NOTES ON KEY EUROPEAN ISSUES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001800010069-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 43
• Document Creation Date: December 21, 2016
• Document Release Date: February 21, 2008
• Sequence Number: 69
• Publication Date: April 21, 1967
• Content Type: REPORT

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Secret
Notes on Key European Issues
State Dept. review
completed
Secret
21
21 April 1967
No. 0633/67
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
( ROUP 1
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Page
NPT . . . . . . . . . . . . . . . . . . 1
Britain and the EEC . . . . . . . . . . 5
Kennedy Round . . . . . . . . . . . . . 9
NATO . . . . . . . . . . . . . . . . . . 13
France . . . . . . . . . . . . . . . . . 20
Italy . . . . . . . . . . . . . . . . . 24
The Netherlands . . . . . . . . . . . . 27
Belgium . . . . . . . . . . . . . . . . 29
Scandinavia . . . . . . . . . . . . . . 31
Spain . . . . . . . . . . . . . . . 38
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After intensive consultations with our European
allies and other interested governments over the
past few weeks the US is now going to resume talks
with the Soviet Union in order that a draft nonpro-
liferation treaty may be tabled when the Eighteen
Nation Disarmament Committee resumes its meetings
on 9 May. The Europeans as a whole have been favor-
ably impressed with the increased attention we have
given their complaints and with the concessions we
have made, but the pressure to agree in such a short
time on problems of such importance to them has left
its scars. Moreover, it is doubtful that any amount
of talking or concessions will assuage those who are
opposed to the treaty in principle and who regard it
as a watershed permanently discriminating against
those countries which until now have been unable or
unwilling to become nuclear powers.
At the 20 April NAC meeting, NATO members merely
made note of the NATO consultations and the US in-
tention to negotiate with the USSR rather than en-
dorsing the treaty. NAC accepted Secretary General
Brosio's "summing up" of the NATO discussions with
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only the Italians completely reserving their posi-
tion. Brosio's statement noted that all member coun-
tries, except France, reaffirmed the desirability of
preventing the spread of nuclear weapons, but that
two countries (Germany and Italy although not men-
tioned specifically) still retained reservations and
were unable to make any commitment at this stage.
Brosio was careful to note that France did not par-
ticipate in substantive discussion as she does not
plan to sign the treaty.
Although other serious problems may later arise--
the desire of some to put a time limit on the.NPT is
one--the article on international safeguards con-
tinues to be the main bone of contention with our
allies. Although the EURATOM Council has endorsed
as a compromise an arrangement whereby EURATOM safe-
guards would be verified by the IAEA, the six EURATOM
members will not agree to the so-called "guillotine
clause" providing that IAEA safeguards would be used
if, after three years, verification arrangements had
not been worked out between the two agencies. EURATOM
members believe that the three year deadline would
weaken the community's bargaining position in
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SEGRE"1'
negotiations with IAEA. Instead they suggest that
the whole question be left open-ended, or that the
application of IAEA controls be discussed during the
conference which would review the operation of the
treaty at the end of five years.
Among the nonaligned the most serious problem
is to give up nuclear weapons without some sort of
a nuclear guarantee. India has taken the lead in
attempting to extract such guarantees from the nu-
clear powers in the event of nuclear blackmail or
nuclear attack. Reportedly the USSR has shown a
willingness to provide such a guarantee in recent
talks with Indian officials. The nonaligned also
want some binding provisions to be made for dis-
armament measures to be undertaken by the nuclear
powers. Some of the advocates of such a provision
would consider a failure to achieve nuclear dis-
armament a default which would release them from
their own obligations under the treaty. In other
cases those countries relying on nuclear guarantees
for their security might regard an actual running
down of nuclear arsenals by the guarantor powers as
a threat to their own security.
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Moscow has continued to appear eager to arrive
at an agreed US-USSR draft treaty and has kept a
close watch of our negotiations with our allies. It
is now unclear, however, how much of the present
draft treaty will be acceptable to the Soviets. Re-
versing an earlier position of indifference, the So-
viets have recently stated that a provision for safe-
guards must be in the treaty. They will almost
surely seek to minimize any EURATOM safeguards role,
if one is acceptable at all. Moscow has also warned
us that there are limits on how far we can go in
meeting Allied objections without losing Soviet sup-
port. They are especially sensitive on the question
of an eventual European federation having the right
to a nuclear force, and have warned that they would
have to denounce any US public statement that we
interpret the NPT to permit this. A Soviet response
of this sort would shatter all hopes for a treaty.
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London's formal application for EEC member-
ship now seems likely to be made during the first
half of May, although it remains possible that the
British could merely issue a firm declaration of
intent to do so, leaving the actual bid until
later, The Germans, who had earlier counseled
delay in an application, reversed this position
during Brandt's 12-14 April visit in London to
the extent of telling the British that "the deci-
sion on timing is up to you." In any event, either
an application or a statement in early May will
mean that UK entry will be a live question at the
Rome summit meeting of the Six tentatively sched-
uled for later in the month, and the main foreign
policy issue facing the Community for at least the
remainder of the year.
A definite British application prior to the
EEC heads-of-state meeting could serve to blunt
a possible French tactic at the conference of
holding out the promise of increased political
cooperation among the Six as an alternative to
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enlarging the Community. The constant theme of
French comment on the current UK bid has been the
"inevitable" danger to the Community's present
functioning of Britain's entry--which would inevit-
ably also be followed by Danes, Norwegians, and
Irish. Most opinions among the Five treats this
as a bugbear, but some concede there is a potential
problem. However, once an actual British applica-
tion is on the table, the Five will have to face
the practical problems of another turn-down of
the UK as well as the consequences of its entry.
British exclusion, when all is said and done,
means a continued dominance of Paris' voice among
the Six. On the other hand, the Five are reluct-
ant to take the chance that De Gaulle would provoke
another crisis which would mean a prolonged period
of inactivity. In fact, France has taken care re-
cently to be cooperative in Community matters--as
if to demonstrate how cozy just the Six could be.
The interests of the Five nevertheless argue
for British membership. How forcefully they will
support these interests remains to be seen, but
they have always maintained that the minimum
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condition for their support of the British cause
was the UK's acceptance of Community institutions
and procedures and a minimum of pleas for transi-
tional arrangements or special consideration. Up
to the point of a formal UK application, the Five
have the reasonable excuse for their relative cau-
tion on the issue of British entry that they cannot
after all get out ahead of London itself.
West Germany, especially, has grounds for cau-
tious attitude because it desires friendly rela-
tions with Paris. Moreover, the offset question,
British advocacy of the NPT, and a possible UK-So-
viet friendship treaty do not improve the British
image in Bonn. German officials have said Bonn
would not push its support for UK entry to the
point of a confrontation with De Gaulle, but there
are undoubtedly differences between parties and
factions in the Bonn coalition over what would be
necessary if the issue comes to a head. As of
the moment, it is safe to say the question has
simply not been faced.
An indirect effect of British membership, or
even of its possibility, is the increased interest
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of "third countries" in preferential trading rela-
tionships with the EEC. The Community has made lit-
tle progress in working out an over-all policy for
countries desiring special ties but unable or unwill-
ing to become full members. EEC Commission offi-
cials are not favorably disposed to the extension
of preferential arrangements, but the member states
show a tendency on a case-for-case basis to settle
for restrictive solutions. Possible agreements with
Spain, the Maghreb states, and East Africa--cur-
rently being studied in Brussels--and others which
are likely to be bruited about in the future will
be a burden on US efforts to reduce rather than
to see proliferate international trade discrimina-
tion.
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The trade and tariff negotiations in Geneva
are more likely than ever to end up as a cliff
hanger, with the major participants reserving con-
cessions to the last possible minute. Everyone
is acting tough, and it is impossible to predict
what the final bargain will look like. As the
"crunch" approaches, moreover, the EEC is playing
its cards closer to its chest, thus making it very
hard to judge just how much give there may be in
Common Market positions.
The fact is that the EEC Commission--no. matter
how well disposed to keep differences with the US
in a low key--is, with only slight exaggeration,
on "trial for its life" in the Kennedy Round negotia-
tions. It must prove itself as the stalwart defender
of Community interests. Insofar as it hopes to ex-
ercise a liberalizing influence on latent EEC pro-
tectionism, the Commission doubtlessly figures that
it can make concessions only after a demonstration
of both toughness toward and reasonableness from
the other negotiators in Geneva. The Commission
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has threfore been somewhat coy about how much
"give" there is in the negotiating mandate it has
from the Council of Ministers, but there have been
hints that the Commission thinks it can take far-
reaching decisions in the final confrontation.
The EEC is not our only major problem in Geneva--
Japan on food aid, Australia on wheat prices, Britain
on steel, the Nordics on an industrial balance with
the Community all have taken strong bargaining po-
sitions. Nevertheless, the Common Market's stand
on a grains agreement and chemicals now appear to
be the two biggest hurdles to overcome. On grains,
briefly, the Community has reluctantly agreed to a
modest contribution to food aid, but it continues
to hold to a figure of 90 percent as the target
ratio of EEC grains production to consumption (the
so-called self-sufficiency ratio--SSR) and wants
any Geneva agreement to cover feed grains as well
as wheat. On chemicals, the Six agreed at the
last Council meeting to insist on a "one-package"
approach, that is, any tariff concessions they
offer in this sector are contingent on US action
to remove American Selling Price.
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The Germans, despite their stake in the larg-
est possible reduction of trade barriers, have
gone along with these tough Communist positions.
On grains, their concern is probably due principally
to budgetary considerations. Food aid will of
course cost them something. They may also reason
if feed grains are not included in the Kennedy
Round settlement, prices of feed grains and of feed-
grain-derived productions will drop. This would
increase the drain on the EEC agricultural fund,
which bases Community export subsidies on the dif-
ference between higher EEC prices and lower world
market prices. Germany is a large contributor to
the fund. Bonn would benefit, on the other hand,
from a lower self-sufficiency ratio of grains pro-
duction within the Community--even though they
appear not to have fought very hard for this in
the Council. Now, interestingly enough at this
late date, a high German official has suggested
that the US pressure the Community for a lower
SSR, instead of pushing for food aid.
The failure of the Germans to support a two-
package approach on chemicals during the last
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Council meeting came as a surprise, and no very
satisfactory explanation has been forthcoming of
Bonn's shifting attitude. Reportedly, the Com-
mission favored the one-package approach and was
supported by the other members. The Commission,.
however, may be adopting essentially a hard bargain-
ing position, and it remains to be seen whether,
in the crunch, the Germans might not "give in"
to a more liberal bargain.
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With the trilateral (US/UK/German) talks nearing
completion and the nuclear-planning and long-range
force-planning exercises well in hand, NATO members
are increasingly focusing on the study of NATO's
future tasks and procedures which was authorized by
the NATO foreign ministers last December. Initial
indications are that the study will be free-wheeling,
with an open airing of many of the most vital and
sensitive questions concerning NATO's future. Some
of the questions being raised have long been thought
too contentious for open debate in NATO forums.
The Special Study Group and its subgroups
considering the problem areas of East-West relations,
interallied relations, the general defensive policy
of the alliance, and the development of events out-
side of the alliance area have just concluded their
first meetings. Ambassador Cleveland reports that
in all of these meetings the. national representatives
displayed a surprising willingness to plunge directly
into consideration of important and difficult issues.
There has been a minimum of interest in the history
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of events affecting the alliance since 1949 which
had been originally envisaged as the first stage of
the undertaking.
Outstanding examples of the potentially explo-
sive topics we will be facing are found in the German
outline of questions on reunification and European
security, which raises issues long considered taboo
for open discussion. Cleveland comments that the
Germans may have second thoughts about some of the
issues presented but that since their paper is now
before the study group it is too late to avoid their
discussion. In the subgroup reviewing events outside
the alliance, there has likewise already been mention
of European attitudes toward US involvement in
Vietnam.
With such meaty topics up for consideration it
is doubtful whether enough progress can be made on
the over-all study to provide the June meeting of
the foreign ministers with much more than a progress
report on the general direction in which the various
phases of the study will proceed. Nevertheless, by
the time the ministers receive their final report
in December, the alliance may well have faced questions
and decisions equally as challenging as those raised
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by De Gaulle's moves against the alliance in
The French are participating in all the sub-
groups, but whether this participation is to help
promote NATO's future or only to check any threat
to French interests remains open to doubt. If the
French tactics in North Atlantic Council discussions
on the nonproliferation treaty are any guide, their
presence in the study groups may prove more ob-
structive than helpful. One indication of French
intentions has been signaled by their delegate's
remarks to the East-West subgroup where he served
notice that the French position remains the same as
it was at an earlier meeting of the NATO Political
Advisors, i.e., that France agrees to discussions
but opposes a "common line" in a field which it
feels is reserved for bilateral attention.
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The recent legislative elections strengthened
parliamentary opposition to De Gaulle but left him
in virtually unhampered control for the next five
years. While the Gaullists lack an absolute majority
in the National Assembly, they seem assured of enough
outside support to make unlikely any early move by
De Gaulle to threaten to dissolve the chamber.
Premier Pompidou, in his "State of the Republic"
message to the assembly committed his government to
continue its "policy of independence" in foreign
affairs and to give a more social orientation to
domestic policy.
Budget limitations are expected to hinder the
government's ambitions in the social field, but its
most serious problems will be there. In recent
weeks France has experienced a wave of labor agita-
tion in private industry--involving disputes over
wages and the maintenance of full employment levels--
which is likely to spread.
De Gaulle's foreign policy will continue to be
aimed at increasing France's prestige as a world
power and at placing France in a position to exert
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influence in any situation of global importance. In
the past year, De Gaulle's attitude toward the US
conveys some hint that he believes the U.S. must be
checked "for its own good." De Gaulle fears the U.S.
may abuse its economic and military superiority and
believes the reduction of U.S. influence is vital to
the realization of his "European Europe." He remains
firm in his opposition to U. S. involvement in Vietnam
and has taken every opportunity to disassociate France
from U.S. policy in Asia. He insists upon a cessation
of U.S. bombing and desires negotiations which will
eventually lead to a neutralized but united Vietnam.
Withdrawal of French forces from NATO and the
expulsion of NATO units from France were effected not
only to dramatize French independence but also because
De Gaulle is convinced the USSR no longer represents
a direct military threat to France. France can be
expected to delay British accession to the EEC as
long as possible, because Britain would then be a
threat to French primacy on the continent. If, how-
ever, Britain fully accepts the Rome Treaty and gives
proof of its "European" bona fides, De Gaulle may
find it costly to veto an application for membership.
Pursuit of "detente, entente and cooperation"
with the USSR and Eastern Europe remains an essential
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element of De Gaulle's foreign policy. His visit
to Moscow last June resulted in a series of agree-
ments for economic and technical cooperation with
the Soviet Union but there have been recent
indications these agreements have not panned out
quite as well as he hoped. France will continue to
increase its relations with the Eastern European
countries: De Gaulle will visit Poland in June
and Pompidou is going to Moscow in July.
De Gaulle insists that a settlement of the
German problem is possible only within the framework
of an over-all European solution, and his policy
of detente with the East is partly based on this
conviction. Privately he has expressed doubt that
German reunification can be achieved before a
generation. He has consistently refused to recog-
nize East Germany in order not to antagonize Bonn
unnecessarily. He has stated publicly that Germany
must accept the Oder-Neisse line as the permanent
boundary between East Germany and Poland.
Both concern for French interests and the
desire to take a global view are apparent in De
Gaulle's approach to current international negotia-
tions. France has maintained a hard bargaining
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position on the Kennedy Round, but it has been
cooperative in trying to effect a solution. It
has indicated it will not sign the proposed Non-
-Proliferation Treaty, arguing that it ignores the
basic issue of reducing armaments and discriminates
against nonnuclear powers. De Gaulle's disdain for
all agreements to date to control nuclear weapons
is apparent in preparations now under way for a
series of nuclear tests to be conducted in the Pacific
between 1 June and 15 July, 1967.
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Italy's coalition leaders have recently reached
an agreement on priorities on a few aspects of their
legislative program and this seems to have led to
a temporary relaxation of the tensions under which
the Moro government had previously labored. The
Christian Democratic, Socialist, and Republican
leaders have called for approval of the long-de-
layed Five Year Economic Development Plan (1966-70),
labor union wage restraint, and approval of legis-
lation permitting regional elections in 1969. How-
ever, their statement appears an admission that
there is little likelihood for much progress on
reform, other than economic planning, before the
end of this legislature in 1968.
On 17 March, the Chamber of Deputies approved
the Five Year Plan and it is expected to be passed
by the Senate sometime before June. The Plan--
which calls for a 5 percent annual growth rate--
is regarded as a law providing a framework for govern-
ment economic, financial, and social policy. It calls
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for a heavy volume of economic and social implementing
legislation, much of which is likely to prove a source
of future discord within the Moro coalition.
The idea of planning and the objectives of the
Five Year Plan have gained general acceptance in
Italy, and the Plan is regarded as the heart of the
center-left government's program. Its formal ap-
proval "as a framework law" may redound to the po-
litical advantage of the coalition parties in the
1968 parliamentary elections. Unfortunately,
there is likely to be little progress by then on
specific "bread and butter" reforms involving
schools, urban development, and the public ad-
ministration which are called for by the Plan.
At this stage, the Christian Democrats--with
an eye to the conservative vote in 1968--are
reluctant to push hard on specific reforms, despite
public statements to the contrary. The recently
unified Socialists are still dissatisfied with the
pace of the government's program and are worried
about their electoral image. Their problems are
compounded by some leadership and organizational
difficulties and some Socialists fear that their
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current disarray will hurt the party's performance
in the Sicilian regional elections this June.
Interparty differences over legislation con-
nected with the Five Year Plan., widespread dis-
satisfaction with cumbersome parliamentary and
bureaucratic procedures, and the Socialists'
concern over their electoral prospects, spell
further difficulties for the Moro government in
coming months. Premier Moro's recent decision
to dismiss Italian Army Chief of Staff General
De Lorenzo--over the objections of several impor-
tant Cabinet ministers--may also exacerbate strains
within the coalition. At this stage, however,
a government crisis does not seem in prospect.
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THE NETHERLANDS
The new Dutch government of Prime Minister Piet
de Jong was sworn in on 5 April. A coalition of four
traditional parties, it does not represent the dissat-
isfaction with political and social rigidities which
marked the 15 February lower house elections. Prime
Minister de Jong's program, however, as presented to
the legislature on 12 April, included at least one
measure designed to please new Dutch proponents of
single member districts as opposed to the system of
proportional representation.
Dutch relations with the United States are marked
by repeated complaints that Washington takes the Neth-
erlands for granted and is not helpful on issues where
the Dutch national interest is involved. The Nether-
lands is in fact one of the most stalwart supporters of
American positions in European matters. There are, how-
ever, two issues which irritate the Dutch--the request
of the Dutch airline, KLM, for new landing rights and
the Dutch request for US technical assistance in build-
ing nuclear-powered submarines. A Dutch complaint of
more recent origin is that the US is charging research
and development costs on aircraft purchased by the
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Netherlands but is not similarly charging Italy and
Norway. Prince Bernhard expressed Dutch grievance
on these issues only last month.
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Last month Prime Minister Vanden Boeynants'
uneasy coalition of Social Christians and Liberals
completed its first year in office, having sur-
vived such domestic problems as in intracoalition
dispute over the budget, and the continuing ten-
sions between the French and Dutch-speaking sectors.
Brussels faced a crisis earlier this year in its
relations with the Congo because of disagreement
over the status of the copper company, Union Miniere.
The company eventually received the greater part of
its demands but the basic Belgian relationship with
the Congo remains cool. Belgian military training
in the Congo continues as does most of the technical
assistance including provision of teachers. Belgian
participation in the Congolese administration, how-
ever, is being eliminated.
NATO has given rise to important questions in
US-Belgian relations. US Embassy Brussels believed
until recently that the Belgian Government would
permit PX and commissary privileges for US troops at
the SHAPE installation. Prime Minister Vanden
Boeynants, himself a small shopkeeper earlier in life,
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SECRE'i'
evidently intervened toward the end of the negotia-
tions in late March to insist that no goods readily
available in Belgium could be provided at lower
prices in a US commissary. Belgium plans to reduce
its NATO-committed troops in Germany but claims it
will take the matter up in NATO beforehand.
Belgian prestige in European conclaves has prob-
ably diminished since the departure of Socialist For-
eign Minister Spaak from the government in March 1966
although general foreign policy lines remain the same.
On the nonproliferation treaty, however, Spaak (now
Chairman of the NATO Study Group on Inter-Allied re-
lations) has been somewhat less ambiguous than Harmel.
In conversations on 15 and 17 April Spaak said it is
important for the United States to find some way to
re-affirm its commitment to guarantee the security
of Europe. The nonproliferation treaty embraces im-
portant questions about formalizing the long term
continuity of the US guarantee. Moreover, Europe
should re-launch unification efforts when it has been
deprived by the nonproliferation treaty of a military
role. It should seek to find a world role in non-
military fields, for example in assistance to the de-
veloping countries.
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U'JINrIif.GrN 1lt]L
The major problem facing most of the Scandi-
navian countries at the present time is the serious
and continuing decline in popularity and voting
strength being suffered by their Social Democratic
parties (SDP:) after long periods in power. Although
the erosion has benefited parties on both the right
and left, the SDP leaders' efforts to rectify the
situation have so far taken the form of concessions
to the more organized and articulate left. The
exception is Finland where the SDP was the major
victor in the 1966 elections.
The Scandinavian countries joined forces in
appointing a chief negotiator in the Kennedy Round
negotiations but have not been able to adopt the
same procedure with respect to EEC membership.
This is chiefly due to differing policies and inter-
ests. Denmark expects to follow closely on Britain's
heels in applying for membership; Norway will join
if Britain is accepted. Sweden's interest in some
form of affiliation is conditioned by its neutrality
policy. The same applies to Finland which cannot
accept the Treaty of Rome in its present form.
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In Denmark, Prime Minister Krag's minority So-
cial Democratic government has moved toward parlia-
mentary cooperation on domestic issues with the
far left Socialist Peoples Party, a step widely in-
terpreted as foreshadowing an eventual coalition
government. In the short term it is unlikely that
the new strength on the left will be allowed to
affect Danish foreign policy substantially, and
over the long term sociological factors might
eventually bring about a shift to the right.
SDP leaders are having increasing-diffi-
culty in maintaining a generally favorable stand
toward US policy in Vietnam. Although public de-
bate on this issue has sharpened, it has never
reached the intensity that it has in Sweden,
and recently some voices have been raised in de-
fense of the US.
In Sweden Prime Minister Erlander's governing
Social Democratic Party is not only experiencing
erosion on its right and left wing, but polls indi-
cate that Erlander's standing within his own party
is relatively low. The major threat comes from
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Vvlvr1Lr,1N I iJ--1L
young disgruntled leftwingers who are finding Carl
Harmansson's nationalist oriented Swedish Commu-
nist Party an acceptable alternative. If their
political fortunes continue to decline, the Social
Democrats may either be forced to step down or
consider collaboration with the Communists. Such
a shift could be hastened by the 65-year-old Er-
lander's retirement which he is said to desire.
His most likely successor,. and protege, is
Minister of Communications Olof Palme, 39, who is
immensely popular with young radicals both within
and without the SDP. Under Palme it is unlikely
that Sweden's basic foreign and defense policy
of neutrality would change, except on the Vietnam
issue where Palme has been highly critical of US
policy. It was pressure from his leftwing that
gave rise to Foreign Minister Nilsson's recent
proposal--which the government is likely to accept--
that Sweden not accredit a new ambassador to Sai-
gon. Palme has given no indication that he op-
poses Sweden's future association with the EEC
and has shown no sympathy for Finnish President
Kekkonen's Scandinavian nuclear-free zone proposal.
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\. / V 1 I L L L L l 1 L L 1 1-J
Anti-Americanism in Sweden over Vietnam has been
the most intense by far of any Scandinavian coun-
try, often taking vicious form in speeches, demonstra-
tions and flag-burning,. Government officials, unable
to hold the line against leftist pressure, have
strayed far from a "neutral" stand by condoning pro-
test activities and by ambiguous statements easily
interpreted as detrimental to the US.
In Norway the Social Democrats (Labor Party)
lost their 30-year tenure in the 1965 elections
and have not been able effectively to challenge
the 4-party coalition non-Socialist government that
succeeded hem, One reason is that Prime Minister
Borten's government has generally carried on the
same policies, although there has been some criticism
within both the Labor and Conservative parties over
Foreign Minister Lyng's handling of foreign relations
especially his emphasis on increasing contacts with
Eastern European countries.
As in Denmark and Sweden, the Labor Party is
having trouble with its young radical leftwing
elements who are challenging older party leaders,
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with the full cooperation of the far left Socialist
Peoples Party.
Although there have been protest demonstrations
over Vietnam, the Norwegians in general have taken
a more moderate and understanding view of US problems
there. Foreign Minister Lyng has privately offered
his services if the US can find him useful in
furthering an honorable and peaceful settlement
under the guidelines of the Geneva Agreement.
Finland is the only Scandinavian country where
the Social Democrats are not on the decline. On
the contrary, as the major victors in the 1966
election their party leader, Rafael Paasio, formed
a Center-Left coalition under President Kekkonen
signalling the SDP's return to power after ten
years on the sidelines. Even more significant was
the first Communist participation in the cabinet
since 1948. Despite some internal strains, this
coalition has successfully weathered its first
year with generally good behavior on the part of
the small Communist element. Attention is cur-
rently centered on the 1968 presidential election.
-35-
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With scarcely a doubt over Kekkonen's re-election,
the issue concerns whether the method should be
changed from presidential electors to a direct
popular vote.
While deploring the Vietnam war, the Finnish
Government has carefully avoided partisan statements
despite pressure from Communist and leftwing
elements.
Parliamentary elections on 11 June in Iceland
will determine the relative balance of power among
the four parties--the governing Independence (Con-
servative) and Social Democratic coalition, and the
opposition Progressives and Communist-front Labor
Alliance. If the government parties lose their slim
majority, they will be compelled to look to a third
party for a majority. Hopefully this would again
include the Independence Party to provide an element
of stability and continuity in US relations with
Iceland which have improved significantly since
the mid-fifties.
While the presence of US forces in Iceland has
become much less controversial, it could stir some
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`/t./ Ir1 1 LXIl \ 1111E
public interest and debate in the upcoming election
campaign. A straw in the wind is a recent Progressive
Party resolution advocating gradual withdrawal of
US forces over a four year period which could have
greater appeal in the present atmosphere of East-
West detente and lessening of the Soviet threats
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V V l l i L L1 1 it iii
SPAIN
The constitutional law approved by referendum last
December provides for a smooth transition from Franco's
personal rule, but the Generalissimo shows no incli-
nation to quit. In spite of rumors of health problems,
he is in good shape for his 74 years.
Franco may appoint a premier under the new law but
will most likely refrain from naming a successor as
chief of state. The most logical choice for premier is
Captain General Agostin Munoz Grandes, the present vice
chief of government and chief of the High General Staff.
Franco has given no indication as to whom he might choose,
and he may want a younger man than 70-year-old Munoz.
The army will control the succession which.is, expected
to be orderly, although some groups may express their
discontent with dictatorship controls. The man with the
most valid claim to be chief of state is Don Juan de
Borbon, son of the last King Alfonso XIII. Another
possibility is his son Juan Carlos. However, lack of
enthusiasm for a monarch may lead the army to opt for a
nonroyal regent, probably a military man.
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LaUl'l f111JLlN 11AL
Recent policy decisions by the regime have dimmed
hopes that the new constitutional law would liberalize
government controls. The three implementing bills
seriously water down the initial promise of the
constitutional law. Religious-liberty guarantees to non-
Catholics are qualified by requirements of public order,
and the newly provided direct election of one-fifth of
the Cortes is arranged to favor regime supporters. The
possibility that the National Movement, the only legal
political organization, would be deemphasized was upset
in the implementation bill. Procedures outlined for
electing members of the National Council, which is to
serve as a sort of upper house of the legislature, allow
little chance that independent candidates will be elected.
Thus the hope that the rigid one-party system would be
modified to allow some plurality of political groups has
now faded.
The regime has used strong-arm measures to disperse
student and worker dissenters in recent months, and in
February the Interior Ministry announced that students
arrested in clashes with the Armed Police would be turned
,over to military authorities for trial. On 4 April
the penal code was revised to provide severe prison
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CONFIDENTIAL
sentences for violations of the limitations on freedom
of the press.
In spite of these curbs, the Franco regime will
find it increasingly difficult to keep down pressures
for liberalization. The press continues to maintain
its right to dissent. Labor is agitating for free
unions and higher wages, and students are demonstrating
for university reforms. These pressures, however, will
strengthen the government's will to maintain its hard
line.
U.S.-Spanish relations face some minor problems in
the next few years. Madrid is pressing for US support
in its bid for closer economic and defense relationships
with Western Europe. It wants to be included in readjust-
ments of Western defense arrangements in NATO, and to be
granted at least association with the European Common
Market. It also seeks US support in its current effort
to regain Gibraltar.
Madrid continues to forbid overflight rights for
aircraft with nuclear weapons, as a result of the
January 1966 crash at Palomares. The US-Spanish defense
agreement comes up for renegotiation in 1968 and the
Spanish are expected to bargain for additional benefits.
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Secret
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MEMORANDUM FOR: DCI
The attached was included in
the package to the White House for
.Bromley Smith.
Office of Current intelligence
21 April 1967
DATE
ORM NO. REPLACES-FORM.. 10^101 (47)
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.
TIC ATTACHED WAS II CLUDEP IAN A PACKAGE M TI";,,' WTIITE MOUSE (B. S' ITH) ON 21 APRIL 67-
25 COPIES W1 E RUN.
1-3 ~Jh_ite House
)r. Rusk
5 DDCI
6 DPI
20-21 MCO
25 and 1 Unnumbered to
nest of 25 to)! W, + r or re en ion
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