WESTERN EUROPE CANADA INTERNATIONAL ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000600360002-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 12, 2016
• Document Release Date: December 27, 2001
• Sequence Number: 2
• Publication Date: March 31, 1975
• Content Type: NOTES

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Secret
No Foreign Disrem
Western Europe
Canada
International Organizations
S cret
101 .
No. 0164-75
March 31, 1975
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Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 005827
Exempt from general declassification schedule
of E. 0. 11652, exemption category:
? 5B (1), (2), and (3)
Automatically declassified
on: Date Impossible to Determine
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JD I
WESTERN EUROPE - CANADA - INTERNATIONAL ORGANIZATIONS
This publication is prepared for regional specialists in the Washington com-
munity by the Western Europe Division, Office of Current Intelligence, with
occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
CONTENTS
Belgians Wrestle With F-104 Issue. . . . . . . . 1
Dispute Between Turkish and Greek Cypriots
Threatens to Isolate Cyprus. . . . . . . . . . 3
Spanish Police Prevent Basque Rally. . . . . . . 4
NATO Committee Discusses the Impact of
Economics on Defense . . . . . . . . . . . . .. 6
Declining Turkish Cotton Exports Worsen
Trade Deficit . . . . . . . . . . . . . . . . . 8
US Isolated at UNIDO Conference. . . . . . . . . 10
President Approves New Turkish Cabinet List. . .12
March 31, 1975
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The Belgian government, under strong
pressure from the French, is agonizing over
a final decision on the choice of an aircraft
to replace its'F-104 fighters. While none
of the other three consortium members--Denmark,
the Netherlands, and Norway--has announced
its choice, Oslo and Copenhagen are leaning
heavily toward the American-made F-16 and
The Hague reportedly may also favor the US
plane.
The main problem for the Belgians is
how best to coat the bitter pill Paris must
swallow if all or nearly all the consortium
members choose the F-16'. The Belgian Foreign
Ministry is sending a team of experts to
Bonn this week to try to get the Germans
to agree to a commitment, along with the
Belgians and others, to guarantee the survival
of the European aircraft industry if the
F-16 is chosen. If Brussels is successful,
Paris' main argument in favor of the French
Mirage would be neutralized.
Another source of concern to Brussels
if it chooses the American plane, is the
possibility of an adverse effect on the Belgian
economy if the US inflationary spiral continues.
Although US officials have tried to assure
the Belgians that the cost of the F-16 allows
for an inflation rate nearly twice as high
as the historical average, Brussels still
appears wary.
The French appear to have exhausted
arguments and counter-offers and one report
claims Paris now is resorting to outright
threats. The Belgians reportedly have been
told that if they choose the F-16 they risk
losing several major French industrial contracts
March 31, 1975
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totaling some $600 million. Such a ploy would
~.v have a considerable impact on the Belgian
2 economy, and could have an adverse effect
on Franco-Belgian relations.
The Belgian cabinet will meet on the
issue again this week, but the US embassy
does not expect a decision soon. The meeting
of the defense ministers of the four consortium
members is still slated for April 3, but
no consensus is expected then either. Although
the two Scandinavian members might announce
their decision this week, US officials in
Brussels do not believe the Belgians will
be able to make a choice before mid-April
at the earliest. (Secret No Foreign Dissem)
March 31, 1975
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Dispute Between Turkish and Greek Cypriots
Threatens to Isolate Cyprus
The Greek Cypriot government has attempted
to place further restrictions on air access to
the :island by outlawing use of the Turkish
Cypriot-controlled airport of Ercan, formerly
known as Tymbou, as a port of entry. A Turkish
Cypriot riposte declaring the new Greek Cypriot
airport at Larnaca to be an illegal port is
likely to be announced soon.
This latest Greek Cypriot move comes in
the wake of several decrees issued last October
under which use of the Turkish Cypriot seaports
of Famagusta, Kyrenia and Karavostasi was for-
bidden. The Turkish Cypriot administration
responded by denying entry to the Turkish sector
via the Greek Cypriot ports of Limassol, Larnaca,
and Paphos.
These moves, in effect, prevent persons or
shipments of goods entering one sector of Cyprus
from crossing to the other, thereby further
reducing the already minimal flow of people and
products. Persons found to be in violation of
these laws by either side are subject to arrest
and prosecution. Goods are confiscated.
In the absence of even more economic support
from the respective mainland governments than
has been given so far, both the Greek and Turkish
Cypriot communities are likely to suffer protracted
stagnation. (Confidential)
March 31, 1975
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3
Spanish Police Prevent Basque Rally
Police action Sunday in enforcing a ban on
a Basque nationalist rally in the town of Guernica
shows the government's continuing concern over
unrest in the Basque area. Tension over the rally
was heightened by intensive propaganda of under-
ground Basque oppositionists groups and by the
weekend murder of a police inspector of the Basque
town of San Sebastian.
A police roadblock outside Guernica turned
away thousands of motorists who did not have
legitimate business in Guernica. Some 40 persons
were arrested when they tried to get the banned
rally started. A US journalist was among those
arrested, as were two members of the Belgian parlia-
ment who were later released at the French border.
A massive police presence prevented any major
incidents.
Basque separatist groups had. called for
a peaceful demonstration in Guernica, spiritual
home of Basque nationalism, to mark their national
holiday. The demonstration was to support demands
for an autonomous Basque state, freedom for
political prisoners, and civil rights. The police
claimed to have uncovered an arms cache and acted
to prevent a demonstration that might have gotton
out of hand.
Meanwhile the police are carrying on an
intensive search in the Basque region for the
killers of a young police inspector who was
machine gunned Saturday as he was leaving his
home. The Basque terrorist organization Basque
Fatherland and Liberty (ETA) has claimed respon-
sibility for the shooting. ETA has also been
accused of several bomb blasts in the area during
the past week as part of their campaign to use
March 31, 1975
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terrorism to dramatize their demands for a
separate Basque state. According to a press
report, however, four bomb blasts in Guernica
last Thursday were blamed on the Antifascist
and Patriotic Revolutionary Front, a dissident
Communist extremist group that uses terrorism
to support its opposition to the Franco regime
but has little support in the Basque area.
(Confidential)
March 31, 1975
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NATO Committee Discusses the Impact of
Economics on Defense
A study undertaken by the NATO members
concludes that economic pressures are far
more likely to weaken the security of the
Alliance than of the Warsaw Pact. The study,
based on a US draft, will no doubt be modified
slightly before it is put in final form, but
the conclusions will probably not be much
changed.
According to the report, NATO countries
are facing four types of economic pressure:
--economic stagnation, including high
. unemployment and low growth rates;
--high inflation;
--balance of payments problems;
--dependence on outside suppliers for
oil and, in Europe, other strategic
materials.
The Alliance is thus under strain and in
some danger, but the economic pressures will
not erode Alliance security as long as NATO's
political solidarity is maintained. The prim-
ary danger lies in the possibility that individ-
ual NATO members might adopt short-sighted
policies, such as reducing the level of defense
spending. Such reductions could imply a lack
of political will on the part of Alliance
members, hamper NATO force improvement programs,
and strain the ability of the West to maintain
a unified position. in the force reductions
negotiations and the European security conference.
March 31, 1975
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The report goes on to note certain economic
advantages enjoyed by Warsaw Pact countries,
including favorable growth prospects and the
fact that they are shielded to some extent from
outside economic events. But the report
points out that the Eastern economies do
suffer from fluctuations and setbacks, as
well as structural weaknesses deriving largely
from their systems of central planning. In
addition, the report notes that their economic
growth starts from a much lower base.
The NATO report, at its present stage, is
short: on practical suggestions, but it recommends
that NATO countries keep in mind the political
and security interests of the Alliance when
adopting positions in international economic
forums. The report also concludes that the
present economic difficulties point to the
urgent need for more efficiency in Alliance
programs and greater standardization of NATO
weapons. NATO has been studying such ideas for
some time, with few practical results.
After the paper leaves the economic
committee, it will be discussed in the NATO
political committee and the North Atlantic
Council before being taken up, finally, at
the NATO ministerial meetings scheduled for
late May. (Confidential No Foreign Dissem)
March 31, 1975
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.2
5
Declining Turkish Cotton-Exports Worsen Trade
Deficit
Turkey will end this crop year with a record
cotton harvest and at the same time will be faced
with its lowest exports and largest inventory
in over 10 years. Compared with a year earlier,
1974-1975 production rose by 17 percent but exports
will drop a steep 31 percent, leaving a projected
stock by the end of year of a, staggering 315,000
tons. Unless government efforts to reverse the
situation are effective, Turkey could meet all
of next year's domestic and export requirements
without raising any cotton at. all.
High government support prices and the
failure of export promotion programs have pushed
the price of Turkish cotton above world market
prices. As a result, export contracts amounting
to only 70,000 tons had been logged by the end
of February compared with 227,000 tons a year
ago. Raging inflation--now running at an annual
rate of 30 percent---left Turks with little
purchasing power to offset decreased foreign
demand. Turkish textile mills are now operating
at one-third their normal level.
The cotton crop generally accounts for about
20 percent of Turkey's export earnings. The
steep decline in orders for the fiber will worsen
Ankara's severe trade problems. In the January-
February period, the trade deficit rose to over
$477 million, as exports dropped 20 percent and
imports shot up 60 percent. As a-result of the
deficit, Turkey's foreign exchange reserves have
fallen to $1.1 billion from over $2 billion a
year ago. Ankara is viewing the situation with
alarm and has applied to the International Monetary
Fund for special drawing rights equivalent to
$45.7 million to bolster its reserve position.
March 31, 1975
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Meanwhile, to promote sales, exporters
are insisting that the government release cotton
from price controls. Several concerned ministries
are considering making cotton available to exporters
at minimum prices if exporters have evidence of
firm orders from abroad. The government would
assume the entire loss for these transactions,
which have been predicted would lead to exports of
150,000 tons.
Further help may come from a government
plan to subsidize yarn exports. The export
premium for yarn was recently pushed from 10
percent to 25 percent of the value of the yarn.
Even so, restrictions by importing countries could
limit the effectiveness of Ankara's efforts. The
UK among Others has limited imports of Turkish yarn.
(Confidential No Foreign Dissem)
March 31, 1975
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US Isolated at UNIDO Conference
The second conference of the United Nations
Industrial Development Organization ended in Lima,
Peru last week with a final declaration favoring
the developing countries on such issues as estab-
lishing a link between the prices of finished pro-
ducts and raw materials, sovereignty over natural
resources and advocacy of producer cartels. The
vote on the final declaration found the US isolated
by a vote of 82 to 1, with a number of EC states
and Japan abstaining.
The US vote will heighten concern among the
industrialized states, and particularly the EC,
that the US has done little to settle its differ-
ences with developing states. Moderate developing
states will also worry that the US vote will strengthen
the hand of radical developing states who argue that
the US is unwilling to compromise and that the de-
veloping states should exploit their overwhelming
numerical majorities in the UN.
At the UN General Assembly in December the
US was joined by five EC states in voting against
a similar document, the Charter of Economic Rights
and Duties of States. Support for the US from the
industrial states eroded because they felt the de-
veloping states had softened their stand since
December. EC policy at the Lima meeting reflects
the effort the EC has made to compromise with the
developing states whenever possible. In the last
hours of the conference, the EC pushed hard to con-
vince the US not to demand a vote on the final
document or its individual paragraphs. The EC
states believed that if a vote were demanded they
would find it necessary to vote against the develop-
ing states on some'sections, a move they were loathe
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to make in the face of apparent concessions. Ul-
timately, however, even the Netherlands and France,
the developing states' staunchest defenders in the
EC, voted against one part of the document.
The concern of moderate developing states
over the US vote was expressed to Ambassador Scali
by the Pakistani ambassador to the UN, who will be
the next president of the UN Economic and Social
Council. The Pakistani said the outcome of the
Lima conference made him fearful that this fall's
special session of the General Assembly on economic
issues would degenerate into a fight between devel-
oped and developing states. He asked that the US
take the lead and offer concrete alternatives to
the demands of radical developing states. Other-
wise, moderate developing states, including Pakistan,
would have little choice but to join in full support
of these extreme positions. (Confidential No ForeignI
Dissem)
March 31, 1975
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President Approves New Turkish Cabinet List
President Koruturk has approved the cabinet list
submitted to him by Justice Party leader Suleyman Demirel.
The new center-right National Front coalition will now
take over from the caretaker regime of Prime Minister
Irmak and begin work on a government program which it
must submit to parliament within a week for a confidence
vote. With the support; of nine dissident members of the
Democratic Party, as was announced over the weekend,
Demirel's four-party coalition has a slim three vote
majority in the National Assembly. Even should he lose
the confidence vote, however, Demirel's government would
remain on in a caretaker capacity until another govern-
ment was formed.
Demirel's cabinet. includes the leaders of the other
three coalition members, all in the position of Deputy
Prime Minister. Thus included is National Salvation
Party leader Erbakan, whose antics and obstructionist
behavior finally brought down the Ecevit coalition govern-
ment last September. National Action Party leader Turkes
is also named Deputy Prime Minister. Turkes' party con-
trols only three votes in parliament, but they are crucial
to Demi rel _ Tiirkes i c alle
..t.a-,.,.,
e to have a-;
s t
g
me
e
o
right wing groups that have used violent tactics from
time to time.
Demirel's center-right Justice Party controls most
of the crucial portfolios, including the ministry of
foreign affairs. The Defense ministry went to Ferit
Melen of the Republican Reliance Party; Melen apparently
is satisfactory to the armed forces, having served tem-
porarily as Prime Minister in 1972 after the military
had removed Demirel in 1971.
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Demirel is not expected to press for early elections,
although his coalition is fragile and if he runs into
trouble elections will be seen as the only way out. His
relations with the military will be touch and go, parti-
cularly with Erbakan and Turkes--both of whom the military
strongly dislikes--in the government. (Confidential)
March 31, 1975
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