC Council of Interior Ministers
to coordinate measures to counter terrorism and
hijackings.
French President Giscard reported on the
Rambouillet meeting, affirming that decisions
were not reached which might impinge on com-
munity competence. Assurances were given that a
similar meeting would not again occur without
advance preparation of a community position.
There was an exchange of views on economic
and social conditions in the EC countries. The
need to coordinate corrective measures was
reiterated, but no specific steps were proposed.
Despite earlier intentions, the heads of
government barely touched upon international
political questions because of the inordinate
amount of time spent on the British representa-
tion issue.
The next European Council
March 8-9 in Luxembourg.
FINLAND: BACK TO SQUARE ONE
In July an exasperated President Kekkonen
gave his permission to the leaders of the deeply
divided, immobilized four-party coalition to
resign. Last week, after five months had elapsed
during which there was a parliamentary election
and various coalition formulas were explored and
rejected, he was compelled to order the same
four, plus the Communists, to form a "crisis"
government.
The parliamentary election on September
21-22 solved little if anything. The three
middle-of-the-road parties picked up just enough
seats, mainly at Social Democratic expense, to
outweigh the leftist bloc. The Social Democrats,
however, remain the largest of the ten parties in
the 200-seat parliament.
Following the election, efforts to put
together a broad based coalition that would be
able to deal with Finland's grave economic
problems were unsuccessful. Neither the
politicians nor the problems had changed, and
the parties continued to disagree on whether the
priority task should be to combat unemployment,
reduce the $1.8-billion foreign trade deficit, or
dampen the 17.5-percent inflation rate.
Kekkonen, on November 25, asked the
caretaker government to remain indefinitely.
Within 48 hours he reversed himself and in a
television address rebuked the party leaders for
failing the people. In an unprecedented step, he
"ordered" the three centrist parties-the Liberal,
the Swedish Peoples, and the Center-to join
with the Social Democrats and the Communist-
dominated Finnish Peoples Democratic League to
form a coalition with former provincial governor
Martti Miettunen as prime minister. The new
government's only program, he said, should be to
assure employment, and the only issue to
negotiate was the distribution of portfolios. As it
has worked out, Miettunen's 18-man cabinet is
evenly divided, but his vote gives the
middle-of-the-road parties the edge on con-
troversial votes.
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The prospects for an effective and stable
government are not bright. The biggest question
mark is the reliability of the Communists, who are
deeply divided between Stalinist and reformist
factions. Only the latter wing is -participating -in
the.coalition and will control the politically sen-
sitive ministries of housing and labor. Should in-
ternal bickering force the Communists to
withdraw, as happened in 1970, the Social
Democrats would find their position more dif-
ficult, exposed to attacks from the left as well as
the right.
The next eight weeks will be crucial for the
new government. The coalition is trying to
elaborate a program, beginning with reordering
the draft budget and lining up union and
employer support to pressure the Bank of Finland
to ease its tight credit policy. Communist par-
ticipation will not lead to any change in Finnish
foreign or security policy, but the effort to
hammer out compromises on domestic policy will
bring to the fore again the differences that
plagued inter-party negotiations this fall.
Kekkonen's decision to intervene so directly last
week suggests, however, he will continue to
oversee closely the new coalition.
ICELAND: THE NATO LINK
Iceland's efforts to establish a link between a
settlement of the cod war and continued
membership in NATO generated new tensions
last week in the Reykjavik government's relations
with its North Atlantic allies. During an earlier
outbreak of the cod war-in 1972-73-Iceland
resorted to similar threats to withdraw from
NATO and dismantle the US-manned Keflavik
base as part of its strategy of attracting world
attention to the dispute with the UK.
At a news conference on November 28,
Foreign Minister Agustsson declared that Iceland
would withdraw from the alliance and dismantle
the. Keflavik base unless the UK removes its
frigates from Iceland's 200-mile fishing zone;
Agustsson hinted that he would not attend the
December 11-12 NATO ministerial meeting in
Brussels and suggested there was a strong
possibility that Iceland's permanent delegation
would be withdrawn. The foreign minister also
threatened to take the fisheries dispute to NATO
or to the UN Security Council.
Later in the week, Prime Minister
Hallgrimsson told the US ambassador in Reykjavik
that Agustsson had agreed to attend the NATO
ministerial meeting as a result of strong prodding
by the cabinet. Hallgrimsson also said that there
was little sentiment within the cabinet to
withdraw from NATO or dismantle the Keflavik
base. Iceland plans, however, to send letters to
NATO and the UN outlining Iceland's position in
the fisheries dispute.
The coalition is not under overwhelming
public pressure at this time to act tough with its
other NATO allies, as witness the smooth passage
by parliament of a controversial fishing pact with
West Germany last week. An anti-British
demonstration, furthermore, attracted only a
small crowd, and its mood was more festive than
angry.
Prospects for a speedy resumption of talks
appear dim. The talks collapsed last month after
the British and the Icelanders were unable to
agree on the size of the UK's annual catch. Lon-
don wants an annual catch of 110,000 tons, and
Reykjavik has refused to budge beyond 65,000
tons. Reykjavik has announced that negotiations
cannot resume unless London withdraws its
frigates and replaces chief British negotiator Roy
Hattersley. Meanwhile, Foreign Minister
Agustsson plans to seek NATO Secretary General
Luns' assistance to get the talks resumed.
There is a danger that Icelandic politicians,
who are prone to engage in hard rhetoric, may
find it difficult to disavow some of their own rash
statements. If prospects for settling the dispute re-
main dim and there are incidents at sea in the
coming weeks, the politicians will face growing
public pressure to follow through on their threats.
Many Icelanders insist that the Keflavik base must
contribute to the defense of Iceland and that
NATO's reluctance to intervene in the dispute
proves that the base does not serve national in-
terests. 25X1
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TOP SOVIET BODIES MEET
The Soviet leadership this week adopted a stan-
dard agenda for the party congress in February
and announced sharply lower goals in next year's
economic plan. Evident economic difficulties will
probably complicate completion of the five-year
economic plan and lend a sober tone to policy
discussion before and at the congress.
The party Central Committee, meeting on
December 1, announced that General Secretary
Brezhnev will deliver the main report at the con-
gress, which opens on February 24. Premier
Kosygin will speak on the five-year plan (1976-80).
The Central Committee did not announce an
agenda last April when it set a date for the con-
gress, perhaps because of uncertainty over topics
and speakers. Listing Brezhnev as main reporter
now indicates that, health permitting, he will be
in office through the congress. It does not carry
implications for the period that follows.
Brezhnev made his customary address to the
plenum, which approved the 1976 plan and
budget before the Supreme Soviet took them up
last Tuesday. Speakers at the Supreme Soviet ses-
sion projected an increase in industrial produc-
tion during 1976 of 4.3 percent, the lowest
planned rate since World War II, Industrial
production has grown by an average of more than
6 percent a year since 1971.
Nikolay Baybakov, Moscow's chief economic
planner, ascribed this unusually low forecast to
anticipated shortages of agricultural raw materials
resulting from the poor harvest this year and to
delays in completing new production facilities.
Baybakov did not provide the customary official
estimate of this year's harvest. Consumer goods
and services will bear the brunt of the reduced in-
dustrial growth next year, although heavy in-
dustry will be cut back too.
Baybakov said the USSR's national income
this year will be up by 4 percent; the plans had
called for 6.5 percent. Baybakov foresees national
income growing by 5.4 percent next year, a goal
that is probably based in large part on recovery in
the agricultural sector.
Nikolay Baybakov
In his budget report, Finance Minister Gar-
buzov gave a figure for projected defense spen-
ding-117.4 billion rubles-that was about the
same as in recent years. This figure has little
meaning in terms of the size of Soviet defense
programs, however, and, in fact, does not jibe
with the trend of observed Soviet defense ac-
tivities. From 1970 to 1975, when the announced
expenditures were never more than 17.9 billion
rubles, there were major increases in military
procurement programs, growth in military man-
power, and two large raises in military pay.
The economy's poor performance will make
for tough choices in deciding on allocations and
major programs in the five-year plan. The goals
for next year's plan suggest that the leadership
will adopt a sober approach in its planning and its
promises for the five-year period. With growth
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fir` SECRET
prospects reduced, the regime will probably try to
focus attention on the effort to improve the quali-
ty of goods produced. Brezhnev has already call-
ed this the hallmark of the new plan. The net
effect of the new plan and budget will
nevertheless be to de-emphasize the consumer
program associated with Brezhnev.
Economic problems are probably also
hampering work on a fifteen-year economic plan
(1976-90). In 1974, Brezhhev promised that this
visionary prospectus would be taken up at the
congress. This year the leadership has avoided
comment on the program, and the congress
agenda does not mention it.
1 ':5-1- 7Y
6 7-
USSR-YUGOSLAVIA: MENDING WALLS
Apparently prompted by new Yugoslav charges
of Soviet involvement in the cominformist affair,
Moscow last week broke its long public silence on
the subject. Moscow's message was clear: it
neither supports nor condones the activities of
these anti-Tito groups, and it wants better
relations with Yugoslavia. Whether the Soviet
pledge of goodwill will be successful is
questionable. Belgrade undoubtedly views it
skeptically.
An authoritative article in Pravda on
November 27 dismissed the cominformists as "in-
dividual renegades" who "demagogically try to
portray themselves as the 'most orthodox' cham-
pions of socialism" and "represent nobody but
themselves." Pravda laid the blame for the strain
in Yugoslav-Soviet relations on the "malicious"
insinuations and "dirty provocations of the
West.
In concurrent commentaries on the Yugoslav
national day, the Soviets went to great lengths to
praise the role of the Yugoslav communists in the
country's liberation 30 years ago and in building
socialism today. Earlier this year, the Soviets had
deeply offended the Yugoslavs when Defense
Minister Grechko implied that Yugoslavia had
been liberated by the Red Army.
Both the Pravda statement and the national
day commentaries stressed the importance of the
meetings between Tito and Brezhnev, perhaps to
make the point that relations between the two
countries should be judged on what happens in
official channels, not on aberrations like the com-
informist affair. The almost simultaneous an-
nouncement that Foreign Minister Minic would
go to Moscow on December 8 was probably in-
tended to underline the normality of bilateral
relations.
The early reaction out of Belgrade has been
moderately positive. It is unlikely, however, that
the Soviets will get the Yugoslavs to reduce their
anti-cominformist campaign. For one thing, Prav-
da's demurral on the cominformists is false, as
both sides know, and for another, Moscow is not
about to give up the ideological struggle that has
been going on for over a generation. Thus, in its
Yugoslav day commentaries, the Soviets still used
terms such as "socialist internationalism" to
describe the proper basis of Yugoslav-Soviet
relations. The term is shorthand for Moscow's
pretensions to ideological leadership of the com-
25X1
D.,.-.., I I %A/CCVI V CI IRAKAADV r',... ":
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POLAND: ON THE EVE OF THE CONGRESS
Gierek's policies will be enthusiastically en-
dorsed at the seventh congress of the Polish com-
munist party, which opens on Monday. Not far
below the surface, however, there is considerable
concern that the volatile and demanding popula-
tion is still not satisfied and that it is prepared to
express its unhappiness in word and deed.
Since 1971 party chief Gierek has moved the
Polish economy into high gear. The goals of the
current five-year plan-already raised twice-will
for the most part be significantly exceeded. Much
of this advance is due to Gierek's successful cam-
paign to use Western credits and technology to
modernize the economy.
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 The Polish consumer has fared well. Average
real wages have increased 40 percent since 1971,
and both the quantity and the quality of con-
sumer goods have improved dramatically. The
average citizen, however, has tasted the good life
and is prone to forget how much has changed
since 1971. He has become increasingly concern-
ed about inflation and about the failure of supply
to meet the rising demand for many consumer
items, particularly meat. Consequently, the
regime this year has had to contend with moun-
ting public tension.
The population believes, and with good
reason, that the rapid progress they have ex-
perienced will be slowed down by various austeri-
ty measures, including widespread price in-
creases.
For the longer term, the Gierek regime will
find it increasingly difficult to continue the recent
pace of economic growth. Warsaw will have to
search harder and pay more for essential Western
credits and technology. Soviet raw materials
deliveries will fall further behind in meeting
Polish needs and will be more costly. Wage in-
creases will have to be more closely tied to in-
creases in productivity, and consumer prices are
sure to go up. Gierek's political tenure will de-
pend on how he manages the difficult problems
without alienating the Polish population.
We do not foresee, however, any wholesale
changes within the leadership or in its policies in
the near future. There are undoubtedly policy
disputes, but there is no obvious challenger to
Gierek. He still probably has considerable pop-
ular support and appears to have the party
bureaucracy firmly in hand as a result of his
reorganization of the administrative bureaucracy
earlier this year.
Some personnel changes are expected at the
congress. The former number-two man in the
party, Franciszek Szlachcic, who was demoted last
year for excessive nationalism and personal ambi-
tion, will leave the Politburo. The ailing Miec-
zyslaw Jagielski has partially recovered from a
heart attack and will reportedly remain. The new
planning commission head and Gierek associate,
Tadeusz Wrzaszczyk, is a likely candidate for the
Politburo.
The congress itself will last five days. Gierek
will kick it off with a nationally televised speech
that will highlight past accomplishments. On
foreign policy, he will recite Poland's full
allegiance to the Soviet Union. Prime Minister
Jaroszewicz will outline the 1976-80 five-year
plan.
Soviet party first secretary Brezhnev will
witness the Polish pep rally along with all of the
East Euro can leaders except Roma '
Ceausescu.
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Students demonstrating in Vientiane last week for end of the coalition government
LAOS: COMPLETING THE REVOLUTION
Some seven months after they gained control
of the government in Vientiane, the communists
have dropped the coalition facade, ousting Prime
Minister Souvanna Phouma and King Savang, and
installing a new communist government.
Vientiane Radio on December 3 announced
that a two-day "National Congress of People's
Representatives" had accepted the abdication of
King Savang and dissolved the coalition. The
monarchy was abolished and Laos named a
people's democratic republic. On the next day,
Souphanouvong, the nominal head of the Pathet
Lao and Souvanna's half brother, was named
President. This post almost certainly will be only
ceremonial, because Kaysone Phomvihan, the
secretary general of the Lao communist party, has
taken the position of prime minister. The remain-
ing members of the 38-member cabinet are also
communists. Most spent the last 20 years at the
communist headquarters in northeastern Laos,
and many are little known even in their own
country.
Souphanouvong has appointed former King
Savang and Souvanna Phouma to the newly
created posts of supreme adviser to the president
and adviser to the government respectively. The
communists, however, almost certainly have no
intention of listening to advice from either Savang
or Souvanna. The posts were probably created to
provide a pretext for denying permission to either
to leave the country. The Pathet Lao leaders may
calculate that these appointments will make the
other changes more palatable to the Lao people.
Most of the non-communist former cabinet
ministers and other senior government officials
have already been flown to the communist
headquarters near Sam Neua, supposedly to at-
tend meetings to ratify the changes in govern-
ment. It is likely that they will be detained there
indefinitely, joining other former ranking
politicians and military officers in "reindoc-
trination" sessions.
Souvanna and his non-communist colleagues
had expected to remain in office until the com-
pletion of national elections next April. The com-
munists, however, apparently decided that they
have neutralized all opposition and can operate
the government. They have the election process
well under way and see no reason to maintain the
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Jtl.Kt I
TIMOR: DEATH OF DIPLOMACY
Indonesia has decided against any further ef-
forts to resolve the problem of Portuguese Timor
through negotiations. Jakarta asserts that the un-
ilateral declaration of Timorese independence by
the left-wing Fretilin party last week has radically
altered the situation. Foreign Minister Adam
Malik told reporters during a trip to Timor this
week that diplomatic efforts on Timor have effec-
tively ended and that the only solution now is on
the battlefield.
Malik visited Timor to talk with pro-In-
donesia Timorese, who declared the colony a part
of Indonesia the day after the Fretilin in-
dependence announcement.
I retilin's independence declaration last Fri-
day was an apparent effort to focus greater inter-
national attention on Timor and on Indonesian
military support to pro-integrationist forces.
Fretilin leaders probably hoped to take advantage
of the current media interest in Indonesia
stimulated by the visit of President Ford. Thus far,
Fretilin's bid has had little effect even among
third-world states. Australia and Portugal have
rejected the independence declaration outright.
Some former Portuguese colonies and some
radical third-world countries that dislike the
Suharto regime may recognize the new state, but
such support is unlikely to alter Fretilin's bleak
prospects for survival.
Indonesia's military support for the in-
tegrationists, although still falling short of the
all-out invasion advocated by many Indonesian
commanders, should be enough to maintain the
present momentum against Fretilin military
forces.
Suharto is still concerned in particular about
the strain on bilateral relations with the IJS, and in
general about the international criticism that
massive military intervention might cause. If he
decides invasion by regular forces is necessary, it
will be an easy matter to arrange an invitation
from the pro- integrationists to provide the legal
rationale. Malik told the pro-Indonesia Timorese
that he fully expected to meet them again about
Timorese capital.
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l 'am{ SS
VENEZUELA: REACTION TO US TRADE ACT
The recent publication of the Generalized
System of Preferences of the US Trade Act has
provoked sharp opposition and threats of retalia-
tion from a broad spectrum of business and
political leaders in Venezuela. Government of-
ficials are calling Venezuela's exclusion from the
preferences an unpardonable hostile move that
will affect its relations with the United States.
President Perez believes the act is aimed
specifically at his country not only because of its
membership in OPEC but also because of its
well-publicized efforts to bring about a new inter-
national economic order between producers and
consumers that would improve the terms of trade
for exporters of raw materials and commodities.
Moreover, the Venezuelans consider their exclu-
sion a poor return for the moderation they have
exercised for the past six months in expectation
that the Trade Act would be amended.
Perez hopes at least to turn the issue to his
own advantage domestically. He is an astute
observer of public opinion and has been
successful in measuring the feelings of
Venezuelans on international and domestic
issues. Recently his administration has come un-
der heavy criticism by opposition party leaders for
not controlling inflation and the rising cost of liv-
ing. The Perez administration has been blamed
for not delivering on its election promises
because the average Venezuelan has not yet
benefited from the country's massive oil
revenues. By "taking on" the United States and
repeating his charge that Washington is insen-
sitive to Latin American aspirations for economic
development, Perez will strike a reponsive chord
that should enhance his popular support.
25X1
Although Perez has not yet reacted publicly
to the list, his response is expected to be un-
restrained and harsh. Several cabinet ministers
have already hinted that Venezuela could raise
this issue in Paris at the Conference on Inter-
national Economic Cooperation this month.
Venezuela's primary tactic will probably be to
seek Latin American and third-world solidarity in
condemning the "discriminatory" features of the
GSP, and it may extend that drive into other
regional and international forums as well.
Some opposition leaders and even members
of the President's Democratic Action party are
calling for retaliatory action against the US, but
there is little that Perez can do without seriously
hurting Venezuela's oil-based economy. A cutoff
or reduction of iron ore and petroleum to US
markets is unlikely; iron shipments are controlled
by long-term contracts with private US steel com-
panies, while in the case of petroleum the
government is engaged in tough negotiations
with US companies for technology and marketing
arrangements. Moreover, Caracas would be un-
willing to jeopardize its long-term economic
future for a short-term satisfaction in disrupting
US oil supplies.
-)6-1,)l
CHILE: CHURCH-STATE TENSION EASES
Relations between the Pinochet government
and the Catholic Church in Chile, which
appeared headed for a breakdown in recent
weeks, are now slowly becoming better. The
sharp deterioration was the result of a spate of
arrests of church members charged with shelter-
ing fugitives of the terrorist Movement of the
Revolutionary Left. (MIR).
The church's recent decision to bow to Presi-
dent Pinochet's request that it dissolve the in-
terdenominational Committee for Peace, which
operated under its auspices, was probably an in-
direct admission that some of its personnel had
acted irresponsibly in providing assistance to the
terrorists. Only two weeks ago Cardinal Silva, the
Chilean prelate, seemed on the verge of an open
clash with the government when he publicly
threatened to excommunicate an influential and
ultraconservative adviser to Pinochet who had at-
tacked the church for complicity in the MIR affair.
The subsequent efforts by government officials to
comply with legal obligations to expedite the
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release or expulsion of church people under
detention, as well as the church's acute em-
barrassment over the matter, probably impelled
ecclesiastical authorities to back off from their
tough stance.
The relationship between the Catholic
Church-a potent force in Chilean life-and the
generals who now rule the country has frequently
been stormy. On numerous occasions the clergy
have spoken out against human rights violations
and the harsh effects of economic austerity on the
poor. But in every event the church's highest
spokesmen have averted a breach that almost cer-
tainly would have prevented them from serving as
a moderating voice when almost all other organ-
ized groups in Chile have been silenced.
Similarly, the government has been careful to
keep church-state differences within manageable
limits and to at least leave the door open for
cooperation. The President has met privately with
Cardinal Silva, presumably to work out an un-
derstanding, and both have appeared willing to
take an even-handed approach in dealing with
their quarrels. Pinochet's attitude can also be at-
tributed to the fact that many of the arrested
church people are American citizens, and he does
not want further complications with the US.
The church will remain cautious
in dealing with the military regime; further strife
over sensitive issues is likely, but it is to the advan-
tage of both sides to seek compromises. The junta
would stand to lose the most if it used an iron
hand against the church. At the same time, the
church could lose the support of conservatives,
who have already criticized its involvement with
the terrorists, if it continues to confront the
government.
/ 2-/d?
ECUADOR: POLITICAL UNCERTAINTY
President Rodriguez reportedly intends to
announce his plans for a transition to civilian rule
in a speech on Saturday. His decision undoubted-
ly has been spurred by a further deterioration in
his position brought about by his demands for
political discipline and his harsh attacks on
Ecuadorean political leaders.
A communique authored by the exiled
leader of the coup attempt last September, which
was recently published in the Ecuadorean press,
has reportedly caused consternation and in-
creased disunity in the military. The statement,
which outlined the circumstances of the attempt
and implicated key individuals in the present
regime, prompted the President to impose press
censorship. His action has drawn protests from
journalists and their supporters and has reported-
ly increased opposition to his government.
In recent weeks Rodriguez' actions have add-
ed to political uncertainty. He has harshly at-
tacked "the rebellious insurgency of small
groups" bent on subverting the government. The
President has also publicly attacked exiled
political leaders "for subversive activities" and has
vowed to use force to maintain political dis-
cipline.
A recent statement by the Catholic
Archbishop of Guayaquil, calling for the restora-
tion of political freedoms, is indicative of the
growing opposition. It also marks the first time
that a high church official has criticized the Presi-
dent. The Archbishop's declaration appears to
support recent demands made by conservatives
and liberals that elections be held or a transitional
government be formed.
There have been conflicting reports concer-
ning the President's projects and plans and his
likely successor. His intentions may become
clearer on December 6 during a speech com-
of Quito.
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