WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011500080001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 21, 2016
• Document Release Date: June 17, 2008
• Sequence Number: 1
• Publication Date: February 25, 1977
• Content Type: SUMMARY

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Secret
Weekly Summary
Secret
CG WS 77-008
February 25, 1977
Copy
DIA review lState Dept. review completed.
completed.
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Resorting Group, reports and analyzes significant
EKLY SUMMARY, issued every Friday morning by the
s of the week through noon on Thursday. It fre-
scludes material coordinated with or prepared by the
Regional and Political Analysis. the Office of Eco-
arc;i, the Office of Strategic Research, the Office of
Intelligence, the Office of Weapons Intelligence,
Office of Geographic and Cartographic Research.
CONTENTS
1 Western Hemisphere
Canada; Argentina; El
Salvador
3 Middle East - Africa
Israel; Syria-USSR; Tan-
zania; Rhodesia
5 Europe
USSR-EC; Turkey
6 Asia
Pakistan; Sri Lanka; North
Korea - USSR
8 USSR: Uranium Supplies
9 West Africa: Concern over Soviet Inroads
11 Italy: Communist Economic Proposals
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Canada's efforts to impose stricter non-
proliferation requirements on buyers of its
nuclear materials and equipment are
meeting strong resistance. Negotiations
on export agreements are under way with
major buyers of Canadian
uranium-some EC states, Japan, and
Switzerland-and will continue during the
next month.
Under a policy that went into effect at
the end of 1976, exports of Canadian reac-
tors and uranium are restricted to states
that have either ratified the
Non-Proliferation Treaty or accepted
safeguards monitored by the Inter-
national Atomic Energy Agency on their
entire nuclear program. In addition,
Canada is attempting to use the leverage
of its uranium supply to force acceptance
of controls on transfer of nuclear
technology.
The requirement for controls on such
transfers is being opposed by the EC
states and Japan, which have nuclear
programs that are technologically as ad-
vanced as Canada's and technically more
diversified. These countries refuse to
accept a provision Canada is insisting on
including in the export agreements that
classifies technologies they subsequently
develop as being automatically derived
from Canadian-supplied equipment and
thus subject to Canadian requirements as
to their use and transfer. The provision
would primarily affect heavy-water re-
actor technology.
Apart from not wanting to be bound by
the new restriction, the EC states have no
legal basis for complying with Ottawa's
demands. Under the Euratom Treaty,
they are not required to apply safeguards
to the transfer of technological informa-
tion among themselves.
The West Europeans will probably con-
tinue to refuse to accept Canada's posi-
tion on the transfer issue. Japan, for its
part, is unlikely to accept restrictions
more stringent than those agreed Jo by the
/
Europeans. .- /T
FOREIGN BORROWING
Canada became the world's largest
foreign borrower in 1976. Gross
long-term borrowing abroad reached $9.2
billion, more than double the 1975 level.
Canadian borrowers accounted for 16
percent of the credits floated in inter-
national capital markets last year.
High domestic interest rates provided
much of the impetus for Canadians to tap
,x,MiterMacdonald
Financ
foreign capital markets. In addition, a
sluggish I-percent recovery in corporate
profits forced many firms to borrow to
ease cash-flow problems, and firms that
had leaned heavily on short-term
borrowings between 1973 and 1975 sought
credits to improve their debt structure.
Businesses and provincially-owned
utilities also borrowed heavily in anticipa-
tion of a rise in US interest rates in late
1976.
Private foreign financial institutions are
beginning to show some concern about
lending to Canada, although it still has a
comfortable margin in debt-service
capacity. Interest payments in 1976, for
example, absorbed only 5 percent of ex-
port earnings; dividend remittances raised
the ratio to 9 percent.
Heavy Canadian foreign borrowing is
continuing so far this year, and the
Trudeau government is concerned. In a
recent private conversation with the US
ambassador, Finance Minister Mac-
donald suggested that Ottawa might have
to limit the borrowing if the pace did not
soon slow. In subsequent public
statements, however, government officials
denied that any such move was being con-
sidered.
The current strains on national urity
will make the government extremely
reluctant to curtail foreign debt. It would
not want to appear to be interfering with
the prerogative of the provinces to borrow
where they judge best. Canada may be
able to avoid restricting foreign borrow-
ing by easing monetary restraints to en-
courage a shift to domestic capital
ARGENTINA
President Jorge Videla appears to be
coming under increasing pressure from
fellow military officers critical of his
moderate tactics in dealing with labor un-
rest.
Many of the officers hold labor respon-
sible for a lot of Argentina's problems and
favor instituting far more restrictive labor
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policies than those proposed by President
Videla and his supporters.
25X1 The navy also generally opposes Videla
on the issue.
Y he labor question is one of the most
serious political problems facing the
military government. Most organized
labor activity has been illegal since the
junta seized power last March, but
workers have repeatedly defied a ban on
strikes and slowdowns to protest both
their economic plight and the imposition
of restrictions.
Videla wants to remove most of the
restrictions in an attempt to secure labor's
cooperation with the government. His
detractors want to emasculate the labor
movement as a punitive and preventive
measure.
These differences within the military
have 6.layed the issuance of a new basic
law defining the status of labor. In recent
days, the government has decreed new
rules oa some procedural aspects of labor
activity. US embassy sources believe that
an overall law will be announced soon and
that it will largely reflect the position of
Videla's opponents.
The President's detractors apparently
hope to embarrass and weaken him
politically by forcing him to take a
tougher stand on labor. They also want to
C f" . C,
undermine the position of his chief confi-
dant, army chief of staff General Viola,
who is widely regarded as the architect of
the conciliatory line toward labor.
The dissident officers hope to force
changes in policy, and perhaps in top per-
sonnel, by the first anniversary next
month of the coup that ousted Maria
Estela Peron. There has been considerable
speculation in Argentina that changes in
the structure of the country's executive
authority will be made around that time.
EL SALVADOR
I
General Carlos Romero was declared
the winner of the presidential election in
El Salvador on February 20. His five-year
term starts in July.
Unofficial figures gave Romero, the
candidate of the governing National Con-
ciliation Party, roughly a two-to-one
margin over his opponent, Ernesto
Claramount, a relatively unknown retired
colonel who ran a lackluster campaign.
The opposition coalition of three left-
of-center parties dominated by the Chris-
tian Democrats has charged that extensive
vote rigging and intimidation ensured
Romero's landslide win. The coalition
party held protest rallies this week and
talked about stirring up civil disorders
and worker walkouts, but it has little
chance of building a groundswell of sup-
port for reversing Romero's victory. The
conservative incumbents, with the back-
ing of the military, have ruled El Salvador
for the past 15 years and have no intention
of relinquishing power.
Romero, 52, is a former defense
minister and a career military officer
hand-picked by outgoing President Ar-
turo Molina. Romero probably will main-
tain the present government's policies,
which favor the country's dominant con-
servative oligarchy and stress strict
adherence to law and order.
Romero will be confronted by serious
economic and social problems caused by
high unemployment, distorted income dis-
tribution, and poor health and housing
conditions. Promises of reform have
stimulated expectations among the
landless, estimated at some 100,000
families in this smallest but most densely
populated of the five Central American
countries. The peasants also want a
greater political voice. Church and op-
position leaders, particularly in the coun-
tryside, are increasing their support of the
peasants and their criticism of the govern-
ment.
The Molina government finally tried to
implement a long-promised agrarian
reform project in mid-1976, but backed
off when it encountered strong opposition
from large landowners. During the recent
campaign, Romero made public
statements favoring reform, but he has
privately assured the landowners that he
will protect their interests.
A major foreign policy issue for the new
president will be the long-standing border
dispute with Honduras. The dispute
arouses strong feelings on both sides, and
progress on solving it will probably be
slow, especially when the two sides get
down to trying to delimit a boundary
2 WEEKLY SUMMARY Feb 25, 77
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ISRAEL 3_. 3 1
Prime Minister Yitzhak Rabin narrow-
ly won endorsement on February 23 as the
Labor Party's candidate for prime
minister in the general election scheduled
for May 17. The choice was made at the
party's pre-election convention, which
also must write a platform acceptable to
Labor's quarreling factions and an allied
group.
Rabin's margin of victory over his
challenger, Defense Minister Shimon
Peres, was only 41 votes out of some 3,000
cast. Following the vote, Rabin said that
Peres had agreed to accept a cabinet post
in a new government headed by Rabin.
Rabin will need Peres' support in any
future negotiations with the Arabs.
The Labor Party has dominated Israeli
politics since the country's independence
in 1948. This year it faces a tough election
fight against the right-wing Likud bloc,
the main opposition group in the present
Knesset, and a new party, the Democratic
Movement for Change, which has made
inroads into Labor's traditional sources of
strength. Labor's popularity has been
eroded by inflation, corruption scandals,
and widespread disenchantment with
Rabin's leadership.
Rabin's nomination should make it
easier for the left-wing Mapam Party to
maintain its eight-year alliance with
Labor. Mapam leaders had threatened to
abandon the alliance if Peres won.
Mapam is also demanding that the Labor
platform explicitly acknowledge a
readiness to make territorial concessions
on the West Bank in peace negotia-
tions-something Peres' hard-line fac-
tion opposes.
Labor Party prospects in the election
will depend partly on the sincerity of
Peres' willingness, expressed after his
defeat this week, to work to unite the par-
ty and on his ability to deliver voters who
share his hard-line views on peace
negotiations.
Rabin will base his campaign on
foreign policy and defense issues, por-
traying the Labor Party as best qualified
to negotiate with the Arabs and protect
Israel's security interests while main-
taining close and stable relations with the
Improving Economy 5 j f
I
Israel's economy performed better in
1976 than the government had an-
ticipated. The current-account deficit,
down $800 million to $3.1 billion, was
easily covered by foreign gifts and loans.
Real gross national product rose by 3 per-
cent; the government had forecast a 1-per-
cent decline.
The smaller deficit resulted from a
slight decline in imports and a substantial
increase in exports. Devaluations of the
Israeli pound, some reduction in defense
deliveries, and the drawdown of raw
material stockpiles limited imports. The
economic rebound in Western Europe and
the US spurred exports of goods and ser-
vices. Exports to the US rose by 40 per-
cent.
Israel's $3.8-billion financing require-
ment was exceeded by transfers,
long-term loans, and US assistance. The
government used the cushion to reduce
short-term debt by $140 million and to in-
crease foreign exchange reserves by $150
million. The balance-of-payments situa-
tion should continue to brighten this year,
allowing Israel to trim its financial re-
quirement by $200 million. At the same
time, Israel will have access to an even
larger pool of foreign assistance, in-
cluding more than $2.5 billion from the
US.
With exports again leading the way,
GNP is likely to rise by 5 percent this
year, still well below the 10-percent
average achieved between the 1967 and
1973 wars. Much depends, however, on
the government's ability to deal with labor
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unrest and inflation. Currently, some
200,000 workers-nearly 20 percent of
the civilian labor force-are either on
strike, threatening to strike, or par-
ticipating in work slowdowns.
The general public appears deeply
troubled about continuing high inflation;
last year, consumer prices rose 38 percent
and average wages 35 percent. In a recent
public opinion survey, concern about the
economy far outdistanced worry over
security and political matters. Personal
consumption has not increased much
since before the 1973 war. Given the
current Arab peace offensive, it will be in-
creasin,ly difficult to convince the con-
sumer hat restraint is necessary because
of the security situation. F
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SYRIA-USSR
The Soviet military presence in Syria is
steadily declining. There are no in-
dications at present, however, that an
abrupt curtailment of relations between
Syria and the USSR is in the offing, as
has occurred between Egypt and the
USSR.
Syria appears to be phasing out Soviet
advisers attached to the Syrian military.
probably has been reduced by at least one
third from its peak immediately after the
October 1973 Middle East war.
At that time, the number of Soviet
military advisory personnel in Syria
probably totaled about 3,000. In addition,
some 500 Soviet personnel were manning
an SA-6 missile brigade near Damascus;
they have since returned home.)
Soviet strength in Syria
1,800.
Syrian President Asad wants to reduce
his country's overall dependence on the
Soviets and thereby weaken Soviet
political leverage in situations-such as
occurred in Lebanon-where interests
conflict. Syria is not out to sever its ties
with the USSR, however, and is
proceeding cautiously to avoid being cut
off from vital Soviet supplies.
The decision to cut back on the number
of Soviet advisers also reflects the Syrian
military's general dislike and distrust of
the Soviets and its dissatisfaction with the
quality of Soviet equipment and training.
A post-mortem by the Syrians on their
performance during the 1973 war showed
serious deficiencies in the performance of
officers trained by the Soviets, compared
with those trained in the West. The
Syrians reportedly no longer send officers
to the USSR for professional schooling,
although some are still receiving technical
training there.
In Egypt, meanwhile, the last 23 Soviet
military advisers are scheduled to leave in
April or Ma
Their departure will mark
the end of a Soviet military presence that
at its peak in late 1970 totaled some
15,000 me
TANZANIA.
Tanzanian President Nyerere's major
cabinet shuffle last week apparently was
designed primarily to enhance the
national political position of First Vice
President Aboud Jumbe. Jumbe, the
leader of largely autonomous Zanzibar,
now appears to be Nyerere's choice as his
successor.
The cabinet change sharply downgrad-
ed the status of Rashidi Kawawa, who
was once widely regarded as Nyerere's
likely political heir. Kawawa lost the posi-
tion of second vice president and was
succeeded as prime minister by a man
who is clearly subordinate to Jumbe.
Kawawa was named defense minister, but
Nyerere himself plays a major role in
defense matters.
Jumbe shares Nyerere's commitment
to socialism but is also a pragmatist who
has eased the radical and oppressive at-
mosphere that prevailed on Zanzibar
when he came to power there in 1972.
Earlier this month, Jumbe became vice
president of the new national political
party that Nyerere has created to promote
national unity; it absorbed the separate
parties that have dominated the mainland
territory and Zanzibar since in-
dependence. The unity objective was
almost certainly also a factor in the
President's choice of Jumbe as heir ap-
parent.
In his new role, Jumbe may have some
of his most vexing problems with his
fellow Zanzibaris. The islanders have
jealously guarded their autonomy and
may see Jumbe's elevation in the
presidential succession as presaging future
efforts to integrate them with the
mainland.
At the same time, Jumbe may have
trouble gaining acceptance on the
mainland, where there is some an-
tagonism toward the culturally and
religiously distinct Zanzibaris.
With the creation of the new united par-
ty and Jumbe's accession to the position
of heir, Nyerere may give serious con-
sideration to resigning the presidency; he
has been hinting for some time that he
might step down and devote himself to
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party affairs. He is not likely, however, to
take such a step before the end of his
RHODESIA G "" 3 L
Rhodesian security iforces still are
generally containing the nationalist
guerrillas. Heavy rains and flooding
probably are hampering both the
guerrillas and the security forces.
The government is showing concern
about increased guerrilla activity in
western Rhodesia. Although insurgents
are still much less numerous there than in
the eastern region, the government
reportedly has for the first time created a
restricted area along a small section of the
border with Botswana. Such areas have
long been in existence along the frontier
with Mozambique, where the largest
guerrilla group has its main bases.
The severe strains imposed on
Rhodesia's limited white manpower pool
by the guerrilla war are continuing to give
Prime Minister Smith problems. In-
creased call-ups announced last month
provoked heavy criticism from business
and farming groups, which charged that
the economy would be disrupted. The
criticism led to the resignation of the
defense minister on February 13.
Last week, Smith told the Rhodesian
*LUSAKA
SALISBURY*
BOTSWANA
I SOUTH AFRICA
100 Miles
100 Kilometers
parliament that the government was
adopting measures to deal with civilian
call-ups for military duty. The measures
included the establishment of a National
Manpower Board and the transfer of
overall responsibility for the program
from the Defense Ministry to the Labor
Ministry.
Prime Minister Smith, meanwhile, con-
tinues to prepare the way for his planned
internal settlement with "moderate"
Rhodesian blacks that will bypass the
guerrillas. On February 23, he unveiled a
package of legislative proposals that, if
enacted, would sharply modify the coun-
try's racial discrimination laws, although
their immediate practical effects would be
limited.
The most significant proposal would
revise the land tenure act, enabling blacks
to become owners of farmland held by
whites and of industrial and commercial
land in central business districts.
Smith presented his proposals to parlia-
ment in the context of his plan for a
"democratic internal settlement" that he
claims will be acceptable to a majority of
Rhodesians. The reform proposals, which
are sure to be opposed by the conservative
wing of Smith's party, are clearly intend-
ed to demonstrate Smith's good faith and
attract the support of as many Rhodesian
blacks as possible, including some of the
nationalist leaders who participated in the
recent Geneva talks.
The amendments to the land tenure act
must be passed by a two-thirds vote in
parliament. A stormy debate seems
USSR-ECI
The Soviets and the European Com-
munity reached an interim agreement last
week that averts a showdown over fishing
and represents de facto Soviet recognition
of the EC. The two sides also agreed in
principle to a longer term fishing accord
on which negotiations are to begin on
February 28.
The interim agreement allows 40 Soviet
trawlers to fish for a period of six weeks
within the exclusive 200-nautical-mile
fishing zone that the EC established in the
North Alantic on January 1. The EC had
planned to license only 27 Soviet boats,
but agreed to the larger number on the
condition that there would be no cor-
responding increase in the size of the
Soviet catch.
In the talks with the Soviets, which
began in Brussels on February 16, the EC
reportedly demanded that the USSR
either submit a list of trawlers to be licens-
ed to fish within the EC's zone or
withdraw all their boats from EC waters.
The Soviets initially refused to submit
such a list, asserting that the number of
trawlers should be included in the
negotiations. According to EC estimates,
more than 70 Soviet trawlers were fishing
in EC waters before the talks began.
Soviet recognition of the EC's authori-
ty to represent its nine members in inter-
national negotiations is a major
breakthrough for the Community, even
though the Soviets will want to avoid
making this recognition formal and ex-
plicit. The USSR had previously insisted
on dealing bilaterally with individual EC
states, and it agreed to negotiate with the
EC only after being rebuffed by both the
UK and Denmark.
The EC members are anxious to con-
serve fish stocks within their declared
zone, and their objective is to reduce the
annual Soviet catch from it substantially
below the approximately 600,000 tons of
fish the Soviets are now taking. The EC
wants to negotiate an agreement that will
limit the USSR's annual catch to about
60,000 tons. That is the amount of fish
Community trawlers now take each year
from the Barents Sea, which the Soviets
included in a 200-mile fishing zone of
their own that goes into effect March 1.
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TURKEY
Prospects may be increasing for a
parliamentary election in Turkey before
the constitutionally-set deadline in
October.
A decision for an earlier vote would
have to be approved by the present
legislk.ture. Prime Minister Demirel and
opposition leader Ecevit may be moving
toward a tacit understanding to press the
issue once the budgetary process is com-
pleted this month. If the election is moved
up, June would be the most likely date.
Both Demirel and Ecevit have favored
an early election for some time. Up to
now, however, Ecevit has made his sup-
port f)r the move contingent on Demirel
stepping down and being replaced by a
caretaker government.
Ecevit may be wavering on this precon-
dition. Even if he is not, Demirel may now
be willing to relinquish power if necessary
to obtain Ecevit's agreement to hold the
vote before fall;
Assuming this major impediment is
cleared away, the two long-time rivals
would then have to work together long
enough to overcome the remaining
procecural roadblocks and the reluctance
of many legislators to risk losing their
seats Prematurely. The two leaders would
probably be able to line up enough votes
in parliament.
If Demirel gets to stay on, a decision
for an early election would not end the
feuding within his government. Such a
decision might in fact intensify jockeying
among the four politically disparate coali-
tion partners and could even break the
fragile ties holding them together. If
Demirel leaves office voluntarily or is
forced out by the breakup of the coalition,
a nonpartisan caretaker government
would probably be installed.
An early vote would probably please
militar' leaders, many of whom have
become concerned over the ineffectiveness
of the present government. The military
would presumably see in the election at
least some hope that a stronger govern-
ment might emerge. The chance of this
hope being realized is slim, however;
whenever the vote is held neither Demirel
nor Ecevit is likely to win a majority, and
the balance of power will probably remain
with the smaller generally more extreme
parties.
PAKISTAN
Pakistani voters will go to the polls on
March 7 in the country's first national
election since 1970. Prime Minister Bhut-
6 WEEKLY SUMMARY
to's Pakistan People's Party appears like-
ly to win, although it faces a strong
challenge in populous Punjab Province.
Bhutto is not above interfering in the
political process to ensure victory. He
may, however, forgo blatant interference
that could seriously damage his prestige
as long as his party appears likely to
emerge on top-even if its margin is much
smaller than in the last election.
In Punjab Province, where voters will
choose more than half of the 200 directly
elected members of the National
Assembly, the opposition parties have
managed to submerge wide personal and
ideological differences and are waging a
vigorous campaign. The public response
has been favorable; one opposition rally
reportedly drew a half million people. The
parties appear to be having their greatest
success in the cities, but also are in-
creasingly active in the more important
rural areas.
Bhutto has responded by stepping up
his own campaign. He has been bringing
prominent figures into the Punjab from
other provinces, pressing civil servants
into campaign work, organizing large
rallies for his party, and using government
transport and government-controlled
media to good advantage. Although some
of Bhutto's actions have been clearly il-
legal, so far they have remained within the
bounds of what Pakistanis generally con-
sider acceptable in an election.
The Prime Minister's party faces only
minor problems in Pakistan's other three
provinces. It seems assured of an easy vic-
tory in the Sind, Bhutto's home province,
and also in the two provinces located
along the Afghan border, where the main
opposition party has been outlawed.
The mandate won by the People's Party
in the 1970 election has allowed Bhutto to
dominate his political opponents, rivals in
his own party, business interests, and the
military since he came to power in 1971 in
the wake of the disastrous war with India.
Bhutto remembers, however, how quickly
former president Ayub Khan fell from an
apparently secure position when his lack
of popular backing became evident in
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SRI LANKA - I
Sri Lanka faces a period of increased
political uncertainty as it moves toward
the parliamentary election to be held
before the end of September.
Prime Minister Bandaranaike's
problems have been mounting lately. In
December and January she was con-
fronted with a wave of strikes, which she
broke by imposing press censorship,
threatening to hire replacements for strik-
ing workers, and calling out the military
to maintain essential services. The opposi-
tion criticized her tactics and called for a
no-confidence vote in the parliament. A
week before the scheduled vote, Ban-
daranaike adjourned the legislature until
May 19. Its term expires three days later.
The Prime Minister's action saved her
from having several members of her own
party vote against her. Five of them did,
however, resign from the party. The
pro-Moscow Communist Party, after a
week of indecision, announced that it was
withdrawing from the government coali-
tion. The Communists' mild withdrawal
statement possibly was intended to leave
the way open for cooperating with Ban-
daranaike during the election campaign.
The dismissal of the parliament, in
which Bandaranaike still has a majority,
prevented a further extension of the
emergency imposed to counter leftist in-
surgency in 1971. The opposition press is
now free to criticize the government, and
insurgents and other dissidents jailed un-
der emergency rules have been released.
Bandaranaike has warned that she might
have to reimpose the emergency, but she
cannot do so constitutionally without
reconvening the legislature.
Bandaranaike's political position
probably has suffered, but she will still
have some strengths in the election. She is
likely to have gained support, particularly
in rural areas, by her refusal to give in to
the strikers. In addition, the food supply
may soon improve; the rice harvest in
March could be the best in years. The
Prime Minister can also schedule the elec-
tion at the time she believes will help her
most.
NORTH KOREA-USS
The signing of a trade protocol on
February 14 between North Korea and
the USSR probably indicates that the two
countries have resolved some of the
problems hampering increased economic
ties. Even so, the USSR was clearly not as
responsive to the North Koreans' aid re-
quests as they would have liked.
North Korean Premier Pak Song-chol
is said to have primarily discussed trade
and economic issues during his visit to
Moscow last month. A source of the US
embassy in Moscow has reported that
Soviet officials categorically refused a
North Korean request for a nuclear power
plant. The Soviets indicated they would
continue work on 16 industrial plants that
had been scheduled for completion by the
end of 1976, but provided little new aid.
North Korean exports to the USSR,
valued at $210 million in 1975, were sup-
posed to rise to $260 million in 1976. Ac-
cording to official Soviet statistics,
however, through last September these
exports were 35 percent below what they
were in 1975.
North Korean production problems, in-
cluding a reduction in hydroelectric power
because of drought, are probably in part
responsible for the decline, but North
Korea may also have been trying to divert
goods to hard-currency purchasers. If so,
the USSR might have retaliated by reduc-
ing its exports to North Korea; they were
down 15 percent through September.
Reports that the USSR sharply reduc-
ed petroleum shipments to North Korea
have not been confirmed. If true, the cur-
tailment could have been ordered in reac-
tion to North Korea's refusal to accept
price increases that Moscow imposed last
year on sales to communist countries.
North Korea has long depended on the
USSR and China for petroleum and cok-
ing coal; the Koreans' poor credit rating
in the West now makes them more depen-
dent on communist countries for in-
dustrial equipment as well. Any long-term
deterioration in these trading
relationships could, therefore, have im-
portant implications for North Korea's
industrial growth.
President Kim II-song's regime ap-
parently has not recently approached
China for purely economic assistance.
The Chinese have, however, contributed
significantly more military assistance and
diplomatic support to North Korea in re-
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Soviet supplies of natural uranium, much of* which
originate in Eastern Europe, are more than ample for the
(USSR's nuclear weapons program and for Soviet and East
Luropean nuclear power programs for the foreseeable future.
USSR: Uranium Supplies
The USSR has enough uranium in the
form of ore and concentrates from
domest c and East European sources to
sustain its nuclear weapons program as
well as to provide fuel to Soviet and East
European nuclear power programs for the
foreseeable future. Because of the large
amounts produced, the USSR has had a
continual surplus of uranium concentrate
and now has a large stockpile.
The Soviets produce an estimated
17,500 :ons of equivalent uranium metal
a year and use about 9,000 tons. Utiliza-
tion is likely to increase to about 11,000
tons pe- year in the five-year period be-
ginning in 1980 because of planned in-
. ..r~? EEal . ,,_ ;
Hdme
El, IspiE,
creases in the number of nuclear power
stations for electricity.
From 1946, when their nuclear raw
materials program began, through the end
of 1976, the Soviets have produced an es-
timated 390,000 tons of equivalent
uranium metal and used an estimated
190,000 tons. The remaining 200,000 tons
are stockpiled for future use or sale.
Foreign and Domestic Supply
The Soviets obtain much of their
uranium supply from East European
countries, which have been required to
ship their entire output of natural
uranium to the USSR. The terms are in
essence barter arrangements and are ex-
tremely favorable to the USSR. At
present, four East European countries
supply the USSR with approximately
10,500 tons of recoverable uranium
metal per year. East Germany, the
largest producer, has an output almost
equal to that of the USSR. East Germany
maintains two uranium concentrating
plants; the one at Seelingstadt is prob-
ably the largest in the world and can pro-
cess over 12,000 tons of uranium ore daily.
Czechoslovakia has two concentrating
plants and also recovers uranium by on-
site leaching at one mining area. Hungary
has one plant and Bulgaria two. Romania
has one concentrating plant under con-
struction.
The USSR operates large plutonium
production complexes at Kyshtym in the
Urals and at Tomsk in western Siberia
and a smaller complex at Dodonovo in
Siberia. These plants probably had used
about 150,000 metric tons of uranium in
their production reactors by mid-1976.
The USSR has four gaseous diffusion
plants for enriching uranium-at
Verkh-Neyvinsk in the Ural Mountains
and at Tomsk, Angarsk, and Zaozernyy
in Siberia. Originally built to produce
highly enriched uranium for the nuclear
weapons program, they now also produce
uranium of lesser enrichment for Soviet
and East European power reactors and
Soviet nuclear propulsion reactors.
Environmental samples from the late
1950s through the mid-1960s indicate that
the Soviets have routinely used the
uranium recovered during plutonium
separation operations as the primary
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enrichment plant feed. This practice
minimizes operating costs because less
uranium must be mined and processed.
The Soviets use natural uranium only
when the supply of recovered uranium is
inadequate.
Since 1971, some of the Soviet enrich-
ment capacity has been used each year to
fulfill uranium enrichment service con-
tracts with Western countries for nuclear
power reactors. Under such contracts the
customer must supply his own uranium
feed material, which is enriched for a fee
and returned along with the tailings. This
non-Soviet uranium has so far been a
small part of the diffusion plant feed but
will be a larger fraction in the future.
Soviet uranium supplies are not expended
in fulfilling these contracts.
Foreign Sales Prospects
The Soviets are willing to export
various kinds of nuclear equipment,
material, and technology, but they have
not put any of their uranium stockpile on
the market. The only Soviet uranium ex-
ported to date has been in the form of fuel
elements included in the sale of nuclear
reactors; the spent fuel from these reac-
tors must be returned to the USSR.
Because of their large stockpile of
Pro-Western leaders of several former French colonies in
West Africa are more worried, in the wake of the Angolan af-
fair, over Soviet intentions on the continent and are looking to
the West-in the first instance France for increased support.
ultimately, from the US.
Although the views of each country
differ somewhat according to national ex-
perience and geography, the six
governments are all quietly pro-Western
by African standards. Their pragmatic
leaders are generally more interested in
development than ideology and recognize
that progress depends on stability.
Perception of Soviet Aims
The moderate Africans assume the
USSR's basic aim is to establish a
number of bridgeheads as a first step
toward expanding its influence and con-
trol on the continent. They perceive
various long-range Soviet objectives in-
volving their region, such as the acquisi-
tion of air and naval bases, the isolation of
Africa from its traditional markets in
Western Europe, and the establishment of
a foothold in oil-rich Nigeria.
To achieve such aims, they believe the
Soviets intend:
West A fries: Concern over Soviet Inroads
The pro-Western governments of six
French-speaking African states are show-
ing signs of insecurity. The leaders of
Cameroon, Ivory Coast, Niger, Senegal,
Togo, and Upper Volta are concerned
about Soviet intentions in Africa.
The war in Angola demonstrated to
these leaders the USSR's ability to move
into an area quickly and its willingness to
intervene with surrogates, in that case
Cubans, to tip the scales in a fight among
Africans. The moderates now fear the
Soviets, unchecked by the West in
Angola, will go on to expand their in-
fluence elsewhere in Africa. This has
made the moderates more uneasy than
ever about relations with their more
radical neighbors.
One reaction has been to look for sup-
port from the West, especially from
France, the former colonial power, and,
natural uranium, the Soviets are in a posi-
tion to sell uranium. At the present rates
of uranium production and utilization,
this stockpile is likely to continue to grow.
There are no indications that the
Soviets will soon be willing to sell natural
uranium. East European states are not in
a position to sell uranium independently
to the West. Should supplies in the West
become tight and drive uranium prices on
the world market higher, the USSR might
change its position and sell some of its
uranium stockpile to earn foreign ex-
9 To probe for weak spots that will
offer new opportunities for exploita-
tion.
? To carry out subversive activities
in African states with the aim of
creating unrest and paving the way for
the establishment of regimes more
sympathetic to the USSR.
? To offer additional military aid to
such states as Guinea, Benin, and
Mali, where a significant Soviet
presence exists, thereby increasing the
military capabilities of these states and
isolating their more moderate
neighbors.
The objectives attributed to the USSR
by the West African moderates probably
are basically true, but these leaders
appear to have an exaggerated perception
of how much effort the Soviets are plan-
ning to put into trying to achieve such
goals over the near term. The Soviets are
indeed likely to try to take advantage of
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whatever opportunities are presented in
Wc..t Africa, but they will continue for the
foreseeable future to assign a higher
priority to southern Africa and the Horn.
In any case, there is no evidence that
the states to which Moscow supplies arms
are icing prompted to move against their
neighbors. The Soviet upgrading of
Malian airfields, for example, appears
aimed at securing a backup relay point for
Soviet aircraft rather than preparing Mali
for ~.nother border war with Upper Volta.
Over the longer term, however, the
political fragility of the countries in the
region leave them susceptible to discord,
political instability, and sudden policy
switches-conditions that will continue to
offer the Soviets new targets of opportuni-
ty fr?3m time to time.
The moderates' perception of the
potential military threat from Soviet-
,
. . NIAMEY
To9o-f ( f Nigeria
) *1 TOME
!Cameroon
ABIDJAN F
1006
Kilometers
supplied neighbors has already led them
to make protective moves. Most of these
states now are paying more attention to
their armed forces.
Ivory Coast, for example, is particular-
ly worried by Guinea's continued striden-
cy and is acquiring jets and tanks.
Previously, Ivory Coast spent little on its
military forces, focus.ng instead on
economic development. Both Upper
Volta and Cameroon want military equip-
ment from the US and are also interested
in fostering a special political
relationship.
The moderates have instinctively turn-
ed to France to "do something" about the
threat they perceive, despite some reluc-
tance to do anything that calls attention to
themselves as countries that have remain-
ed close to the former colonial power. The
initial French response has been to
power relationships in the area.
provide some additional arms to meet the
most urgent requests, grant additional
development funds, and consult more
closely with other Western powers, in-
cluding the US, on African affairs.
These piecemeal efforts are generally
regarded as inadequate, and there is a
growing feeling among the West African
moderate leaders that some sort of
cooperative effort might be more effec-
tive. Some of them have considered, for
example, the creation of a broad sub-
Saharan alliance of moderate states
against all radical states or a nonaggres-
sion pact for West Africa.
Outlook
The moderates' defensive moves may
contribute to an arms race with their
Soviet-supplied neighbors. The radical
states have long been suspicious of the in-
tentions of "neocolonialism" and its
regional "lackeys." At a minimum, the
perceptions of each side are likely to
lead to intensification of polemics
between moderate and radical states in
the region.
The diversion of talents and resources
from basic development to national
rivalries will cost both sides.
Most of the moderate states hope for a
more activist US policy toward Africa
that will blunt Soviet moves and provide
effective, tailored support to their
positions; they question their ability to
prevail over Soviet influence without US
backing. They would not, however, want a
conspicuous show of US support that
would leave them more vulnerable to
charges of "neocolonialism."
The French would probably welcome
coordinated US moves that contributed to
stability in the region. They would be
wary, however, of any US actions that
appeared to challenge their long-time
paramount position in the area.
If the moderate states conclude that
Western support is inadequate, they are
unlikely to try to go it alone. Instead, they
will probably reassess their policies with a
view to accommodating themselves to
what they perceive to be the emerging
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Italy's Communists, striving for popular acceptance, are
developing a package of largely nondoctrinaire proposals for
dealing with the country's economic problems while continuing
to support the economic stabilization program of the minority
Christian Democratic government.
C% 92
als
Italy: Communist Economic Propos
Italy's Communists, who are bent on
gaining acceptance as a governing party,
are striving to develop a set of policies to
cope with the country's continuing
economic problems. Specific proposals by
party experts are for the most part non-
doctrinaire and aimed at. solving Italy's
immediate problems; in the fiscal area,
they conform closely to those advocated
by various center-left parties.
The proposals do not, of course,
necessarily reflect what the Communists
would do if they were to win a dominant
governing position.
The Communists and Austerity
Since the June election, which
strengthened the Communists at the ex-
pense of the smaller parties, the party has
held the power in parliament to make or
break the economic stabilization plans of
the minority Christian Democratic
government. The Communists, by
abstaining in parliament, allowed Prime
Minister Andreotti to enact a series of
tough tax measures designed to reduce
Italy's high rate of inflation and curb the
spiraling growth of imports. The party
agrees with the government's position on
the need to limit the growth of wages, but
has so far had little success in convincing
the labor movement.
Party chief Enrico Berlinguer's tacit
support of the austerity program has
stimulated criticism within the party,
although Berlinguer and his associates re-
main firmly in control. The meeting of the
party's Central Committee in October Amendola, reflecting the dominant
was notable for the different approaches viewpoint of Berlinguer, argued that
to economic problems recommended by workers must sacrifice now to ensure a
party president Luigi Longo and direc- more equitable redistribution of future
torate member Giorgio Amendola. resources. Longo and others urged that
Italian Communist Party President Longo (1) and party secretary Berlinguer
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the party must do nothing to violate the
interests of its working class base.
Support of Andreotti's stabilization ef-
forts has caused a rift between the party
and the Italian labor unions. Most party
ecoromists are convinced that Italy's ex-
tens ve wage indexation system must be
curhed, but the party has been unable to
pers lade the unions of this.
Luciano Lama, head of the Com-
munist-dominated labor confederation,
failed in his attempt to secure labor accep-
tance,, of a change in cost-of-living ad-
justments from a quarterly to a semi-
annual basis. The party is now channel-
ing its efforts toward persuading workers
to hold down additional wage demands
in an approaching series of company-
level contract negotiations.
The party realizes that its support of
the Andreotti program is testing its ties
with both the unions and its own
membership. Communist economists
have warned Berlinguer that he can con-
tinue to rely on labor support for his
political position only if something tangi-
ble in the way of social reform or
economic progress is produced. Party
analysts speak of the leadership having
signed a "promissory note" with the rank
and file that may remain outstanding for
six months or a year, but not indefinitely.
Positions on Payments Problems
Along with curbing inflation, an im-
mediate goal of the Communists is
halance-of-payments equilibrium. More
consistently than most noncommunist
economists, party economic experts ad-
vocate controls to solve problems in the
short term. During last year's lira crisis,
the Communists urged petitioning the EC
for emergency authority to establish im-
port quotas for luxury items, and they
supported the import deposit scheme im-
posed by the government last March to
curb the external deficit.
If pressure on the lira resumes, the par-
ty probably would recommend tighter
controls over capital exports and over im-
port payments. Should consumption of
imports need to he cut sharply, the Com-
munists, would view rationing as the most
equitable policy.
The need to finance continued
payments deficits has taken on political
ramifications for the Communists, and
party economists generally oppose further
external assistance. Italy's large foreign
debt-totaling about $I-" billion-is seen
as a symbol of foreign control overthe
Italian economy.
Although the party is against declaring
a moratorium on debt repayments, it will
press for a rescheduling of the current
repayment program. If the present
debt-service schedule is to be met, party
economists contend, Italy would have to
shift its trade balance into surplus over the
next several years, an adjustment requir-
ing restrictive government policies. The
party believes the government can use its
debt as a bargaining tool vis-a-vis official
creditors by warning of the conse-
quences-particularly for New York and
European banks-of an Italian default.
Structural Changes
Over the longer run, the Communists
see import substitution as essential to im-
provement in Italy's external accounts. In
common with many center-left
economists, Eugenio Peggio, one of the
party's leading economists, recommends
the rapid expansion of domestic
agriculture and maintenance of the farm
population at current levels. He par-
ticularly emphasizes the need to boost
meat production; after crude oil, imported
meat is Italy's most costly item in terms
of foreign exchange.
The Communists go much further than
most noncommunist economists in ad-
vocating major changes in the Common
Agricultural Policy of the EC. The Com-
munists have threatened to try restruc-
turing EC farm policy so that those
nations currently benefiting from the
policy-notably France and Den-
mark-would finance at least half of their
own agricultural surpluses.
The party also advocates a shift in trade
flows to reduce import costs. Peggio urges
that trade in raw materials and
semifinished goods he shifted toward in-
expensive suppliers either n the USSR
and Eastern Europe or among the
developing countries. The party
recommends barter agreements based on
the East European prototype to save hard
currency. The state holding companies,
with their proliferation of firms at all
stages of production, are seen as the
natural conduits for arranging barter
deals of a magnitude that cannot be
duplicated in other countries.
The Communists correctly maintain
that straightening out government
finances is essential for long-term
economic stability. Party resolutions
recommend ceilings on central govern-
ment and state agency budget expendi-
tures; no such fiscal control is recom-
mended for city governments, the largest
of which are controlled by the party.
The Communists also advocate decen-
tralization of programs. They would turn
over almost all public projects in the fields
of health, education, housing, and
transportation to the regional
governments for implementation. To aug-
ment government revenues, the party
favors accelerated collection of overdue
taxes and stringent tax audits to curb eva-
sion.
The Communists consider ad-
ministrative reform essential for effective-
ly implementing economic policy, as well
as for trimming the patronage that is an
important facet of Christian Democratic
power.
"Democratic Planning"
According to Luciano Barca, chief of
the party's economics section, Italy's
market system is obsolete. He believes
free enterprise in Italy has rested on the
pillars of cheap labor and inexpensive raw
materials. The collapse of these pillars
with the strengthening of the labor union
movement in the 1970s and the energy
crisis plunged Italy into its present
economic morass and, to Barca, signaled
the decline of a market-dominated
economic system.
The Communists profess a desire to
move Italy toward a planned economy
through a democratic system. They main-
tain that parliament, as the expression of
the popular will, should determine the
economic plan for society. Because the
government already controls so much of
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the economy-in recent years half of all
industrial investment has originated in the
public sector-the Communists believe
they can use the present system to gain
effective control of all parts of the
economy.
They would use the levers of the tax
system, credit control, and fiscal manage-
ment to ensure that both private and
public enterprise act in accordance with a
national economic plan. They favor a plan
for each sector of production and plan-
ning agreements among companies, un-
ions, and the government.
The Communists would channel more
investment into housing, schools,
hospitals, public transportation, and
economic development in southern Italy.
Giorgio Napolitano, a member of the
national directorate and secretariat of the
party responsible for economic and labor
policy, says planning would reduce
duplication of manufacturing facilities
and lead to a better distribution of in-
dustrial capacity.
Party economists focus on the indus-
trial reconversion program-a multi-
billion dollar aid effort for industry to
be enacted as part of the Andreotti
stabilization program--as a testing
ground for their theories. The Com-
munists are determined that the funds
allocated under this program go to job
creation, improved social services, and
development of the south; they do not
want them to benefit corporate interests
or the bureaucracy.
The party's office of economic research
recommends that economic planning ac-
company the reconversion program and
that planning guidelines be legislated in a
form binding on both the bureaucracy and
the industries involved.
Evaluation
Thus far, the party seems to be exerting
a positive influence on the austerity
program. While unable to gain union
acceptance of changes in the wage indexa-
tion system, the party has helped dampen
labor protest against other economic
measures. Labor's promise to hold down
wage demands and to increase productivi-
ty probably could not have been extracted
without Communist influence. Having in-
vested considerable political capital in the
Andreotti government, the Communists
have much to lose if its economic
programs should fail.
The Communists' longer range
economic program is likely to be extreme-
ly divisive. Despite their professed
allegiance to the EC, formal adoption of
several Communist proposals would run
counter to Community doctrine. Com-
munist demands for a reform of the sub-
sidy mechanism within the Common
Agricultural Policy amount to an attack
upon the system itself. Proposals to con-
trol luxury imports, reduce import
dependence, and redirect trade toward the
East and the developing countries could
only be accomplished by imposing con-
trols or subsidies.
Such measures would threaten the most
solid achievement of the EC-the free
flow of goods and services among member
states. The use of state holding companies
to conclude barter agreements would be a
competitive threat to trading nations
within and outside the EC that cannot ex-
ercise the same degree of coordination
and control.
While many of the party's fiscal
proposals have economic merit, others are
inspired mainly by political con-
siderations. The proposals to curb the ex-
penditures of the central government and
the state agencies, for example, are a call
for sound fiscal management, but
recommendations of fiscal decentraliza-
tion are clearly motivated by the strength
of the party in regional governments
rather than by a desire for greater ef-
ficiency.
The Communists are far less
emphatic about spending limits for
municipalities, which in fact have ac-
counted for much of the rise in the public
sector deficit in recent years. Communist
proposals for reform of public administra-
tion are not very subtle attempts to under-
mine the base of Christian Democratic
power.
The Communist goal of "democratic
planning" would increase government in-
terference, especially in the areas of credit
allocation and investment, and push Italy
further in the direction of a planned
economy. The party envisions tight
management of industry and a planning
center to set economic priorities. A
powerful leadership would be required to
implement those priorities. Thus, the
Communist program may imply a higher
degree of authoritarianism than can easily
be fit into a democratic framework.
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