WESTERN EUROPE REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A001700010011-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 20, 2016
• Document Release Date: November 29, 2005
• Sequence Number: 11
• Publication Date: March 14, 1979
• Content Type: REPORT

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Assessment
Center
Western Europe
Review
State Department review completed
Secret
RP WER 79-011
14 March 1979
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WESTERN EUROPE REVIEW
14 March 1979
CONTENTS
The Spanish Election: Appearance and Reality
As the first emotional reactions to the
parliamentary election on 1 March subside,
many Spaniards seem to be wondering if Com-
munist leader Carrillo may not have been
right when he branded the contest a waste of
time and money.
Italy: Party Relations at the Local Level
Growing strains in relations among Italy's
three major parties, which led to the col-
lapse of the national government in Jan-
uary, were anticipated in many local
governments.
France: First Round of Cantonal Elections
The cantonal elections on 18 March have
been overshadowed by the crisis over un-
employment, particularly in the steel in-
dustry, and by the European parliamentary
election in June, in which the political
parties see higher domestic stakes.
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Finland: Parliamentary Elections)
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The results of the E'innish el
uled for 18-19 March are expe
increased support for the cou
ections sched-
cted to show
ntry's four
major parties as a group and a growing con-
servative attitude among the voters.
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The Spanish Election: Appearance and Reality
As the first emotional reactions to the parliamen-
tary election on 1 March subside, many Spaniards seem to
be wondering if Communist leader Carrillo may not have
been right when he branded the contest a waste of time
and money. Prime Minister Suarez again fell short of
a majority and will probably continue to seek consensus
on most important issues. Nevertheless, he will be deal-
ing from a stronger position especially in relation to
his chief rivals. The Socialist Suarez won this edge
over the opposition and a four-year extension of his
mandate at the cost of lengthy delays in implementing
vital legislation, particularly on the economy and on
rules governing regional autonomy. Gains by regional
parties, especially in the volatile Basque provinces
augur bitter confrontations ahead on this issue.
Both major parties--Suarez' Union of the Democratic
Center and Felipe Gonzalez' Socialist Workers Party--
emerged from the election with about the same popular
vote and almost the same number of seats as they gained
in the last election in June 1977. The Centrists still
have a plurality, but they once again fell short of a ma-
jority in the crucial lower house. Thus, Suarez will
have to choose between distasteful alternatives: forming
a coalition--with one or more regional parties--or de-
pending on floating votes for each important bit of leg-
islation.
To a large extent, the parties' initial responses
to the electoral results are colored by preelection hopes
or fears that were not realized. The Centrists' elation
owes more to their fear of a drubbing at the hands of the
Socialists than to any real advances made. Suarez gained
only two seats more than in 1977; in spite of the built-in
advantages of incumbency and an electoral system biased
slightly in his favor, he could not win an absolute ma-
jority.
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Socialist bitterness, too, seems to reflect dashed
hopes rather than a significant defeat. Preelection So-
cialist boasts--based on opinion polls and heady opti-
mism--that they would win more votes than the Center and
that, even if they won fewer seats, Suarez would not be
able to form a government without them seem rash in
retrospect. The Socialists are also dazed by the abrupt
halt to the seemingly inexorable forward momentum built
up during and after the last election.
Communist crowing is also hard to explain purely on
the basis of election returns. They showed more improve-
ment than any other national party, increasing their
representation by three or possibly four seats and upping
their share of the vote by almost 2 percent, but their
elation seems to derive mostly from the discomfiture of
their major rivals on the left, the Socialists.
RETURNS OF THE 1 MARCH SPANISH PARLIAMENTARY ELECTION
Party*
Congress of Deputies
Senate
1979
1977
1979 1977
UCD
167
165
120 106
PSOE
121
1182
65 483
PCE
231
20
- -
AP/CD**
91
16
2 2
Catalan
CU
9
11
1
PNV
7
8
8 4
HB
3
-
1 -
EE
1
1
- 1
%,UCD--Union of the Democratic Center; PSOE--Spanish Socialist
Workers Party; PCE--Corgmunist Party; CD--Democratic Coalition;
Catalan CU--Convergencia Y Unio; PNV--Basque Nationalist Party;
HB--Herri Batasuna (Basque extremist); EE--Euskadiko Eskerra
(Basque extremist).
**Most of the 1977 Popular Alliance joined forces under Fraga with
Osorio and Areilza to form the CD in 1979.
'One Madrid seat is being disputed and could move from the CD to
the PCE.
2The subsequent merger with the PSP and the addition of two Catalan
defectors gave the PSOE 125 seats.
30ther PSOE senators are "hidden" in electoral alliances; its true
strength is closer to 60.
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Alone among the four major parties, the rightist
Democratic Coalition seems completely justified in its
reaction. Having fallen disastrously from 16 seats to
9, party delegates are left with the choice of sweeping
the coalition quietly under the rug and joining Suarez'
party or trying to maintain their unity in hope of trad-
ing on their nine votes--which would give Suarez an ab-
solute majority.
On the Other Hand
These relatively small shifts are more significant
than they might seem at first. Suarez really is better
off. Defections had weakened his party in the months
prior to the election. Not only has he regained the lost
ground and more, he has taken the opportunity to weed
out dissidents and strengthen party discipline. More-
over, by breaking the Socialists' momentum and reaffirm-
ing the ascendancy of the Center, he may have made an
impact on the voters that will serve him well in the
municipal elections coming up on 3 April. Although
Suarez will probably still seek consensus on important
issues, he will be dealing from a position of greater
strength.
The Socialists have been hurt, not only by the dem-
onstration of their fallibility, but also by their imma-
ture reaction to defeat. Their self-indulgent bitterness,
their attempts to blame the outcome on Suarez' dirty
tactics--charging that he scared Spanish voters into
believing that the Socialists would radically alter
Spain--and their railing against. the electorate's stu-
pidity are all likely to damage the carefully-nurtured
image of a mature, responsible alternative to power.
Then too, taking into consideration the merger last year
with a splinter party and the addition of two Catalan
defectors, the Socialists actually lost four seats in
this election.
Moreover, the setback may encourage party radicals
to challenge Felipe Gonzalez' policy of moderation at
the party congress in May, where he has vowed to recom-
mend dropping Marxism from the party label. The effec-
tiveness of their challenge will depend, at least in
part, on the results of the municipal elections where
victory in several large urban centers would partially
offset the results of the national election. 25X1
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The Communists, who were least happy with Suarez'
decision to call elections, emerged strengthened. Though
far behind Suarez and Gonzalez in electoral support,
Carrillo is once again in the position of being able to
do Suarez a good turn--by supporting him on parliamen-
tary votes when the right, the regionalists, and the So-
cialists oppose the government. In exchange, Carrillo
will seek enhancement of his party's reputation as a
responsible actor on Spain's political stage with an im-
portance out of proportion to its vote totals.
A key aspect of the Communists' bargaining leverage
is their predominance in organized labor--as shown in
last year's plant elections. This strength could become
crucially important to Suarez if the Socialists and their
labor arm, the General Union of Workers, veer to the left
and refuse to cooperate on important pendin economic
and labor legislation.
Basques Vote Defiance
Characteristically, the most somber note of the
election was struck in the troubled Basque region where
nationalists of various stripes--ranging from those
seeking some degree of autonomy to those demanding com-
plete independence--garnered more popular votes than
Centrists, Socialists, and Communists combined. The big
gainers were not the relatively moderate Basque National-
ist Party--which has traditionally spoken for the vast
majority of ethnic Basques--but the more extremist sepa-
ratists who won close to 20 percent of the vote in the
two most volatile provinces of the region. The Herri
Batasuna coalition, many of whose leaders spent the elec-
toral campaign in jail and which openly supports the
most violent wing of the terrorist ETA organization, won
nearly 200,000 votes--enough to elect three deputies.
This is a sharp message of defiance to Madrid that will
be heard just as clearly by the Basque Nationalists. As
early as last December there were signs that the Basque
Nationalists were undergoing an internal struggle between
moderates and hardliners. The election results seem cer-
tain to strengthen the hardliners within the party and
bode ill for future negotiations with Madrid over the
region's autonomy statutes. 25X1
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Italy: Party Relations at the Local Level
Growing strains in relations among Italy's three
major parties, which led to the collapse of the national
government in January, were anticipated in many local
governments. Local political developments during the
past several months illustrate two general trends: the
weakening of Christian Democratic - Communist coopera-
tion and increased Socialist ambivalence toward both
larger parties. These factors have already immobilized
a number of key regional administrations and will
threaten others unless relations among the parties
improve at the national level. Meanwhile, there are
signs that the composition of local governments could
become a bargaining chip in the current maneuvering
to form a new national government.
The impressive Communist gains in the 1975 local
and 1976 general elections--both times the party won
more than a third of the vote--greatly improved the
party'?s standing and contributed to the impression
that Italy's pressing economic and social problems
cannot be treated effectively without Communist assis-
tance. The Communists' subsequent decision to support
a Christian Democratic minority government at the
national level--in return for an understanding that
they would be consulted on major policy decisions--
encouraged a trend toward similar cooperation in many
local administrations.
Communist gains in areas where the party had been
weak gave it the leverage to work out formal consultative
arrangements with Christian Democratic - led governments--
in return for Communist support in local legislatures.
And in traditional Communist strongholds, the party's
gains led not only to an increased number of Communist-
Socialist coalitions, but also to some instances of
Christian Democratic support for such governments.
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Communist Participation in Italian Regional Governments
~'~. Y.(J'M:6XRbt'r4
1 TRENTINO-
ALTO
AOIGE'
1f-EkV'Fy,'pl,A
P5LAVIA
Regional boundary
Direct participation of Italian Communist
Party
Indirect or limited participation of
Italian Communist Party
0 100
L4Z G ( _ ABRUZZI
H me ~' _
MOLfSE
\8A SILICA TAN
R, W. ~1116-
14 March 1979
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These arrangements seemed fairly stable until re-
cently, but in the last few months the same factors
that have soured interparty relations at the national
level have begun to affect local politics. The Com-
munists have been particularly anxious about the
possible revival of Christian Democratic cooperation
with their former Socialist allies. Consequently, the
Communists have sought to work out more formal alliances
with both parties in the regions where Communists dominate;
elsewhere, they have increased their demands to partici-
pate fully in administrations they support. The Social-
ists have become increasingly concerned that Communist -
Christian Democratic cooperation will weaken their party's
political importance. They have recently attempted to be
more independent in local government affairs by backing
away a bit from the Communists without becoming too
closely linked to the Christian Democrats. For their
part, the Christian Democrats are reconsidering various
commitments to cooperate with the Communists and are
refusing to grant them new concessions in local adminis-
trations. Some of the Christian Democratic leaders
apparently hope the growing differences among the parties
will provide an opportunity for the Socialists to rejoin
them in regional coalitions.
Regional Variations
The "Red Belt": The Communist Heartland
The Communists have been predominant in the north-
central regions of Emilia-Romagna, Tuscany (Toscana), and
Umbria throughout the postwar period. They have tra-
ditionally governed in these regions in coalitions with
the Socialist Party. Communist gains in the 1975 regional
elections allowed the party to put together similar
leftist coalitions in three additional regions: Piedmont
(Piemonte), Liguria, and Lazio. 25X1
Emilia-Romagna is a special case. With more than
48 percent of the vote, the Communists are stronger there
than in any other region, and they have used that position
to work out a unique arrangement under which the Com-
munist-Socialist government formally negotiates its
program with the Christian Democrats, who are then
pledged to support it in the regional assembly. This
is a reversal of the arrangement that has governed
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Christian Democratic - Communist relations at the na-
tional level for most of the last two and a half years.
Last fall, Communist efforts to reaffirm and expand the
program agreement with the Christian Democrats met with
stiff resistance from the latter, who threatened to with-
draw their support. They apparently were concerned that
the arrangement would become institutionalized--and might
further blur party distinctions with respect to local
administrative policy.
During the past several months, the Socialists have
been eager to antagonize the Communists--especially in
Tuscany--on isolated but controversial issues such as the
Communists' equivocal position on the questions of Soviet
dissidents and the presence of Warsaw Pact troops in
Czechoslovakia. Because the Socialists are reluctant to
jeopardize their relationship with the Communists in
Tuscany--the Socialists have offices and influence in
this region that outweigh their electoral strength--they
refuse to make a definitive break. For their part, the
Communists have refused to make administrative policy
changes in the Socialists' interest. The Communists in
some Tuscan towns have even stripped uncooperative
Socialists of their municipal offices to emphasize this
point.
The Communists in Sicily, Lombardy, and the Northeast:
One Foot in the Door
Although different in most other respects, these
regions are limited by one key political attribute: they
all have regional administrations led by Christian Demo-
crats, allied with the Socialists and some smaller
parties, which enjoy Communist support. The Christian
Democrats apparently agreed to these arrangements merely
to bring the local situation into line with developments
at the national level. The Communists view this coopera-
tion as a step toward their eventual full participation
in these administrations and for several months have in-
creased their demands for such status.
Although the Communists show no signs of with-
drawing, they might begin to disassociate themselves
from these administrations by moving gradually toward
the opposition as the 1980 regional elections approach.
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The Socialists have also timidly indicated their will-
ingness to put some distance between themselves and the
Communists in these areas. They are apparently prepared
to support the Palermo city administration in Sicily
(Sicilia) despite Communist opposition and to block
changes in the Lombardy (Lombardia) and Venice (Veneto)
regional program agreements proposed by the Communists.
But in the city of Milan--where the Socialist mayor re-
mains in office at the pleasure of the Communists--the
Socialists show no inclination to irritate their allies.
The Communists in Calabria, Campania, and Apulia:
Prying the Door Open
Tensions among the three parties have been most
pronounced in these southern regions. The Communists
have had less influence in these regional administra-
tions, even though they have formed part of the majority
supporting their legislative programs. In recent months,
the Communists have labeled the administration of each
region ineffective and have withdrawn their support to
emphasize their demands for full participation. They
have also declared that adjustments in the programs
would be inadequate, but have accepted an offer to
lead a regional program control commission in Apulia--
which would greatly increase Communist influence in the
planning and distribution of funds--even if the party
remained excluded from the administration. A similar
arrangement proved ineffective in Calabria, and the
Christian Democrats remain unwilling to offer such con-
cessions in Campania. The Socialists hold the balance
of power in both these provinces, but continue to sup-
port Communist demands rather than risking exposure to
Communist attacks by siding with the Christian Democrats
in these three-month-old disputes.
Outlook
The withdrawal of Communist parliamentary support
for the Andreotti government two months ago virtually
eliminated local party initiatives to overcome inter-
party tensions. And most such efforts are likely to
remain stalled until the impasse at the national level
is broken. F77 -1
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At the national level, the renewed Communist insist-
ence on direct participation in the Cabinet and the
Christian Democrats' refusal to meet these demands are
the most serious barriers to compromise. Since the
Socialists refuse to support any government that ex-
cludes the Communists, it is unlikely that a formula
acceptable to the parties can be reached without an
early election.
Even an election might not overcome these diffi-
culties. But a vote that does not appreciably change
the Italian political equation in numerical terms--the
current prediction--could reinforce the impression that
only a renewal of Christian Democratic - Communist co-
operation offers a way out. Thus, the parties might
eventually have to reconsider compromises they have al-I ready rejected.
One solution, which was never specifically offered
by the Christian Democrats or rejected by the Communists,
is a pledge of greater cooperation between the parties
at the local level, that is, full Communist participa-
tion in regional administrations in the south, Sicily,
and the northeast. This alternative would probably be
part of a larger compromise that included some inde-
pendent leftists associated with the Communists in
Cabinet posts and a greater role for the party in
national government olicymaking and implementation.
It is uncertain whether local Christian Democrats
would resist or obey directives from the national party
to surrender some administrative authority to the Com-
munists. Since interparty tensions reappeared first in
the localities--where they are frequently more aggra-
vated--they probably cannot be submerged so easily.
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France: First Round of Cantonal Elections
The cantonal elections on 18 March have been over-
shadowed by the crisis over unemployment, particularly
in the steel industry, and by the European parliamentary
election in June, in which the political parties see
higher domestic stakes. Nevertheless, the contest will
have a psychological impact and national implications.
It is the first major test of electoral sentiment since
the legislative election last March, and the sampling--
half the electorate, or 18.6 million voters--is respect-
able.
The balloting, which concludes on 25 March, is held
every three years to elect half of the more than 3,500
cantonal representatives (general councilors) who serve
six-year terms. Like the legislative elections, the
cantonals are based on a two-round popular vote. To win
a seat on the general council, the candidate must get
either an absolute majority in the first round or a simple
plurality in the second.
The election takes place under strikingly different
conditions than the last cantonals in 1976. Those elec-
tions, held during the halcyon days of the union of the
left, showed spectacular progress for the Socialists and
led observers to believe that the left was well-placed to
win the legislative contest in 1978. Even though can-
tonal elections are notoriously poor harbingers of legis-
lative elections, the left vote of over 56 percent in
the first round was considered significant. More im-
portant in retrospect, was the Socialist sprint ahead
of the Communists (26.5 percent versus 22.6 percent) no
doubt a crucial element in the eventual Communist deci-
sion to scuttle the union of the left and make the left's
loss of the 1978 elections virtually inevitable.
Many observers--and particularly the prospective
losers--tend to discount the cantonal elections in advance,
arguing that general councilors deal only with mundane
local matters such as roads and day-care centers, and
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that their influence over expenditures (largely in the
hands of the centrally appointed prefects) is slight.
Yet the general councils are steppingstones to higher
political office and over 200 deputies and senators will
be defending their local seats, although their positions
at the national level will not be affected by the outcome.
Also, since the French senate is elected by the general
councilors, the conservative nature of that body is grad-
ually changin as the left increases strength at the can-
tonal level.
Despite all of the problems involved in analyzing
cantonal elections, the results should provide a current
reading on: the balance of forces between the governing
coalition and the left; the relative strength of the
Giscardian UDF versus the Gaullists and the Communists
versus the Socialists; and the degree to which voter
discipline operates on the second ballot in which voters
on both the left and right are asked to transfer their
support to the best-placed candidate after their first
choice has stepped down. In the 1976 cantonal election
there was considerable erosion of support from Socialist
voters to the Communist to when the latter came
in first.
Like byelections last fall in which the left won
all five seats at stake, the cantonals are likely to see
a left protest victory that, despite the local nature of
the contests, could justifiably be interpreted as a re-
pudiation of government policies, particularly the eco-
nomic program.* The government is especially worried
that formerly progovernment areas, like Lorraine, where
there have been violent demonstrations against layoffs
in the steel industry, may move into the opposition
camp or register heavy abstentions. Gaullist leader
Jacques Chirac's joining with the opposition to call
for a special parliamentary session to deal with unem-
ployment must be seen in the light of his recognition
that any initiative on employment two weeks before the
cantonals can be electorally profitable.
Yet the Socialists could also be expected to pay for
the byzantine quarrels that obsess them and for their
continued failure to produce a convincing alternative
*The left, however, has won a majority of the popular vote in every
cantonal election since 1958.
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to the government's strategy. The Communists are a law
unto themselves, but they are likely to see an erosion
of their usually reliable electorate, partially for demo-
graphic reasons. One possibility is a fairly high ab-
stention rate that could cloud election results that
may be ambiguous at best.
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Finland: Parlimentary Elections
The results of the Finnish elections scheduled for
18-19 March are expected to show increased support for
the country's four major parties as a group and a growing
conservative attitude among the voters. This latter
factor will have to be taken into account in the selec-
tion of a prime minister and the formation of a new coali-
tion, which heretofore has excluded one of the major
parties--the Conservatives. The Finns, however, will
have to move carefully in order not to upset their rela-
tions with the Soviets, who have opposed the inclusion
of conservatives in the Helsinki government. The choice
of a prime minister becomes increasingly important as
this individual could become the successor to the aging
The Parties
Opinion polls taken over the past year show growing
support for the Conservative Party, Finland's large non-
socialist party, which has been excluded from government
for more than a dozen years because of Soviet pressure.
Although the Conservative Party has been pointedly sup-
porting a foreign policy that Moscow finds acceptable
in other Finnish parties, recent articles in the Soviet
press indicate Moscow would try to prevent the party s
inclusion in the next government.
The Social Democratic Party--the leader of three
coalitions during the last two years--may also gain mar-
ginally. As the largest party, the Social Democrats ex-
pect to lead the postelection government. Underscoring
this anticipation, they have unofficially "nominated"
Prime Minister Sorsa for the top position--irritating
Kekkonen, who normally selects the prime minister and
exercises a strong role in determining the makeup of the
Finnish Government.
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The Center Party, the major nonsocialist party and
longtime participant in Finland's governments, is expected
to gain little. Its main backers are farmers, craftsmen,
and small businessmen, and it is tr in to build worker
support in the service industries.
Finland's Communist Party, which functions through
a leftist front party called the Finnish Peoples Demo-
cratic League, has been a model member of the coalition,
helping to draft the conservative economic program adopted
by the Cabinet last year. The front has made its inclu-
sion in the postelection government an important part of
its campaign.
Communist Labor Minister Aalto published a preelec-
tion call for a working class - bourgeoisie compromise
under which the workers would give up their goal to take
over private property in exchange for their inclusion in
planning production, housing, and public services. Al-
though Aalto claimed his concept would differ signifi-
cantly from all current political-economic systems, in
actuality it has much in common with the Swedish and
nothing with the Soviet model. Aalto's purpose in pre-
senting this plan may have been to counteract what is
seen as a rightward drift among Communist Party support-
ers. The party fears this could lead to a shift in
their allegiance to the Social Democratic Party.
Finland's five remaining parties, who together cap-
tured 15 percent of the vote in 1975, are all right-of-
center parties. Polls indicate they will lose seats in
this election. The maturing of the society may have re-
duced the need for these parties, which reflect language
and religious differences, and the brighter outlook for
the Conservative Part ma encourage man of their mem-
bers to support it.
Government Makeup
If the election results in no significant redistri-
bution of power among the four large parties, Kekkonen
would undoubtedly call on Sorsa to form a government
that includes once again the Communist, Social Democra-
tic, Center, and Liberal Parties. The coalition might
be enlarged to include the small Swedish Peoples Party,
which dropped out of the government a year ago because
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it could not support a constitutional change that would
diminish the power of the smaller parties. The new gov-
ernment would continue the same programs as its pred-
ecessor.
If the Conservatives win close to the 10 seats in-
dicated in the most recent poll, they can be expected to
press their claim to participate in the government.
If the Communists and Social Democrats--under pres-
sure from Moscow--stand by their preelection statements
and refuse to participate in a coalition with the Con-
servatives, a nonsocialist government may be formed.
This could be either a majority coalition including all
or most of the seven center and rightist parties or a
Center-led minority government dependent on Conservative
support. Neither would last long, however, because of
the lack of labor support. F7 I
The socialist parties' pledge not to join a govern-
ment that includes the Conservatives may turn out to be
campaign rhetoric. In that case, Kekkonen will choose
a prime minister with an eye to balancing the composi-
tion of the government. If the Conservatives do become
part of the coalition, Kekkonen will have to choose a
prime minister who is acceptable to the socialists--and
Moscow. The Center Party has two potential candidates
who are supported by different party factions.
On the other hand, the Conservatives may be side-
tracked to subcabinet posts, or cabinet posts given to
technicians who have no active party role. A conserva-
tive flavor could still be added to the government by
the choice of Bank of Finland Board Chairman Mauna
Koivisto. Moscow and the left, although not among his
supporters, could hardly exert pressure against him
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because he is a Social Democrat--albeit a decidedly con-
servative one. Undoubtedly, negotiations over the bal-
ance of power will be difficult and could lead to an
extended period in which the present government contin-
ues in caretaker status or to a deliberate choice of a
government without staying power.
Foreign Policy Implications
In contrast to other countries, foreign policy is
important in all Finnish parliamentary campaigns. This
time, because of Kekkonen's age, it assumes greater prom-
inence. Kekkonen will be 79 this year, and there is a
distinct possibility he will be forced from office by
incapacity or death before the end of his term in 1984.
In that event, the constitution provides that the prime
minister become interim president until elections are
held. The interim president:. would have an advantage in
the subsequent presidential campaign.
The Finnish constitution gives the president prime
responsibility for foreign policy, and Finnish-Soviet
relations are the keystone of that policy. Moscow will,
therefore, be especially sensitive to the choice of
prime minister, even more so in light of the expected
conservative tilt of the vote. Finnish politicians rec-
ognize Moscow's veto power over their choice of president,
but whether they will submit; to a heavy hand in their
selection of a prime minister remains to be seen.
Domestic Policy Implications
The conservative tilt has already had its effect on
domestic policy. Individual. party policy prescriptions,
though focusing on different economic ills or responding
to different pressures, generally recognize the same
problems and call for similar remedies. The present
center-left government pursued a "capitalistic" line in
targeting stimulative measures on business and exerted
strong pressure on labor to accept wage increases only
marginally higher than the rate of inflation. 25X1
National-level labor negotiations begun in late
1978 were tough and nearly failed to produce an umbrella
agreement. Failure would have brought serious confronta-
tions both between labor and the government and among
14 March 1979
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the coalition partners. In early January, the labor
unions--representing about two-thirds of the work force--
signed a one-year package that includes: a small wage
increase with a little more promised for the end of the
year and early next year; a slight reduction in withhold-
ing taxes; and some improvements in a variety of fringe
benefits. This surprisingly moderate settlement, the
first national agreement since 1976, appeased all fac-
tions and effectively stilled the incomes question as
a campaign issue. But it was built on--and underscores
the importance of--inclusion of the socialist parties
in the governmen because of their close association
with the unions.
14 March 1979
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