WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011500200001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 21, 2016
• Document Release Date: June 3, 2008
• Sequence Number: 1
• Publication Date: May 20, 1977
• Content Type: SUMMARY

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c?
Secret
Weekly Summary
State Dept. review completed.
Secret
CG WS 77-020
May 20, 1977
Copy N2 66
DIA
review
completed.
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CONTENTS
t Reporting Group, reports and analyzes significant
pments of the week through noon on Thursday. It fre-
WEEKLY SUMMARY, issued every Friday morning by the
iiy includes material coordinated with or prepared by the
rch, the Office of Strategic Research, the Office of
ce, the Office of Weapons Intelligence,
e of Geographic and Cartographic Research.
1 Africa
Sudan-USSR; Ethiopia;
Zaire
2 Middle East
Israel; OPEC-US
3 Asia
Fakistan; India-USSR
4 Western Europe
France; Portugal; Spain
6 USSR - Eastern Europe
Bulgaria; Poland; USSR
7 Western Hemisphere
Peru; El Salvador; Arab
Funds in Latin America
Reelional and Political Analysis, the Office of Eco-
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Next 2 Page(s) In Document Denied
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SUDAN-USSR /
The Numayri government's expulsion
of the Soviet military advisory team will
exacerbate strains that have existed in
Soviet-Sudanese relations since 1971,
when President Nurnayri became con-
vinced the USSR had supported a nearly
successful attempt by the Sudanese Com-
munist Party to overthrow him.
The Sudanese apparently notified the
Soviet ambassador last week that all 90
Soviet advisers in Sudan would have to
leave within a week. The Egyptian news
agency reported that the advisers and
their dependents departed for home on
three planes on May 18. In addition,
Sudan reportedly has asked the Soviets to
reduce their diplomatic representation in
Khartoum, and the size of their economic
aid mission may also be affected.
The expulsion followed a week of an-
ti-Soviet demonstrations in Khartoum
orchestrated by the Sudanese govern-
ment. Numayri seems to have been
motivated by a desire to:
? Demonstrate his displeasure over
recent Soviet backing for Libya and
Ethiopia, both of which provide sup-
port to Sudanese dissidents.
? Prevent Soviet advisers from
collecting information on Sudan's
military preparedness for passage to
the Libyans and Ethiopians.
? Underscore Sudan's solidarity
with Egypt and perhaps ingratiate his
government with Saudi Arabia, which
would like to see Soviet influence in
the area reduced, and with the US and
France, from which Numayri hopes to
obtain more military equipment.
? Improve the atmosphere for
Numayri's trip to France this week
and for his scheduled visit to China
next month.
The US embassy in Khartoum believes
that Numayri made the decision to expel
the Soviets on his own, but probably coor-
dinated the move in advance with the
Egyptians and Saudis.
The Sudanese move is unlikely to have
a serious impact on Sudan's military
forces, with the possible exception of the
air force. The Egyptians may be prepared
to replace the Soviet advisers. Egypt now
has 300 military advisers working with the
Sudanese, including 100 with the air
force.
Since political relations with Moscow
cooled, the Sudanese have had trouble ob-
taining an adequate supply of spare parts
for their Soviet-supplied equipment; this
problem may now grow worse. The
Numayri regime will probably increase
the efforts it has been making in recent
years to acquire spare parts from China
and to diversify its sources of supply by
purchasing more Western arms.
25X1
ETHIOPIA
Activity in support of a planned
military drive against antigovernment in-
surgent groups in northwestern Ethiopia
has increased markedly in the past two
weeks. A people's militia made up of
recently recruited peasants and accom-
panied by regular Ethiopian forces may
begin operations against the rebels as ear-
ly as the end of this month.
Cash contributions of almost $1 million
have been made by the public, and an es-
timated 55,000 to 80,000 militiamen are
in a training camp near Addis Ababa.
They have been there for a month, and
some rudimentary training appears to be
under way. Citizens' associations in Addis
Ababa are contributing their labor to sup-
port the camp.
The offensive is likely to be directed
first at the Ethiopian Democratic
Union-a moderate opposition group
that controls parts of Begemdir
Province-and the secessionist Tigre
People's Liberation Front. Pockets of lef-
tist dissidents in areas north of Addis
Ababa also will be early targets. An offen-
sive against the more formidable
secessionist guerrillas in Eritrea Province
presumably will follow if the first phase is
successful.
The Union probably has about 2,000
reasonably well-armed men, plus several
thousand poorly armed sympathizers. It
has significant support in Begemdir and
other northern provinces, but suffers from
a lack of heavy weapons, ammunition,
and money. Some Arab states reportedly
have tentatively agreed to support the
Union, but their aid has not materialized.
Government forces will probably be
able to recapture most of the towns now
held by the Union, but the government's
difficulties in keeping a sizable force in
the field for long will work to the Union's
advantage. The Ethiopians' logistic
system is incapable of keeping the regular
army adequately supplied. Moreover, if
the militia offensive is delayed much
beyond the end of this month, it would run
into the rainy season, when large-scale
military operations would be exceedingly
difficult.
The effectiveness of any offensive by
the peasant militia will be determined
largely by the amount of training it
receives. The group has a better base of
organization, supplies, and weapons than
the thousands of peasants who were sent
out to fight secessionist guerrillas in
Eritrea last year; that operation turned
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ZAIRE -2! r
The Moroccan-supported Zairian army
is advanc.ng slowly in Shaba Region, ap-
parently hampered more by its own short-
comings than by Katangan resistance.
The Nigerian-sponsored talks between
Zaire and Angola, meanwhile, seem to
have all but ended.
The Zairian-Moroccan force that oc-
cupied tha important town of Kasaji on
May 12 reportedly advanced at least
another 20 kilometers west of the town
during the next several days. Another
government force was reported this week
to be halfway between Kafakumba and
Sandoa; Kafakumba apparently had been
reoccupied by government troops on May
I I after tf ey had gained almost no ground
in the are2. of the town for nearly a month.
To the north, a third government force
is advancing slowly on Kapanga, one of
the first towns initially occupied by the
Katangar invaders. The Katangans
reportedly abandoned the town last week
and fell back a few kilometers to the
south. Sandoa, Kisenge, and Dilolo are
the only major towns in Shaba still
thought to be in Katangan hands.
There tas been little sign of any con-
certed effort by the Katangans to stop the
four-week-old government advance,
although there is one report that they may
attempt a counterattack on Kasaji. The
slowness with which government forces
are moving is probably due in large part
to their own organizational, logistic, and
leadership weaknesses. River flooding
also is said to be slowing the offensive in
the Kapanga area.
Another obstacle may be the reluctance
of the Moroccan forces to take the lead.
The Moroccans prefer to play more of a
supporting role.
Zairian President Mobutu has been in
Shaba for four weeks and reportedly in-
tends to remain there until the invaders
are forced across the border into Angola.
Mobutu, who is making his headquarters
in Kolwezi, is portrayed by the
government-controlled press as personally
directing the war effort. He obviously is
trying to reinforce his political stature by
minimizing the role of his military com-
manders and claiming personal credit for
recent military gains.
Since last week, the talks between
Zairian and Angolan representatives ap-
parently have been either in recess or ad-
journed. The question of a neutral border
police force, advocated by Mobutu,
remains a major sticking point. Nigerian
"9 3 1S
The task of forming a new Israeli
government and the prospects for Middle
East peace negotiations were plunged into
new uncertainties this week when the
long-dominant Labor Party lost its
plurality to the right-wing Likud grouping
in the parliamentary election on May 17.
The outcome makes Likud leader
Menahem Begin the key person at the
start of negotiations for a new coalition
government, but it is by no means certain
that he will succeed.
On the basis of unofficial returns,
Likud won at least 41 of the 120 Knesset
seats; Labor and its close ally, Mapam,
came in second with 33. The new
Democratic Movement for Change, a
reformist party, took 14 seats, and the
National Religious Party, the guardian of
orthodox Jewish laws and values, won 12
seats. The remaining seats were scattered
among small parties.
Negotiations among the main parties
are sure to be difficult and protracted.
Begin will get together quickly with the
conservative Religious Party, which
shares Likud's opposition to returning
any part of the occupied West Bank to
Arab rule, but he will need the support of
either the Democratic Movement or
Labor to form a viable majority coalition.
Begin announced immediately after his
party's victory became apparent that he
would seek to form a government of
national unity. The odds seem heavily
against such an outcome, but the
dynamics of coalition negotiations have
been basically altered by the emergence of
the new party and at this early stage
nothing is to be excluded.
Labor's leaders, for their part, appear
divided on strategy. Some, including the
party's campaign manager, say flatly that
Labor will not enter a Likud-led cabinet.
Party leader Peres, however, has been
more noncommittal and may wait to see
what Begin offers. Labor's course during
the negotiations will be influenced by the
knowledge that if Begin finally is unable
to form a government, Labor could get a
crack at it or at appealing to the elec-
torate again in a new election.
A conservative government led by
Begin would give neighboring Arab states
special pain. Although Arab leaders see
little difference among Israeli leaders,
Begin is particularly anathema to them. A
Begin government will confirm their con-
viction that Israel is not prepared to make
the concessions the Arabs consider
necessary for peace in the Middle East
and will, in turn, reduce Arab willingness
to make concessions of their own.
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OPEC-US
31.-3
Z
Member states of the Organization of
Petroleum Exporting Countries increased
their investments in the US by a net figure
of nearly $7.5 billion in 1976; their total
investments in the US now come to more
than $28.3 billion. The US received about
30 percent of these countries' new in-
vestments abroad in 1976, up from 25 per-
cent a year earlier.
Saudi Arabia and Kuwait invested $5.3
billion and $3 billion respectively in the
US last year, bringing their combined
holdings in the US to more than $20
billion. The two now account for 72 per-
cent of holdings by OPEC countries in the
US; at the end of 1975, they accounted for
less than 60 percent.
Iran and the United Arab Emirates,
which together invested $1.1 billion in the
US last year, were the only other OPEC
members to post substantial gains. Some
of the remaining nine reduced their US
holdings.
Most of the new funds went into
medium- and long-term US assets; about
5 percent of the new funds were invested
in foreign securities by US trust
managers. Saudi Arabia put the bulk of
its funds into medium- and long-term
government securities and also increased
substantially its holdings of corporate
securities.
Kuwait invested most of its funds in
corporate issues, mainly equities. In both
cases, the countries are seeking the higher
returns offered by longer term assets.
OPEC countries' bank deposits, which
offer relatively low interest rates, in-
creased only slightly last year.
OPEC investment in the US this year
will probably equal or exceed that of
1976. Saudi Arabia will have a larger sur-
plus to invest and has already increased
allocations to its US trust accounts, in-
dicating that a higher proportion of 1977
investments in the US will go to corporate
securities, possibly with increased
emphasis on corporate debt issues.
The Kuwaitis will probably increase
their US holdings in the next few months,
too. They recently opened a new equity
account.
reports he is planning a nationwide tour in
June-presumably part of the referendum
campaign.
Bhutto is probably interested primarily
PAKISTAN 3 .j
Prime Minister Bhutto is attempting to
buy time by keeping alive hopes, especial-
ly among the military, that some form of
political settlement in Pakistan is still
possible despite a breakdown in his
negotiations with the opposition. His
latest effort is a proposal for a referendum
on his continuation in office.
As Bhutto probably expected, opposi-
tion leaders quickly rejected his proposal.
They argued that an honest referendum is
impossible with Bhutto in office, that he
would have far too much control over
procedures and timing, that he has badly
distorted the issue by saying the choice is
between him and chaos, and that even if
he lost and resigned, his successor would
be chosen by a fraudulently elected
National Assembly.
Bhutto nonetheless, apparently intends
to go ahead with his plan. He had the
constitution amended this week to allow
the referendum, and according to press
in the proposal's effect on senior generals.
They are unlikely to intervene to end the
political crisis as long as they see some
prospect for a political solution. Bhutto
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surfaced the plan for a referendum after
his negotiations with opposition leaders
on proposals for a political compromise
had broken down.
The military is likely to judge the value
of any proposal not on its merits, but by
the intensity of the opposition's reaction.
Should The opposition again be able to
create widespread civil disorder, the
senior generals might well decide there is
no alternative to military intervention.
Discortent among military officers ap-
pears to be growing, adding to pressure
on the senior generals to act. Several
brigadiers apparently have resigned to
protest the use of force against civilians,
and there have been a number of reports
indicating serious dissatisfaction among
more junior officers.
The opposition has returned to the
streets in recent days and violence is in-
creasing, although there have been no
serious problems in those cities where
martial law is in effect. The violence has
not reached the level it did in April, when
demonstrations nearly drove Bhutto from
INDIA-USSR ~ 6
Efforts by the USSR to preserve its
preeminent position in India are con-
tinuing with the scheduled visit to New
Delhi later this month of the commander
of Soviet ground forces, General
Pavlovsky. The Pavlovsky visit follows
Foreign Minister Gromyko's trip to India
by only a few weeks and is another sign of
Soviet concern that relations with India
may cool in the wake of former prime
minister Gandhi's election defeat.
The Soviets are probably especially
anxious to shore up the military connec-
tion. India's military leaders were never
as favorably disposed toward the USSR
as was Gandhi, and the Soviets probably
are concerned that they will be less
amenable now to close cooperation.
Pavlovsky apparently has had an open in-
vitation for some time and accepted it
only recently.
The Indian military appreciates
Moscow's willingness to provide a wide
range of sophisticated military hardware
for its navy and air force, but it tries to
prevent the Soviets from gaining influence
with Indian troops.
There has been, for example, recent
evidence that New Delhi would like to
diversify its sources of military equip-
ment. Moreover, military leaders limit
both the number of Indians sent to the
USSR for training and the number of
Soviet military personnel in India. India
is one of the largest recipients of Soviet
military aid in the third world., but only an
estimated 300 Soviet military advisers are
stationed there. By comparison, there are
some 1,200 Soviet military advisers
stationed in Iraq and 2,500 in Syria.
For years, the USSR has pressed India
to grant special port privileges for the
Soviet navy and landing rights for TU-95
reconnaissance aircraft. Even under the
Gandhi government, however, the re-
quests were always denied.
FRANCE I (- 5 /
The French Communist Party's
publication last week of the estimated
costs and benefits of the common
program of the Socialist-Communist
alliance has embarrassed the Socialists
and handed the governing coalition its
first solid issue against the left in some
time.
In a subsequent televised debate, Prime
Minister Barre was able to force Socialist
leader Mitterrand to disassociate his
group from the estimate of costs the Com-
munists published, thus making the
differences between the two alliance par-
ties glaringly evident. Most of the Paris
press proclaimed Barre the winner of the
debate.
The Communists' motivation in hand-
ing the government this unexpected am-
munition and thereby sabotaging
Mitterrand, who is one of France's most
experienced and talented debaters, is com-
plex. The Communists, involved in a
power struggle with the Socialists, un-
doubtedly timed their move to influence
negotiations between the leftist parties
that began with an alliance "summit"
eting this week. Communist leaders
wanted to head off criticism from
Ibng-time members who fear that the par-
~~ t
i
i
i
t
ith th
h
y
s comprom
s
ng
w
oo muc
e
Socialists. There may also have been a
certain amount of miscalculation.
The Communist estimate of the cost of
the common program advocated by the
left is nearly $100 billion-half again as
large as the government's 1977 budget.
The program would produce a massive
and rapid transfer of income to the lower
end of the wage scale, and would be
financed by the business sector and by
higher taxes on the wealthy. Most of the
French public would view the program as
highly inflationary.
The incident is only one of several re-
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cent examples of friction within the left
alliance sparked by the Communists or
their labor federation. The Socialists
believe that the Communist Party's
tougher line is due to its need to maintain
a distinct identity for itself and to remain
clearly separated from the Socialists in
the public mind. The Communists are
concerned that a blurring of the lines
between the two parties may be weaken-
ing the militancy of some Communists
and could eventually lead to a transfer of
votes from their party to the Socialists.
The Communists nonetheless have a
strong interest in resolving their policy
differences with the Socialists, as they
have indicated by recent conciliatory
statements on the European Parliament
and the French nuclear force. On the
latter issue, the Communists, in a move
designed in part to increase their popular
support, announced last week that they
will not oppose retention of France's
nuclear strike force if the left alliance
comes to power. Statements by party
leaders indicate, however, that they re-
main sensitive to any indication that
France would move closer to NATO and
are uncomfortable about the nuclear
force's intended purpose of defending
against a threat from the East.
PORTUGAL ~ 6 "Z-
Azorean separatists clashed with police
on May 15 in Ponta Delgada, the main
city of the Azores, over the display of the
Azorean flag. The incident demonstrates
the mainland government's fear of the
minority that favors independence.
The dispute began when supporters of
the Azorean Liberation Front-a conser-
vative group advocating immediate in-
dependence for the archipelago-defied
orders from Portuguese authorities not to
fly Azorean flags alongside Portuguese
flags for local holiday celebrations. The
Azorean flags normally are flown openly
on private property. When police
attempted to remove the Azorean flags, a
scuffle broke out in which several people
the Democratic Center gives this center-
right coalition a boost that should enable
it to win a plurality, probably with 30 to
40 percent of the vote. However, the
coalition's designation-in a dis-
pute-ridden selection process-of a
number of candidates who were
associated with the Franco regime may
result in the election of some conser-
vatives less committed to reform than
Suarez.
Suarez also has the disadvantage of be-
ing held responsible for maintaining order
during the pre-election period. Recent
police brutality in controlling
demonstrations has triggered further
protests over his inability to reform the
police. Demonstrations by Basques, who
are demanding the release of the remain-
ing political prisoners in Spain, led to 25X1
several deaths last week. Tension eased
this week when major Basque parties and
trade unions urged a halt to
demonstrations for fear that further
violence could undermine the election.
The Democratic Center must also share
centrist votes with a coalition of several
Christian Democratic factions. This
grouping, led by Joaquin Ruiz Gimenez,
is known for its opposition to the Franco
regime and could win 8 to 15 percent of
the vote. It has agreed to run joint lists
with the Democratic Center in some
provinces.
were injured.
The incident has created new tensions
between the Socialists, who run the
mainland government and the Social
Democrats, who dominate the Azorean
regional government. The Socialists-and
President Eanes-were quick to criticize
the regional government's lack of
firmness in dealing with the separatists.
The Social Democrats, in attempting to
play down the incident, claim that the
regional government supported the dis-
play of the Azorean flags to affirm their
interest in regional autonomy. The repri-
mand from President Eanes was especial-
ly disappointing to the regional govern-
ment because he recently had shown some
understanding and sympathy for Azorean
aspirations for increased autonomy.
SPAIN 1 ,~ "
Many of Spain's numerous legal parties
have formally established coalitions to
contest the parliamentary election next
month. Only 5 of the 18 coalitions have
nationwide appeal, and they are likely to
dominate the election.
Prime Minister Suarez' announcement
early this month that he will run at the
head of the Madrid list of the Union of
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The main coalition on the right is the
Popular Alliance led by a well-known
former interior minister, Manuel Fraga.
Although he favors moderate reform,
Fraga Fas thrown in his lot with a number
of rightist groups headed by former
ministers under Franco. Alliance
spokesmen are alleging a threat to order
by the recently legalized Communist Par-
ty and will play up any pre-election dis-
orders to draw conservative votes. Latest
estimates give the group 15 to 24 percent
of the vote.
The Socialist Workers' Party of Felipe
Gonzalez, which has the support of West
European socialist and social democratic
parties, represents the democratic left. It
may obtain 15 to 21 percent of the vote.
Communist Party leader Santiago
Carrillo espouses a "Eurocommunist"
moderate line but is handicapped by his
alleged involvement in a massacre during
the Spanish Civil War. His efforts to give
the party a moderate image in the cam-
paign may be hampered by the return to
Spain on May 13 of its titular head,
81-year-old Dolores Ibarruri, after nearly
40 years in exile. Ibarruri is an un-
reconstructed Stalinist who opposes
"Eurocommunism." In any event, the
party is not expected to win more than 5
to 10 percent of the vote.
BULGARIA
Boris Velchev, number-two man in the
Bulgarian Communist hierarchy, was
ousted f om all party positions on May
12. His removal, which was not explained
by the party, represents the most serious
crack in :he Bulgarian leadership in more
than a decade.
As the man in charge of party personnel
and sect.rity matters, Velchev wielded
vast power. The decision to deprive him
of all positions, including his membership
in the Central Committee, implies that he
was involved in extremely serious offenses,
possibly even a plot against party leader
and chief of state Zhivkov.
One of Velchev's responsibilities was
coordinating relations with foreign com-
munist parties, and his dismissal may
have involved policy differences with the
USSR. In earlier years, Velchev had been
rumored to be opposed to certain aspects
of Soviet foreign policy, and his failure to
appear during a visit to Sofia by General
Secretary Brezhnev in 1973 was regarded
as an indication of those differences.
The announcement earlier last week
that Zhivkov will visit Moscow soon
suggests that the Bulgarians wanted to
dispose of the Velchev case before that
visit. Velchev's ouster creates a fourth
vacancy on the Politburo; in April 1976,
three members of lesser importance were
POLAND
The recent death, probably at the hands
of the police, of a Polish student with
close ties to dissident intellectuals could
become an important rallying point for
the flagging dissident cause in Poland and
create more headaches for party leader
Gierek. Students are pressing the regime
to investigate the death; if they maintain
their campaign, Gierek will face his most
serious political test since last June when
Polish workers rioted to protest proposed
price increases.
Thousands of students turned out on
May 15 for a requiem mass and a
candlelight procession in Krakow to
mourn the death of the student. Several
leading members of the dissident human
rights organization, the Workers' Defense
League, tried to participate in these
ceremonies but were prevented from do-
ing so by Polish officials and were
,arrested the following day. Five have been
charged with contacts with "alien
organizations harmful to
Poland"-probably meaning either Radio
Free Europe or Kultura, a Paris-based
Polish emigre journal. If convicted, they
could be sentenced to seven and a half
years in prison. Until now, the regime had
not detained dissidents for more than the
48 hours allowed by Polish law nor
brought charges.
Regime leaders have said nothing
publicly about the demonstrations or the
arrests. In the past, Gierek has been
careful in handling dissidents in order not
to create martyrs, but he may be facing
some tough decisions. The students ap-
parently intend to keep up the pressure for
a full investigation. At the May 15
demonstration, they announced the es-
tablishment of a solidarity committee to
support the human rights goals of the
Workers' Defense League as well as plans
to hold memorial services in other Polish
cities.
The students plan to hold another
memorial service in Warsaw on May 20.
Although there were no violent incidents
in Krakow, the potential for trouble is
greater in Warsaw, where the universities
are centers of dissident and human rights
activism. The student turnout is expected
to be large, and the regime will probably
take special precautions to ensure that
there is no violent confrontation.
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USSR
Moscow in January. The shortages also
have been politically embarrassing to
General Secretary Brezhnev, who is the
Kremlin spokesman for agricultural
policy.
Moscow appears confident that the
momentum generated by last year's
record grain crop can be sustained, and
the outlook for this year's grain crop is
still favorable. Winter losses appear to be
below normal, spring sowing is running
slightly ahead of the pace of last year, and
soil moisture is generally good.
Even if this year's harvest turns out
well, the odds are strongly against the five
successive years of better-than-average
weather necessary to achieve the 1976 to
1980 grain production targets, which are
more than one fifth larger than actual
output during 1971 to 1975. Past ex-
perience suggests the weather will cause
one or two serious crop shortfalls before
1980.
In the industrial sphere, last year's
growth was the slowest since World War
11. For the first quarter of 1977,
moreover, industrial output in the civilian
sector is estimated to have risen by only
4.3 percent over the same period last year.
Growth in energy-producing sec-
tors-fuels and electric power-fell to an
all-time low of 3.5 percent for the quarter.
This in turn may prevent recovery in the
steel and cement industries. Steel produc-
tion dropped by 1 percent for the quarter,
while the growth rate for civilian
machinery output-usually a star per-
former-fell to a seven-year low in 1976
Despite a record grain crop last year,
the Soviet Union continues to suffer from
its worst food shortages in a decade. The
industrial sector, meanwhile, may be
heading for a second consecutive year of
sluggish growth.
There were sharp declines throughout
1976 in amounts of food normally
available to consumers. Overall supplies
of staple foods had recovered by early this
year, but serious shortages of meat, milk,
and vegetables, including potatoes, con-
tinue in many places.. The meat shortages
will persist for some time, and a
reasonable volume of fresh vegetables will
not appear in northern cities before July
at the earliest.
Although the situation does not en-
danger the regime, the shortages have
caused unrest and even some work stop-
Rages.
food shortages in provincial
cities may have led to three bombings in
and sank even lower during the first
quarter of this year.
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PERU 7 7/ ?7
General Morales Bermudez, the head of
Peru's military regime, has been holding
talks with party leaders that could further
his plan to return the country to civilian
rule by 1980. Any transfer of power will
be gradual, and Peru's uncertain
economic situation could delay its im-
plementation.
Last month, military leaders expressed
confidence in Morales Bermudez by ex-
tending his presidential term beyond the
date early next year when he was to retire
from the military. Since then, the Presi-
dent reportedly has been discussing a
return to representative government with
a wide range of political parties.
Besides conferring with the Christian
Democrats and the Socialist Popular Ac-
tion, both of which support his govern-
ment, Morales Bermudez has met with
the Peruvian army's principal an-
tagonist-Victor Haya de la Torre's
erican Popular Revolutionary
lliance. He was also scheduled to meet
Soviet citizens wait their turn for scarce meat supplies
with the Peruvian Communist Party and
the Popular Action of former president25X1
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Belaunde who was overthrown by the
military i n 1968.
It is not clear how far the military is
prepared to go in restoring a democratic
system. The parties are nonetheless set-
ting forth their views on presiden-
tial, parliamentary, and municipal elec-
tions.
The consultations will in any event
mollify :he government's critics by
,demonstrating at least a semblance of
Political violence has been mounting in
tl Salvador since February, when the
long-dom.nant ruling party was declared
the winner in a fraudulent presidential
alection. The murder last week of kid
naped Foreign Minister Borgonovo by
?eftist opponents of the regime has
markedly heightened tensions.
Protest demonstrations in February by
upporter:; of the opposition presidential
andidate led to a bloody clash with the
National Guard and the imposition of a
state of siege. Since then, the courts and
-sews med a have been under military con-
trol, political meetings have been banned,
and citizens have been barred from leav-
ing the co.mtry.
These measures have been accom-
panied b'i a government campaign of
mepression against leftist groups and per-
.;ons suspected of aiding them, including
,clergymen. Several Catholic priests
suspected of having such ties have been
expelled from the country and others have
been murdered by right-wing groups.
The wave of repression has prompted
the usually reticent Salvadoran Catholic
Church to publicly accuse the government
x)f torture, illegal detentions, harassment,
and intimidation of clergymen. After a
Jesuit priest was killed last March, the
Archbishop of San Salvador prohibited
priests from taking part in any official
state ceremonies.
Leftist terrorist groups, however, are
not intimidated. The murder of
Borgonovo by one of the main ,groups, the
Popular Liberation Forces, appears to be
the beginning of a more intensive terrorist
campaign. The authorities have few effec-
tive ways of dealing with or penetrating
terrorist groups and will probably con-
tinue to harass leftist priests and diis-
sidents supected of supporting the
terrorists.
The state of siege will doubtless be
maintained beyond the inauguration on
July I of President-elect Romero, who
will himself continue to rule by repression.
He reportedly has threatened to expel all
Jesuits in the country when he takes of-
lice.
Last February, the US embassy re-
'eived unconfirmed reports of coup plot-
ting by officers who were upset by the
government's blatant vote rigging in the
,election or were dissatisfied by Romero's
election. Although a prolonged wave of
-epression could eventually galvanize
some elements of the military to move
against the government, there is currently
no evidence that discontent focuses on
the repression issue or has united around
an individual officer or group of officers.
Arab Funds in Latin America
Kuwait and Libya have offered several
Latin American banks $60 million to es-
tablish a joint development bank. The new
bank, which would have an initial
capitalization of about $100 million,
would help finance joint Arab-Latin
American industrial projects in Brazil,
Colombia, Chile, Argentina, and Peru.
Some of the banks involved in the joint
proposal reportedly are also considering
participation by European countries.
Until recently, Arab governments have
invested only small amounts of capital in
Latin America. The Arab-Brazilian In-
vestment Company, a Kuwaiti-Brazil-
ian enterprise set up to invest in joint
ventures in Brazil, had provided most
of those funds.
Over the past year, however, Kuwait
and Libya have shown increased interest
in Latin America. Kuwait committed $31
million in development assistance to
Jamaica and Ecuador, the first instance of
sizable Arab aid to Latin America. Libya
has been negotiating agreements with
Argentina, Brazil, Panama, and Surinam
that would provide them with economic
credits and investment in joint ventures.
Among the Arab oil-producing states,
Kuwait and Libya have been the most ac-
tive participants in joint investments in
non-OPEC developing countries. Each is
involved in such ventures in at least 20
developing countries throughout Asia and
Africa. Kuwait and Libya first teamed up
in January when they established the joint
Turkish-Arab Bank.
WEEKLY SUMMARY May 20, 77
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Foreign workers are pouring into the oil-producing coun-
tries of the Arabian Peninsula in response to rising income; they
bring skills that contribute to economic growth, but they also
create economic and social problems.
-,? 7
Arab States: Labor Boom
For more than two decades before
1973, Arab workers drifted steadily into
Saudi Arabia, Kuwait, and the smaller
Gulf states. Their numbers-never more
than 100,000-were easily absorbed.
Western personnel were brought in to
manage and operate the oil fields and to
fill other skilled positions, but their
numbers remained fairly stable.
Rising oil income, however, has recent-
ly triggered a mass migration of labor in
the Arab world. More than a million
foreign workers have poured into the
Arab oil-producing states of the Persian
Gulf since 1973, bringing the total foreign
labor force to 1.6 million. The number is
likely to double by 1980.
Saudi Arabian development plans have
had the biggest impact on labor demand.
The Saudis spent $1.1 billion in the fiscal
year preceding the oil price hike in early
1974; they now have a $140-billion
five-year development plan. This plan
alone calls for an increase in the labor
force from 1.6 million in 1975 to 2.3
million in 1980. Of the 700,000 increase,
500,000 workers would come from
d
manpower plan un
erstates the need by at
least 300,000 workers.
Although some foreign workers are
needed for only two or three years to fill
jobs in the booming construction business,
most are hired for permanent jobs in
fields such as retail trade, teaching,
medicine, and government service. The
demand for outside labor in fact covers
nearly all occupations. A recent Saudi
contract with a US sanitation firm, for ex-
ample, calls for the import of 2,000
workers, primarily from Pakistan and
Egypt, to collect garbage in Riyadh.
Kuwait, the United Arab Emirates,
Oman, and Qatar have also stepped up
their modernization programs since 1973.
Development spending in the UAE, for
example, jumped from $18 million in 1973
to $750 million in 1975.
The demand for foreign labor has been
pushed even higher by ambitious military
programs that drain domestic manpower.
The Saudi military, which is scheduled to
double its strength by 1980, currently
sponsors 30 percent of the Saudis study-
ing abroad and will have first call on these
students when they return.
Kuwait and the smaller Gulf states do
not have populations large enough to man
completely their military forces; the
UAE's air force, for example, is
dominated by Pakistani pilots, and the
army is run largely by Jordanians.
The oil states fill some of their labor
needs by offering high wages and by going
far afield, including Asia and the US. The
Saudis have hired stevedores from the
Chicago docks.
To assist recruitment, several Middle
Eastern goverments require foreign con-
tractors to bring in the labor force needed
for their projects. A US contractor for
one construction project in Saudi Arabia,
for example, will have to supply more
than 25,000 foreign workers. The foreign
labor requirement has been a boon to
South Korean contractors, who are able
to supply the full range of labor needs
from ditchdiggers to engineers.
About 1.2 million of the roughly 1.6
million foreign workers now in the oil-
producing countries are Arabs-primarily
North Yemenis, Egyptians, Jordanians,
and Palestinians. Since 1973, increasing
numbers of Pakistanis, Indians, and
South Koreans have obtained jobs as the
Arab pool of excess labor has dried up.
Egypt is now the only Arab country in a
position to furnish large numbers of
workers to the oil states.
Saudi Arabia has taken the lion's share
of the workers coming into the area. Im-
migration has boosted the Saudi popula-
tion by almost 25 percent in less than
three years. About one third of the pop-
ulation is now foreign.
The smaller Persian Gulf states, while
taking relatively few workers, have dou-
bled their populations. Foreigners make up
more than 75 percent of the population in
the UAE and about 55 percent in Kuwait.
Only Iraq among the Arab oil states has
not imported large numbers of workers.
Although encouraging Arab immigration,
Iraq has met manpower needs primarily
from its own labor force of 3.5 million.
The void left by the rush to the oil states
has set off a secondary migration to non-
oil-producing Arab countries. Jor-
dan-also enjoying an economic
boom-has brought in Pakistanis, Egyp-
tians, Taiwanese, and South Koreans, as
well as Palestinians from Israeli-occupied
Gaza and the West Bank.
The Syrian labor force, which lost large
numbers of Palestinian workers to the oil
states, was resupplied by 1 million
refugees escaping the fighting in Lebanon.
Roughly 400,000 of these people remain
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Economic Impact
The large inflow of foreign workers has
both contributed to economic growth and
precipitated economic problems. Inflation
has-been running at 20 percent or more a
year in the area since 1973, reflecting
soaring wages, housing shortages, and
new demand for imported foodstuffs and
other basic consumer goods, the cost of
which has been magnified by severe port
congesticn. Despite the influx of workers,
wages are now roughly three times the
1973 average in Saudi Arabia, UAE,
Kuwait, Qatar, Oman, and Bahrain.
Wage rates for unskilled labor have risen
more than sixfold.
Seriou i housing shortages have resulted
from the rapid increase in population and
the more than twofold rise in disposable
income in the Arab oil states since 1973.
Saudi Arabia needs 200,000 housing u-
nits, and sanitation facilities are scarce.
Turkish workers in Saudi Arabia recently
went on strike, complaining that they had
only one refrigerator per 400 people.
The situation is not much better in
other oi: states. Kuwait's shantytown
numbers 120,000 people and is growing.
Many of the same problems have
spilled over to the Arab nations that pro-
vide workers to the oil states. Labor short-
ages and the competition for workers
have dra?v-n up wages in Jordan and North
Yemen as fast as in the oil states. The
building trades have been hit particularly
hard; in Jordan, wages in construction
have increased fourfold over the last four
years. Average wage levels, however, re-
main well below those in the oil states.
On the positive side, Jordan, North
Yemen, and Egypt have benefited greatly
from wcrker spending, which totaled
some $2 billion in 1976. In fact, spending
by workers in both Jordan and North
Yemen i~. a larger source of foreign ex-
change than commodity exports.
Social Strains
Foreigi workers are indispensable to
the governments and economies of
Kuwait and the small Persian Gulf states,
but the large foreign presence clearly
strains political and social stability. In
Kuwait, where many foreign workers and
their families have lived for years,
demonstrations, flag-burnings,
pamphleteering, and even bombings have
been carried out, primarily by
Palestinians attempting to influence
Kuwaiti foreign and domestic policies.
The Kuwaiti government has taken a
tough stance. Troublemakers are prompt-
ly deported, parliament has been dissolv-
ed, the press is under strict censorship,
and unions and professional societies are
forbidden to deviate from government
policies.
Even more worrisome, especially to
Saudi leaders, is the threat to social
traditions. So far at least, the Saudi
leadership seems prepared to risk the
social cost of industrial and educational
development. The Saudi royal family is
not completely unified on this, however,
and conservative religious leaders an-
tagonistic to development still have a
voice in government decisions.
By 1980, there will probably be around
3 million foreign workers in the Arab oil-
producing countries of the Persian Gulf.
Most of the increase will come from out-
side the Arab world. Pakistan probably
will provide about half of the total in-
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crease. South Korea will most likely be
the major source of non-Muslim workers,
and Egypt-still with considerable slack
in its labor force-will supply most of the
small rise expected in Arab workers.
By 1980, preparations for accom-
modating foreign workers will be nearly
complete. Port expansion and im-
provements in the handling and distribu-
tion of goods will greatly ease competition
for consumer goods, and housing con-
struction now under way should alleviate
shortages. The foreign presence will,
however, continue to rise as workers are
needed to build and operate new in-
dustrial facilities. The number of con-
struction projects is not likely to decline in
the 1980s.
Barring a complete reversal of develop-
ment policy, most oil states will become
melting pots. In the smaller Gulf states,
foreigners may outnumber locals by as
much as 10 to 1, and it will be nearly im-
possible to prevent them from having a
voice in government policy. Saudi Arabia
too will find it hard to ignore the political
demands of a major portion of its popula-
tion.
As the belief grows in French political circles that the
parliamentary election scheduled for March 1978 is all but lost
to the left, President Giscard and his coalition partner, Gaullist
leader Chirac, are each believed to be weighing the possible ad-
vantages to himself of moving up the vote.
The labor boom will put pressure on the
Arab states to expand the role of women
in the work force, but progress will be
slow. Jordan employs only 3.5 percent of
its large potential labor pool of literate
15- to 35-year-old women, despite a policy
of actively encouraging women's par-
ticipation in the labor force. In Kuwait
and Saudi Arabia, women are not
accepted as workers outside the home ex-
cept as nurses or teachers in girls' schools.
This situation probably will not change
markedly in this century.__
France: Possibility of an Early Election
Speculation is growing among French
politicians that the legislative election,
which must be held by the end of next
March, will be advanced. Rumors about
an early election have been circulating
for months, but speculation has intensi-
fied recently as disenchantment with Presi-
dent Giscard grows, rifts in the governing
coalition deepen, and the growing pop-
ularity of the Socialist-Communist
alliance seems to ensure it an electoral
majority.
The widely held belief that the
Socialist-Communist coalition will win is
stimulating an attitude that "it's best to
get it over with." The French press has
reported such sentiments among members
of the governing coalition parties, but
their leaders-Giscard, Prime Minister
Barre, and Gaullist chief Chirac-have
repeatedly denied that the election will be
advanced.
The leaders have good reason to stick
with their commitment to hold the elec-
tion on schedule, but it is symptomatic of
the current sense of drift in French politics
that their statements are not believed. Re-
cent efforts to paper over problems within
the coalition have not succeeded, and rifts
are so deep that both Chirac and Giscard
are constantly re-evaluating the personal
advantages that an early election would
offer.
Any initiative for advancing the elec-
tion will come either from President
Giscard-who has constitutional authori-
ty to dissolve the Assembly-or from
Chirac, who holds the votes that could
destroy Giscard's majority. The leftist
leaders cannot directly provoke action;
they can only precipitate massive labor
protests, which might be counterproduc-
tive and hurt their own chances at the
polls.
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The National Assembly cannot vote to
dissolve itself. It could defeat the govern-
ment on a vote of confidence-which the
Prime Minister has said he will not again
request before March-or it may censure
the government. The President is not
compelled to respond to these actions by
calling an election, although either move
probably would eventually force him to do
Arguments For
The Gaullists believe that the election is
all but lost, that the left will only increase
its lead in the period before it is held, and
that an anti-left backlash would return the
Gaullists to power a year or two
afterward. Thus, the party would favor
putting the election behind it.
Chirac recognizes that continued at-
tacks on the government to establish a
separate identity for the Gaullists will also
hurt their cause. Chirac might conclude
that he can better revitalize his party and
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win back voter support as opposition
leader than as Giscard's less-than-loyal
.illy. Lastly, the Gaullists may conclude
that the loft should not be allowed to reap
any benetits accruing from a possible im-
provement in international economic con-
ditions, but should rather be forced to
cope with the nation's current economic
problems.
Giscarc, for his part, might conclude
that prolonging the pre-election period
would severely damage the nation and
that he could best serve the country and
salvage his personal popularity by seeking
an early election. Giscard would expect to
use the presidency to moderate the left's
program if his coalition is defeated.
He believes that he can work fairly
smoothly with a leftist government until
his term ends in 1981. He would also hope
for an early split in the left ailiance that
would allow formation of the center-left
government he wants.
Giscard might also reason that the
serious losses the Gaullists are expected to
suffer in the election would discredit
Chirac and reduce the Gaullists to the
more modest role Giscard believes the
party should play.
Arguments Against
Arguing against dissolution of parlia-
ment are not only the repeated public
commitments by Giscard, Barre, and
Chirac not to advance the election date,
but also the damage that Giscard and
Chirac would suffer by such a move.
Chirac would have to bear the onus of
allying himself with the left to bring down
the government; neither he nor Giscard
wants to be the man who invited the
Socialists and Communists into power.
Giscard, moreover, would forfeit for 12
months his power to call a new election if
he dissolves the National Assembly.
Were Giscard to decide that the best
Ml
course for France is an early legislative
election, he would open the door for the
left to press for a similarly early vote on
the presidency. This could frustrate
Giscard's desire to serve his full seven-
year term.
In order to keep the Gaullists in line,
the Elysee may be encouraging stories
that Giscard feels under pressure to call
an election. The President knows that the
threat of dissolution is one of the few
weapons he has to goad the Gaullists into
being more cooperative with him.
Decisions Deferred
All the governing coalition parties need
time to re-evaluate their positions, to try
to cut their losses in the election, and to
prepare for a period out of power. Hopes
are fading that the government's
economic program will produce results
that will help the coalition at the polls.
Despite indications to the contrary,
Giscard and Chirac may not have made
up their minds on the election question. If
the vote is to be advanced, vacation
schedules and winter weather conditions
leave dates in the early fall as best for a
maximum turn-out of the coalition's sup-
porters. If an early election is called, it
must be held 20 to 40 days after dissolu-
tion of the parliament,
3 TliAvplAI 'Rr*e/'e
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An authoritative stinging attack on current Chinese
leaders in Pravda indicates that the Soviets have abandoned all
hope for any early improvement in Sino-Soviet relations.
USSR-China: Soviets Escalate Polemics
A Pravda attack on May 14 against
China's leaders is the most vituperative
Soviet criticism of the Chinese leadership
since Mao's death. The article appeared
over the signature "I. Aleksandrov," in-
dicating that it is an authoritative state-
ment from the Soviet leadership. The arti-
cle responded specifically to recent
high-level Chinese warnings of ap-
proaching war, but was probably
prompted by what the Soviets see as a
possible US relaxation of restrictions on
Western arms sales to China.
The article charges Peking with:
? Stubbornly resisting the spread of
political detente to the military field.
? Fighting arms control and disar-
mament efforts.
? Interfering with the normal
development of relations between
nuclear powers.
? Putting the Chinese economy on a
war footing.
? Supporting reactionaries in the
West against the USSR.
In a marked departure from recent
Soviet commentary on China, the polemic
explicitly criticizes party chief and
Premier Hua Kuo-feng, Defense Minister
Yeh Chien-ying, and Vice Premier Li
Hsien-nien for recent anti-Soviet
statements and alleged war provocations.
This is the kind of attack leveled at Mao
in the 1960s when he opposed US-Soviet
arms control agreements, particularly the
1963 Partial Test Ban Treaty.
Significantly, the article cites that por-
tion of Brezhnev's speech at the 25th Par-
ty Congress in February 1976 in which he
berated the Chinese, but omits the balan-
cing portion in which he affirmed
Moscow's interest in better Sino-Soviet
relations.
Soon after Mao's death last fall, the
last article on China bearing the Aleksan-
drov signature contained the relatively
hopeful note that Sino-Soviet problems
would be resolved. In February, in the
face of apparent Chinese intransigence,
some of the conciliation went out of the
line, and Soviet commentaries charged
that the new Chinese leaders were follow-
ing "the old anti-Soviet line."
Despite the failure of high-level Soviet
and Chinese officials early this year to
find ground for improved relations and
despite increasingly unfriendly statements
by Chinese leaders, the Soviets in March
still gave the appearance of believing that
limited improvements in Sino-Soviet
relations were possible under the new
Chinese leadership. This posture has now
been displaced by a new, more openly
critical and harsh line.
A possible harbinger of the shift
appeared in the weekly New Times on
April 22. The new Chinese leadership was
accused of "missing a favorable oppor-
tunity" by "voluntarily taking on Mao's
regalia." In a speech on the same day,
Soviet Party Secretary Zimyanin used
such harsh words on China that the
Chinese charge walked out.
Recent high-level Chinese charges that
war is coming may be one reason for the
switch to a tougher line. In speeches at a
national industrial conference published
on May 9, Hua and Yeh reiterated
Peking's line that a new world war is in-
evitable. Yeh declared that "it is
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necessary to be prepared for a big war
that may break out at an early date," and
the May 14 Pravda article seized upon
Yeh's comments to point out the
dangercus proclivities of the Chinese
leaders.
The direct attack on the Chinese
leadership, however, probably stems
mainly from the USSR's fear that the
West may sell arms and military equip-
ment to China. Recent articles in the US
by scholars on China discussing this sub-
ject have undoubtedly attracted intense
Soviet attention, and Soviet leaders know
that the US administration is reviewing
its China policy.
Indeed, the main thrust of the article in
Pravda is to warn Western countries
about being taken in by Chinese
arguments or underestimating the danger
Peking poses for them. Several major
points in the article appear to reflect deep
Soviet concern on this score. Pravda
warns:
? It would be an "unpardonable
mistake to hold an indifferent attitude
toward Peking's reckless policy until
the danger assumes ruinous propor-
tions.'
? The Western countries should not
hold "illusions that they will manage
to divert Peking's expansionism from
thems--lvesand direct it elsewhere."
? Western arms suppliers in the US
and West Germany and some
monopolies in France, Japan, and the
UK want to profit from Peking's
military build-up. This effort recalls
the arpeasement of Hitler's Germany
before World War II.
? "The leaders of the military-in-
dustrial complexes of the US, West
Germany, Japan, and some other
capita.ist countries are actively dis-
cussing; the possibility of supplying
China. with arms and military
equipment."
In trying to prove Chinese duplicity in
hiding its "true" purposes while dealing
with the US, Pravda quotes from several
fabricated statements by high-level
Chinese, in particular from the alleged
secret speech of a party official to the
effect that Peking will use the US tem-
porarily to protect China against the
USSR and later "say to Uncle Sam, be so
kind as to pack your things."
If Washington, along with Peking, is a
primary target of the article, Tokyo is the
next most important reader. The Soviets
are concerned that the numerous visits to
Peking by various Japanese political
figures in recent weeks, in the wake of the
stalemate in Soviet-Japanese negotiations
on a fishing agreement, may've the initial
signs of a real desire in Tokyoo to conclude
a Sino-Japanese peace treaty. The Soviets
fear that the Japanese government
may accept Peking's demand that the
treaty include an anti-Soviet clause-
that is, a phrase which condemns
"hegemonism"-and the Pravda article
indirectly warns Japanese leaders against
this.
The harsh tone taken by the Pravda ar-
ticle indicates that the Soviets now see no
prospect for improving relations with
China and believe that nothing further is
to be gained by relative restraint. They
may in fact fear that something might be
lost if other powers, above all the US and
Japan, are not warned strongly against
rapprochement with China.
In light of their reading of recent trends
in the US and Japan and faced with
strongly worded, high-level Chinese
statements intended to stiffen Western
policy toward Moscow, the Soviets
evidently felt a strong message was need-
ed to convey their interests to all parties,
particularly Washington.
16 WEEKLY SUMMARY May 20, 77
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