PREPARED WEEKLY FOR THE SENIOR INTERDEPARTMENT GROUP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001000010008-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: September 18, 2006
• Sequence Number: 8
• Publication Date: July 4, 1966
• Content Type: IR

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State Dept. review completed
4 July 1966
OCI No. 1206/66
Copy NI), 44
INTELLIGENCE REPORT
Prepared Weekly
for the
SENIOR INTERDEPARTMENTAL GROUP
DIRECTORATE OF INTELLIGENCE
Approved For Release 2007/03/06: CIA-RD&F"IEOD1000010008-
GROUP 1
Excluded from automatic
downgrading and
declassification
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This Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of itle 18, Sections 793 and 794, of the U.S. Code, as
amended. Its transmission or revelation of its contents
to or receipt by an unauthorized person is prohibited
by law. The reproduction of this form is prohibited.
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Page
1. Iran. . . . . . . . . . . . . . . . . .
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2. Argent in.a . . . . . . . . . . . . . . .
2
3. Guatemala . . . . . . . . . . . . . . .
3
4. Ecuador . . . . . . . . . . . . . . . .
4
5. Spain . . . . . . . . . . . . . . . . .
5
6. Kenya-Somalia . . . . . . . . . . . . .
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4 July 1966
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The US may well be heading into a difficult pe-
riod with the Shah over the' issue of Iranian arms
purchases.
Since his recent return from Eastern Europe
and North Africa, the Shah has reiterated his
acute dissatisfaction with the terms offered for
US equipment and has expressed his determination
to maintain freedom of action in looking for other
sources of supply.
The Shah told the US ambassador on 29 June that
he was particularly anxious to purchase such items
as all-weather aircraft from the US, but that he
was unhappy about high prices, long-term delivery
dates, and the limited number of F-4 aircraft avail-
able. He mentioned negotiations for equipment
with the French and British, and he indicated he
was considering the possibility of buying some "non-
sensitive" items, such as antiaircraft weapons,
from the USSR.
Prime Minister Hoveyda
had
said earlier that
Western European terms were
not
much more attrac-
tive than those offered by
the
US, adding that the
Shah was tempted to turn to
the
USSR for more rea-
sonable terms on military equipment.
The Shah told the US ambassador on 29 June
that he had not yet approached the Soviets on the
question of military purchases. There have, how-
ever, been several reports of Soviet offers to sup-
ply arms to Iran, and Foreign Minister Aram has in-
dicated the Shah may have discussed arms with the
Moscow representative who was in Iran last week
for the formal signing of the USSR-Iran steel mill
t%
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The military take-over in Argentina last week
was a move carefully planned in, advance and aimed
at en.din.g the political and economic problems that
have plagued Argentina since the end of the Peron
dictatorship in 1955.
New President Juan Carlos Ongania and the army
generals who overthrew President Illia apparently acted
when they be.capie convinced`. that Illia and his Radi-
cal Party administration were incapable of positive
action. and that Illia's newly announced policies were
merely stalling tactics to buy time in, hopes of pro-
moting military disunity.
The new government reportedly has plans for
drastic revision of the country's economic and polit-
ical.. institutions. The task will not be easy. The
regime hopes to attract foreign. investment and
stabilize the economy but realizes-that a period of
austerity may be necessary. Its policies include
an. attempt to win the loyalty of the Peronists by
in.stitutin.g a social security system, but it may
face strong reaction. from Peronists to plans to
keep them out of national politics.
The regime does not envision holding elections
for some time to come and it is reportedly prepared
to stay in. power until certain. basic economic and
political problems are resolved.
Initial statements by General Julio Alsogaray,
who was active in the plotting for the coup, indicate
that the new government will not alter Argen.tina's
pro-Western foreign, policy. Ongania strongly favored
Argentine participation. in. the Inter-American. Peace
Force and is particularly concerned with Communist
penetration and in.sur en.c in Latin. America.
-2- 4 July 1966
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President Julio Cesar Mendez Montenegro, a mode-
rate leftist inaugurated on 1 July, starts his term
with an uncertain future.
The military, the final arbiters of power, in.
Guatemala, distrust the new president, but appear will-
ing to give him a chance to prove himself. Difficul-
ties seem likely, however, when Mendez attempts to
bring about reforms he promised during his campaign.
Such attempts are almost certain to antagonize conserv-
ative-sectors, and these may in time persuade the mil-
itary once again to take over.
Aside from the country's economic, social, and po-
litical problems, Mendez will face continuing leftist
guerrilla terrorism as well as some terrorism by ex-
treme rightists. As the first civilian president since
1951, however, he is likely to have greater support
from the populace than did military governments. Men-
dez has picked a generally moderate cabinet and his
minister of defense has a substantial following within
the military high command.
zas Armadas Rebeldes (FAR), reportedly plan to give
Mendez six to eight months before intensifying their
The Communist Party and its action arm, the Fuer-
activity.
Guatemalan politics is normally somewhat seamy
and the military, who after 40 months of rule have
become accustomed to having things their way, prob-
ably will resent the new opening of political arenas.
the Guatemalan Christian
Democratic party, which was not permitted to participate
in the last elections, has now secured the necessary
50,000 signatures and qualified as a political party.
Other parties which have been dormant during the pe-
riod of military rule are also likely to take up their
banners again.
4 July 1966
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The government of Interim President Yerovi has
thus far survived the threat posed by the late May
return from exile of former president Velasco Ibarra,
but it remains basically weak and could yet be
topped.
Velasco's arrival in Quito on 2 July, which many
Ecuadoreans had expected to generate popular clamor
for the 72-year-old demagogue's immediate return to
power for the fifth time, was not up to Velasquista
expectations. Only about 5,000 persons turned out
to welcome the former president. While there were
sporadic clashes between pro- and anti-Velasco ele-
ments--as there had been in other cities Velasco
visited before coming to the capital--there were
fewer incidents of violence than had generally
been expected.
The military remain the key to the situation.
While military leaders have thus far stood by the Yerovi
government, they are more immediately concerned
with keeping Velasco out than with keeping Yerovi
in. Velasquistas have been trying to subvert key
military units and get support for a coup, and
these efforts will probably continue in the weeks
to come, especially among junior officers and en-
listed men.
Most military leaders are reluctant at this
.time to resume control of the government, which
they gave up under pressure just this past March,
but they might act if Velasco seemed to be making
headway or if the Yerovi government was unable to
stand firm against him.
Another threat to Yerovi's survival is Ecuador's
tenuous economic situation together with the con-
tinuing resistance of business interests to neces-
sary economic corrective measures. The recent $10
million budget-support loan granted Ecuador by the
Inter-American Development Bank will help shore up
the government but this was at best.: only a stop-
gap measure.
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The Franco government, in seeking US support in
the Gibraltar dispute with the UK, has threatened re-
taliatory measures if it fails to get it.
Foreign Minister Castiella told the US ambassa-
dor on 16 June that if Spain were rebuffed in its
Gibraltar aspirations, there would be "serious reper-
cussions" for US and Western defense interests. He
mentioned specifically such matters as
the extension o the
panis a ense agreement which expires in 1968.
A somewhat similar line. was taken the next day
by Antonio Garrigues, former Spanish ambassador
in Washington now assigned to the Vatican... He
told the US ambassador in Madrid that the Gibraltar
negotiations were leading to an impasse and a major
confrontation, and that US help was necessary to
avoid the "bitter consequences."
The Spanish Embassy in Washington also recently
showed the Department of State a letter from Cas-
tiella stating that Castiella and Vide President
Munoz Grandes had reached agreement that all matters
involving Spain
should be examined in light o a successful resolu-
tion of the Gibraltar question.
While it is doubtful that Spain is willing or
able to go very far at this time'in carrying out
some of the broader threats, it has an available
pressure point
As for the Gibraltar question, it may be dif-
ficult for Spain to extricate itself from the pub-
lic commitments it has made to change the "Rock's"
legal status. Negotiations With the UK which
opened in mid-May are to resume shortly, British
delaying tactics thus far and London's apparent de-
termination not to give up sovereignty over Gibral-
tar raise the prospect of continued impasse. I
4 July 1966
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The long-festering frontier dispute between
Kenya and. Somalia is flaring; anew as both countries
adopt harder lines.
Bands of Kenyan Somali tribesmen, trained and
equipped by the Somali Army, have re-entered Kenya
during the past two months. They have sharply in-
creased their attacks and sabotage in the northeast-
ern part of Kenya where the Somali nomads live. One
guerrilla band has been active some 200 miles inside
the border.
Neither country appears strong enough to settle
the dispute by force, and past efforts at negotiated
settlement have been fruitless. Both Kenya and
Ethiopia--which also has a sizable Somali minority
and a disputed border with Somalia--haverbecome in-
creasingly alarmed over Soviet military aid to So-
malia, although no Soviet arms are known to have
been used outside Somalia's borders. Mogadiscio is
equally concerned that Ethiopia has begun to receive
modern F-5 jet fighters from the US.
Nairobi is determined to step up its campaign
against Somali insurgency despite the economic burden.
Key government ministers are urging tough new measures,
including a "scorched-earth" policy along the 400-mile
border. Some ethnic Somalis loyal to the Kenya Qov-
ernment are being trained for security patrols within
Kenya and or possible guerrilla attacks against Somalia.
The joint Kenya-Ethiopia defense committee has
been discussing coordinated retaliatory raids into So-
malia. Nairobi has apparently authorized "hot pursuit"
across the border when necessary. A Nairobi govern-
ment minister claimed last week that a Kenya Army
unit had killed 76 guerrillas on Somali soil.--
No Somali government can take the political risk
of abandoning ethnic Somalis beyond the country's bor-
ders. In fact, there has been increasing pressure on
Prime Minister Abdirazak from the opposition and from
the Soviet-assisted army to step-up aid to their tri-
bal brothers. Faced with an early parliamentary vote
of confidence, Abdirazak may feel compelled to promise
an even more militant stand against his neighbors.
-6- 4 July 1966
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