WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000040005-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 27
• Document Creation Date: December 22, 2016
• Document Release Date: May 1, 2009
• Sequence Number: 5
• Publication Date: March 29, 1974
• Content Type: REPORT

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DSO FIDE Coy(
RETIhRI T01H-11U1
C/A acs
Top Secret
25X1
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Weekly Review
State Dept. review completed.
Top Secret
Copy N2 426
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The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It
fr5qucnt!y includes material ,oordinated with or prepared by
the Office of Economic Research, the Office of Strategic
Research, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and therefore
published separately as Special Reports are listed in the
contents.
I Middle East: Toward Disengagement
3 USSR-China: Rivalry in South Asia
4 EC: Shaken but Not Shattered
9 Cambodia: The Battle for Oudong
9 Laos: Up the Down Staircase
10 Korea: Point Counterpoint
11 Yugoslavia-Italy: The Trieste Gambit
11 Hungary: Leadership Shake-up
17 Iraq: Kurds; Grechko Visit
18 Foreign Aid for Sahel Drought
19 Ethiopia: Renewed Military Unrest
22 Peru: Social Property Law
22 Grenada: A Troubled Economy
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CONTENTS (March 29, 1974)
EAST ASIA
PACIFIC
MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
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Middle East: Toward Disengagement
The effort to settle the, Middle East conflict
enters another crucial stage with the arr ival of
Israeli Defense Minister Moshe Dayan in Washing-
ton on March 29. Dayan is to discuss with Secre-
tary Kissinger Tel Aviv's proposals for initial dis-
engagement of Syrian and Israeli forces on the
Golan front; a Syrian representative is expected
to hold similar tall - here sometime after Dayan's
departure. Further disengagement on the Egyp-
tian front, the reconvening of the Geneva peace
conference, and possibly the continued avail-
ability of Arab oil supplies to the US are contin-
gent on the successful outcome of the discussions.
The Israeli press reveals considerable official
and public pessimism over the prospects for disen-
gagement talks. Prime Minister Golaa Meir told a
group of visiting American war veterans that she
expected little from the talks in the US. Dayan
himself has expressed reservations about the value
of the Washington negotiations.
Concern over the possibility that the
might urge concessions unacceptable to Tel Aviv
may have inspired recent press stories empha-
sizing that Israel will not agree to withdraw from
any territory captured in the 1967 war as part of
an initial disengagement accord. Israel reportedly
will discuss withdrawal from rh town of al-
Qunaytirah only in the context of an over-all
settlement with Dar' ascus.
Syrian Foreign Minister Khaddarn told the
Arab League meeting in Tunis this week that a
disengagement agreement with the Israelis must
include the return of a l-Qunay ti rah to Syria.
The level of artillery, tank, and mortar fire
between Israeli and Syrian forces positioned along
the Golan front flared abruptly on March 27 after
several clays of relatively minor clashes. Inter-
mittent fighting lasted nearly 14 hours and in-
volved the entire sector of the Israeli-held salient
into Syria. The shelling resumed again the next
clay.
Although the heavy exchange on March 27
was initiated by Israeli artillery, there is little
doubt that the clashes over the past 17 clays have
been orchestrated primarily by Daniascu',. The
marked fluctuation in intensity during this period
suggests that the Syrian motivation is more politi-
cal than military. The Syrian leadership probably
views the continuation of sonic level of armed
conflict as necessary to maintain a strong nego-
tiating position, as well as to demonstrate to the
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Arab world that the regime's basic militancy
against Israel has not been eroded.
Early this week, Damascus announced that
President Asad had accepted a Soviet invitation to
lead a government and party delegation to Mos-
cow during the first half of April. The trip was
apparently arranged during the visit of Soviet
Foreign Minister Gromyko to Damascus early in
March. Asad will undoubtedly confer with Soviet
leaders about Syrian-Israeli disengagement nego-
tiations, and he may press them for more arms.
Although Asad's position at home seems fairly
strong at present, he would probably welcome
another show of Soviet support to further
strengthen his hand against those who oppose his
undertaking to negotiate with Tel Aviv.
Egypt's President Sadat, meanwhile, has
been relatively inactive on the public scene while
attention has been focused on the Syrian-Israeli
arena. After receiving a high-level Peruvian dele-
gation this week, he was off to Belgrade on March
28 for a two-day visit with President Tito, a
staunch supporter of the Arab position. Early
next week, however, Sadat will receive King
Husayn, who wants to brief the Egyptian leader
on the results of his recent Washington visit and
consult on strategy for the Geneva peace talks.
According to the semi-official Al-Alrram,
while Husayn is in Cairo, he is expected to give
public recognition to the Palestine Liberation
Organization as the "sole representative of the
Palestinian people"-something he has been ex-
tremely reluctant to do thus far. Husayn almost
certainly intends to discuss Jordan's relations
with the fedayeen and perhaps-with Sadat's
help-reach an agreement with the PLO on work-
ing together in some fashion at Geneva once the
conference resumes. The King, however, is prob-
ably not yet ready to renounce all claims to the
Israeli-occupied West Bank, although he is under
considerable pressure from other members of the
Jordanian royal family and the rest of the East
Bank establishment to do just that.
Al-Abram also reported this week that an
Egyptian-Palestinian committee will begin consul-
tations on April 1 to "coordinate a joint stand"
on the role of the Palestinians during the next
phase of the Geneva conference. According to
this account, President Sadat has assigned Foreign
Minister Fahmi to negotiate with the Palestinians,
and has assured PLO leader Arafat thct Egypt and
Syria will not embark on an over-all settlement
unless the Palestinians are present at the Geneva
talks.
Sadat's moves to include the Palestinians in
the current round of negotiations are prompted in
part by a need to assuage their constant fear that
they are being abandoned by the Arab states, and
in part by Sadat's desire for Arafat to continue
his private support for Egypt's diplomatic initia-
tives. There is, in fact, little need to coordinate
Egyptian and Palestinian negotiating strategies at
this time. The two parties are being held back less
by differences between them than by the inability
of either to take further initiatives without Syria's
concurrence.
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USSR-China
Rivalry in South Asia
A recent increase in Soviet attention to
Chinese activities in South Asia betrays Moscow's
interest ' Jrestalling any improvement in
Peking's relations with its southern neighbors.
The Soviets are also concerned that some recent
events, such as the Chinese seizure of the Paracel
Islands, point to an understanding between
Peking and Washington regarding the region.
The Paracels episode looms large because of
long-standing Soviet sensitivity to any sign that
the Chinese are becoming more aggressive. Mos-
cow's propaganda mill, moreover, has been using
the incident to exploit the traditional distrust of
the Chinese in South and Southeast Asia.
The Soviets have also moved to take advan-
tage of Chinese support for the insurgents in
northeast Burma. On March 1, Pravda ran a long
article that traced the Chinese role in Burma; its
March 21st issue replayed Western press reports
that Peking had moved several thousand more
troops into the area. The Chinese have responded
in kind, and this particular area will almost cer-
tainly be the subject of further propaganda ex-
chang' s.
The Soviets are particularly concerned that
Peking's efforts to increase its influence in South
Asia are abetted by the Sino-American rapproche-
ment. Moscow has publicly charged US-Chinese
collusion over northern Burma and has argued
that Peking's mild reaction to he Diego Garcia
issue proves that Peking favors arer, expanded role
for the US Navy in the Indian Ocean. Several
Soviet commentaries have charged that US silence
over the Paracels and Chinese approval for the US
base at Diego Garcia resulted from Sino-American
bargaining on "dividing spheres of influence."
The Soviets realize that, despite their efforts,
Peking's moves to improve relations with its
neighbors to the south have already begun to bear
fruit. Chinese and Malaysian diplomats have all
but agreed on a final version of a joint commu-
nique announcing diplomatic relations. Thailand
is preparing to lift a ban on Chinese imports and
has agreed to begin negotiations on a formal Sino-
Thai trade agreement. Finally, the Soviets are
anticipating that Pakistan's recent recognition of
Bangladesh has removed one r'f the major obsta-
cles to a Chinese presence on 1 . subcontinent.
Chinese Hold Soviet Helicopter
Sino-Soviet strains bode ill for an early re-
lease of the crew of a Soviet helicopter downed in
mid-March in northwestern China. Peking has
been engaged in anti-Soviet polemics for several
months, attacking particularly Moscow's "expan-
sionist" foreign policy and its espionage activities.
A Communist newspaper in Hong Kong has in
fact explicitly linked the downed helicopter with
an incident in January that led to the expulsion
of Soviet diplomats from China.
Violations along the Sino-Soviet border are
not uncommon; the Chinese have charged the
Soviets with more than 60 intrusions in the past
year. Nevertheless, this is the first time since
border negotiations began late in 1969 that either
side has publicized such an incident. Previously
scheduled Soviet military exercises near the
border will add to the problem and further delay
the release of the Soviet airmen.
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EC: Shaken But Not Shattered
The EC foreign minister. will gather in Lux-
embourg on April 1 and ~: fer their first meeting
since debate sharper ,"d over consultation pro-
cedures with the US. In :,ddition, Britain's Labor
government will be aitcnding for the first time.
Although taking heart that the agricultural minis-
ters last week satisfied the immediate farm-policy
demands of the UK's naw government and
avoided fresh divisions within the community, the
EC members are aware that much more difficult
decisions lie ahead.
The agreement on farm prices, reached on
March 23, substantially increased agricultural sup-
ports but allowed a variety of subsidies to keep
retail food prices down. The increase in support
prices should have no immediate effect on the
cost of most farm products, since market prices in
EC states are generally above the support levels.
The EC capitals greeted the outcome of the
agricultural ministers' meeting with relief. EC
leaders had speculated earlier that Britain's new
leaders would seize the occasion to challenge the
basic principles of the community's common agri-
cultural policy.
The agenda for the council meeting in Lux-
embourg is almost certainly too ambitious for
thorough discussions, let alone decisions, on all
the items, which include regional policy, coopera??
tion with East European countries, the budgetary
powers of the European Parliament, further nego??
tiation of compensation due the US because of
enlargement of the EC, Mediterranean policy, and
a possible UN aid fund for developing countries,.
The council meeting will be overshadowed)
by London's commitment to improve the terms
of its EC membership. Foreign Secretary Ca!..
laghan may make specific demands at Luxem??
bourg, and will in any case show part of his hand,.
Essentially, London is seeking to reduce its net
financial obligation to the community and to
open EC markets wider to commonwealth pro-
ducers of raw materials. The British are at-
tempting to achieve better terms without having
to alter the community treaties radically. Even so,
some of London's aims will require fundamental
readjustments.
The Labor leaders will apparently not be
satisfied with the previous government's approach
of trying to increase Britain's benefits under
various community allocations, such as the pro-
posed EC regional fund, as a means of balancing
the UK's financial contribution to the com-
munity.
A basic reform of the common agricultural
policy could also work to London's financial
benefit, and EC circles are still nervous about the
extent of British demands. For the French, the
common agricultural policy is the most sacrosanct
of EC accomplishments, and Paris would resist
efforts to modify it.
London may, in contrast, stress a new look
at the terms for assessing member-state contri-
butions. The British favor a close correlation with
an individual country's gross national product.
An early resolution of the problems London
is raising about the terms of its membership is not
likely. Callaghan has predicted a "hot summer of
negotiation." The meeting next week should
provide some indication, however, of the reforms
that Britain's partners are willing to contemplate
in an effort to preserve what is left of community
solidarity.
This solidarity is still being strained by the
differing national responses to Washington's
desire for a more formal US-EC consultation
procedure. Most EC leaders express the hope that
consultations on foreign policy will be a two-way
affair, but they are not sanguine that Paris will
sanction improved procedures. Pending a decision
on the formulation of a response to Washington,
the EC proposal to offer wide-ranging coop-
eration to the Arab states is being held in abey-
ance at the insistence of several membe
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The deficits arising from Peking's huge agri-
cultural imports and its multi-billion dollar pro-
gram to buy Industrial plants are compelling
China to seek ways to finance its trade with the
West.
In contrast to its previous reluctance to in-
cur foreign debt, China has recently expanded its
use of short- and medium-term credit to finance
its trade defi, its. China's trade deficit with the
non-Communist countries last year was roughly
$500 million. Continued large deficits are ex-
pected in the next two years. China has signed
grain import contracts covering the next three
years with Canada, Australia, and Argentina, and
additional purchases from the US are expected.
Thus -far in 1974, Peking has signed conicacts for
whole plants worth about $250 million in addi-
tion to the $1.2 billion worth of plants it pur-
chased last year.
China's drawings of foreign credits totaled
about $550 million last year and will reach about
$1.4 billion in 1974. The ratio of debt service to
exports will increase sharply this year. If Peking
continues to purchase plants at the $1 billion
annual rate, the debt service ratio will remain high
for several years with repayments, including in-
terest, rising to more than $1 billion annually.
Nevertheless, if the value of Chinese exports to
the non-Communist countries grows by approxi-
mately 20 percent each year-a likely prospect in
view of the potential for petroleum exports and
the probable continued rise in world prices-the
debt service ratio will remain within manageable
limits.
Peking is making strong efforts to increase
foreign-exchange earnings. As part of the drive to
increase exports, prices of Chinese goods have
been raised, the quality has been improved, and
new markets are being opened. Exports of petro-
leum could provide substantial earnings in the
next few years-possibly exceeding a half billion
dollars annually. China also is tapping other
sources such as overseas remittances, deposits in
Chinese-controlled banks, time deposits from
foreign banks, a greatly expanded merchant
marine, and small-scale tourism.
Barring unforeseen disruptions to the econ-
omy, Peking should be able to finance a growing
import bill without straining its balance of pay-
ments. Continued growth in exports and invisible
earnings will enable China to follow its present
foreign trade policy without drawing down its
estimated reserves of $1.5 billion to dangerous
levels. If Peking shifts policy and follows the
Soviet example of accepting long-term credits and
negotiating self-liquidating loans, even higher
levels of imports would be possible without
greatly increasing annual debt service.
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An authoritative article by Vice Premier Le
Thanh Nghi reinforces earlier signs that recon-
struction and development of North Vietnam,
rather than the struggle in the South, will receive
priority attention for the next couple of years.
The article, published on March 14, was de-
signed to explain to cadre the decisions of the
22nd Central Committee plenum held earlier this
year. Nghi's article stated that the North's "key
task" at present is to rebuild and industrialize its
economy. With unusual bluntness, Nghi asserted
that the North "should not be too bent on main-
taining vigilance and making preparations for
war" lest the reconstruction effort suffer. He in-
dicated at more than one point that he expects
this to be the line through 1974 and 1975.
Nghi emphasized that Hanoi remains as com-
mitted as ever to the southern struggle, but he
claimed that North Vietnam can best fulfill its
revolutionary duties at this time by building its
own economic strength. This theme was stressed
by party leader Le Duan last spring, but pro-
nouncements over the last few months have
fuzzed the issue. Nghi did not rule out the possi-
bility that once North Vietnam has achieved a
degree of economic strength-and perhaps also
once it has completed its current effort to im-
prove and modernize the armed forces-it would
attempt another major military move in the
South.
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The Viet Cong this week surfaced what they
calied an "important new initiative" for a military
and political settlement in the South. The pro-
posal, presented in Paris on March 22 and sirce
treated to considerable fanfare in Hanoi's media,
is essentially a rehash of the Communists' stand-
ard six-point program unveiled last April.
The only real difference is the omission of
call for the return to the January 28, 1973, cease-
fire lines. While Hanoi has not been publicly push-
ing this demand for several months, it has always
been included in any comprehensive statement of
Communist progrims. its omission at this junc-
ture is curious in light of the gradual erosio'i of
Viet Cong territorial holdings.
The new version focuses considerable atten-
tion on the necessity for "third force" participa-
tion in a political settlement in the South. It also
includes a harsh attack on Saigon's alleged foot-
dragging on prisoner exchanges-standard themes
of recent Communist propaganda.
Both China and the Soviet Union promptly
endorsed the Viet Cong proposal, though in some-
what restrained terms. The South Vietnamese re-
jected it entirely, claiming it was merely a restate-
ment of earlier ones.
It is unlikely the Communists expect their
proposal to lead to any break in the stalemated
negotiations in Paris or to any change in the
situation on the ground in South Vietnam. They
probably are hoping that the proposal-comple-
menting other recent propaganda attacks on the
US and Saigon-will help refocus international
interest on the Vietnam war and inhibit US aid to
South Vietnam. The North Vietnamese are back-
ing an anti-US international gathering on Vietnam
in Stockholm this week for the Fame pur-
poses.
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Heavy combat continued northwest of
Phnom Penh near Oudong this week as the Cam-
bodian Army made a major effort to recover the
town. A 2,500-man government fr-:ce advancing
from the east fought to within a mile of Oudong
before being halted by stiff resistance on March
28. Another relief force is trying to make its way
to Oudong 'from the south but has made only
limited progress. Remnants of the Ouqong garri-
son were forced to abandon remaining positions
on the town's outskirts after Communist shell-fire
;et off ammunition stocks.
The Khmer Communists also attach consid-
erable importance to Oudcng. Broad coverage of
its capture continues in propaganda, Sihanouk
himself has sent a public cable of congratulations,
and insurgent units are being urged to hold on to
the town and to expand their holdings along
Route 5 to the north.
A delegation headed by Khmer Communist
"deputy premier" and "defense minister" Khieu
Samphan began an official visit to North Vietnam
late this week. The visit comes at a time when the
Communists' dry season offensive is falling well
short of expectations. In addition to Samphan,
the delegation is composed of leng Sary-the
prominent Khmer Communist official who has
not been heard from since he left Peking for
Cambodia last November-and several other Com-
munist functionaries.
This is the first known trip outside Cam-
bodia since the war began for the 42-year-old
Samphan, who has gradually emerged as one of
the top leaders in the insurgency. While in Hanoi,
he is certain to discuss future insurgent strategy
and tactics ;nd may use Vie occasion to request
additional military aid from the North Viet-
namese. The subject of negotiations is also likely
to be on the agenda.
There has been no indication that Sihanouk,
who has resumed residence in Peking, will partici-
pate in Samphan's talks with North Vietnamese
leaders. Even though Sihanouk has been to Hanoi
twice this year, he probably would like to confer
with Samphan. The two last met a year z,go dur-
ing Sihanouk's vie;t to Khmer Communist - con-
Pathet Lao chairman Prince Souphanouvong
has dispatched his plenipotentiary representative,
Phoumi Vongvichit, to Vientiane to resume pri-
vate discussions with Prime Minister Souvanna on
the formation of a new coalition government.
Phoumi arrived back in the Lao capital on March
27, following a six-month stay at Lao Ccrnmunist
headquarters in Sam Neua, and his return is signif-
icant. , :e previously served as the principal Pathet
Lao official during the difficult negotiations lead-
ing to the February 1973 peace agreement and its
implementing protocol the following September.
Both Souvanna and Pathet Lao negotiator
Phoun Sipraseuth have publicly stated that
Phoumi was returning to complete arrangements
on the membership of the coalition cabinet and
its advisory political council. Phoumi will prob-
ably also attempt to resolve with Souvanna the
few procedural difficulties still impeding effective
neutralization of the twin capitals of Vientiane
and Luang Prabang.
Souvanna hopes that Phoumi's visit will lead
to a meeting in Luang Prabang between himself,
Souphanouvong, and the King to "consecrate"
the new coalition before the Lao new year begins
in mid-April. The King's recent decision to sup-
port Souvanna's opposition to a special session of
the National Assembly, publicly announced in
Vientiane this week, appears to clear the way for
the Prime Minister to form the coalition by direct
royal investiture without prior legislative ratifica-
tion. The Pathet Lao are in favor of this coalition
scenario.
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Since Seut.lt jnd Pyongyang began direct
talks on national unification two years ago, each
has put forward proposals designed less to unify
Korea than to serve partisan objectives. The
South, fearful of broadened contact With the
tightly controlled and rigidly indoctrinated north-
erners, has advocated only the most limited so-
cial, cultural, and humanitarian exchanges. The
North, seeking better access to audiences in the
South, has pressed for broadened political con-
tacts. To weaken the South militarily, Pyongyang
has also pressed for new security arrangements
involving termination of the UN role in Korea,
mutual force reductions, and total withdrawal of
US forces. The US military presence in South
Korea has been persistently singled out as the
main obstacle to unification.
These conflicting objectives led to an im-
passe in the talks months ago. But each side sees
some advantage in continuing the dialogue, in
part to meet domestic needs and in part to avoid
forfeiting the diplomatic initiative to the other.
Thus, in January, Seoul offered the North a non-
aggression pact calling on both sides to avoid
military confrontation and to respect the 1953
armistice agreements. On March 24, North Ko-
rean Foreign Minister He Tam responded in a
lengthy statement before a meeting of the Su-
preme Peoples' Assembly.
For the first time, Ho Tam proposed direct
negotiations between Pyongyang and Washington
for a peace treaty to replace the existing armistice
arrangements. He called upon the US to withdraw
its troops from the South (and to abstain from
any further military involvement thereafter), to
terminate the UN Command mechanism headed
tr?i the US and, in effect, to end military suppc,rt
for the Seoul government. Ho Tam maintained
that he was appealinn directly to the US because
Sr;ith Korea had persistently obstructed a peace
trea'Ly and national reconciliation, and because-
in his analysis-the US held the key to progress.
In advancing their proposal, the North Ko-
reans appear to have two main, interrelated objec-
tives. Anticipating a change this year in the
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arrangements for policing the armistice-stem-
ming from the possible termination of the UN
Command-Pyongyang wants to stake out its ne-
gotiating position. In effect, the North Koreans
are putting on record their opposition to meas-
ures limited to remodeling the Military Armistice
Commission and are reaffirming their opposition
to a continued US roilitary role on the peninsula.
Ho Tam's proposal for turning the armistice into
a peace treaty, however, is probably only an
opening gambit in what could become prolonged
and complex negotiations on the UN Command
issue.
By appealing to Washington over the head of
Seoul, Pyongyang is also pressing the South Kore-
ans to consider seriously various Communist pro-
posals for bilateral North-South agreements.
While Ho Tam characterized the present North-
South dialogue as "meaningless," the North ap-
pears anxious to resume formal meetings and is
ready to resume Red Cross talks with the South
as well.
Seoul's official response to the Ho Tam pro-
posal has been predictably negative; the South
Korean spokesman characterized it as Pyong-
yang's effort to communize the South. Privately,
however, the South Koreans appear intrigued by
Pyongyang's renewed interest in the talks and by
the relatively flexible language in Ho Tam's state-
ment.
newal of formal talks. In future discussions with
Pyongyang, the ROK government must, however,
also weigh the effect an improved atmosphere on
the peninsula would have on UN consideration of
Seoul will remain cautious about any North
Korean overture that appears to move the talks
forward. The regime in the South is anxious not
to undercut its claims of North Korean hostility
and intransigence, allegations that have served so
well in defusing domestic unrest in recent weeks.
So long as the likelihood cf discontent remains
high-particularly on college campuses-Seoul will
maintain a hard line toward Pyongyang while at
the same time keeping the door open for a re-
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YUGOSLAVIA-ITALY: THE TRIESTE GAMBIT
Belgrade is keeping up the pressure in its
dispute with Rome over Zone B in order to drive
home the message that Yugoslavia will resist any
?oreign claims on its territory.
Last week, the Yugoslavs rejected Italian
Prime Minister Rumor's efforts to restore the
good bilateral relations that prevailed before the
dispute became public in early March. Belgrade
views Rumor's general expression of goodw'-Il as
unsatisfactory and says that only a flat renuncia-
tion of the Italian claim will be acceptable. The
Yugoslavs are also threatening to revive their
20-year-old claims to Zone A in Italy and to
release the contents of secret talks with Rome-a
move that could embarrass the Rumor government.
Monfalcone.N.
~.r
ZONE FIR,
Tr I I.. It A
Koper\
Ai.?i?i1\iIC~
\ZONE B
?-International boundary(1970)'
O MILLS 6
555541 3-74
Belgrade's reaction may in part be aimed at
other neighbors who might be tempted to revive
irredentist claims or otherwise to intervene in
Yugoslavia. High-ranking military officers in Bel-
grade have privately told US diplomats that the
"signal" is aimed at "any and all" countries that
threaten Yugoslav territorial integrity.
Domestic political concerns also contribute
to the bluster. Belgrade has organized a wave of
protest meetiligs throughout the country. Tito
probably believes that national elections in April
and a party congress in May will run more 25X1
smoothly if problems at home are obscure
wave of patriotic fervor.
HUNGARY: LEADERSHIP SHAKE-UP
The shake-up in the top Hungarian leader-
ship last week dealt a major setback to Budapest's
liberal economic and cultural policies. Over the
past year, the Kadar regime had done much to
satisfy demands from domestic conservatives and
from Moscow for more orthodoxy. Clearly, it
was riot enough. Kadar has now had to trim the
strength of the staunch advocates of economic
reform and cultural flexibility, most significantly
by replacing the party secretaries responsible for
these areas.
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In so doing, Kadar demoted two of his
closest associates-Rezso Nyers and Gyorgy
Aczel-and struck at policies that had become the
twin pillars of Kadarism as cautiously practiced
for more than a decade. While the moves may at
last mollify his critics, they could also whet their
appetites for further changes in policy or person-
nel. Indeed, additional shifts in the central party
apparatus are already under way, and Kadar
clearly must adopt a more conservative tack in
domestic policy.
The immediate issue at the party plenum
that implemented the shake-up was the economic
reform and its preferential treatment of agricul-
ture at the expense of urban workers This topic
undoubtedly flared into a discussion of "negative
Reso Nyers Politburo member and architect of the
economic reform. Removed from party
secretariat.
Gyorgy Aczel Politburo member and director of cul-
tural policy. Removed from party secre-
tariat.
La/os Feber Politburo member, deputy premier, and
spokesman for agriculture. Retired.
Niklos A/tai Deputy premier for science and tech-
nology. Retired.
Istvan Sarlos Chief editor of party daily, Nepsza-
badsag. Relieved, to head the Patriotic
Peoples Front.
Karoly Nemich Politburo member and dark-horse candi-
date to succeed Kadar. A moderate, but
less committed to some reform goals.
Moved into party secretariat, apparently
in place of Nyers.
Itnre Gyori Agitation and propaganda specialist in
the late-1950s, and apparent conserva-
tive. Replaces A czel on party secretariat.
Zoltan Komocsin Politburo member and conservative for-
eign affairs spokesman. Assumes addi-
tional duties as editor of party daily
Nepszabadsag.
social and economic phenomena" (acquisitive-
ness, conspicuous consumption, managerial
haughtiness), which the conservatives :lave long
criticized as ideologically unacceptable spinoffs of
the decentralized economic reform. The discus-
sion, moreover, came against the backdrop of
generally increased Soviet pressures for ortho-
doxy in Eastern Europe. Moscow's concerns may
have thus indirectly precipitated the debate and
emboldened the conservatives to bring the issue
to a head.
Kadar still retains the levers of power, and
apparently still is the Soviet choice to run the
country. Although his options are now more
closely circumscribed than they have been since
the early days of his rule, he has taken personal
charge of updating policy for the next party con-
gress in March 1975. Clearly he hopes to weather
the setback and limit the damage.
Abrupt policy changes seem out of the ques-
tion as even the staunchest conservatives realize
the disruptive potential of such a course. In all
likelihood, however, more constraints will be
placed on the managers, more attention paid to
the urban worker, and increased strictures put on
intellectuals. The hand of the central economic
authorities is also likely to be strengthened, but it
is too early to predict how much this will gut the
economic reform and its emphasis on local initia-
tive and decentraiization.
Kadar has until the next party congress to
work out compromises with his critics. He is
adept at such give-and-take and has used it as a
key political tool throughout his 18-year tenure.
In Kadar's favor is the fact that his domestic
critics do not present a solid front. Kadar may
well emulat3 the "salami tactics" of his Stalinist
predecessor, Rakosi-not to purge, but to "slice
off" issues and critics piecemeal.
The Soviets, of course, can set the limits of
Kadar's actions. If Moscow is intent on extracting
further concessions from him, it can give the
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conservatives a relatively free hand. Nevertheless,
stability in Hungary is a clear priority for both
Budapest and Moscow and, for the moment, the
memory of 1956 may be sufficient to temper
SPAIN: CHURCH-STATE DISPUTE SIMMERS
Cardinal Tarancon's declaration in a sermon
on March 24 that the church has a right to speak
out on social problems-even if it displeases the
government--will make it difficult for Madrid to
adhere to its decision to play down its recent rift
with the church. Last month, a pastoral letter
authorized by Bishop Anoveros, which called for
greater Basque autonomy, caused the most seri-
ous confrontation between church and state since
Franco assumed power.
A recent statement from the Episcopate
stressed that Anoveros had no intention of attack-
ing national unity in his pastoral as the govern-
ment had charged. Madrid accepted this explana-
tion, even though the statement also firmly de-
fended the church's right to speak on temporal
affairs. In responding, the minister of information
cited the recent tensions as evidence that the
existing system regulating church-state relations is
inadequate and called for renewed negotiations to
revise the 1953 concordat. By not insisting that
the bishop be exiled, the government has avoided
for now a confrontation with the Vatican.
Meanwhile, Anoveros has quietly :att for a
vacation in southern Spain to permit the atrrios-
phere in his Basque diocese to cool down. He is
expected to return in time to take charge of Holy
Week celebrations. Although rumors persist that
he may be "kicked upstairs" to a post outside the
Basque region, such a decision may be delayed
because his failure to return to Bilbao would
cause more unrest among the Basques to whom
he has become a hero-martyr.
Although the government has backed off
somewhat, the outlook for improved church-state
relations is not good. Madrid is unlikely to agree
to the Episcopate's wish to speak out on temporal
affairs, and negotiations to revise the concordat
will be difficult. Monsignor Casaroli, the Vatican's
equivalent of foreign minister, stopped in Madrid
on his way to Cuba this s.-eek and may have
sounded out thr government on its inten-
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ICELAND: A BASE OFFER
The Icelandic Government's first official
proposals for revising the defense agreement rep-
resent Reykjavik's maximum demands and are
described as a "basis for discussion." The propo-
sals were leaked last week by Communist leaders.
Speaking before parliament on March 25, Prime
Minister Johannesson conceded that the Icelandic
position could be altered during subsequent
rounds of negotiations, and that the "final out-
come" might not correspond to his government's
latest demand:,.
Under Reykjavik's plan, the US would be
required to withdraw all of its forces from the
NATO base at Keflavik. The pull-out would occur
in stages, with one quarter of the troops being
withdrawn before the end of 1974 and further
withdrawals occurring every six months until the
entire force will have departed by mid-1976. The
base would become an emergency NATO airfield
with a small civilian caretaker staff, and would be
under the protection of Icelandic police.
The future of the ;;eflavik base has been a
divisive issue in Iceland. Disagreements within the
ruling tripartite coalition of the Progressive Party,
the Liberal Left Organization, and the Commu-
nists have fora d repeated postponements of ne-
gotiations after the first round ended last Novem-
ber. A nationwide signature campaign sponsored
by supporters of the base this winter was surpris-
ingly successful. Johannesson's review of his gov-
ernment's new proposals sparked a heated debate
in parliament and elicited a sharp response from
the opposition Social Democratic and Independ-
ence Party leaders, who favor retention of the
base. More significantly, a deputy of Johannes-
son's own Progressive Party declared he would
not support the government's move against the
base, raising the possibility of other defections
that might deprive the coalition of its parlia-
mentary majority.
The hard line taken by the Johannesson gov-
ernment suggests that these initial proposals are
intended in part to improve Iceland's bargaining
position. Be;-ond this possible consideration,
however, the Progressives and Liberal Leftists
evidently fell compelled to placate the Commu-
nists with a tough line. They may hope to dis-
suade the Communists from bolting the coalition,
thus bringing down the government, at least until
later in the yea;. iceiand will celebrate its 1,100th
anniversary this summer, and moderate leaders
may hope to avoid an embarrassing interregnum
or a bitter political campaign at that time.
The increasing rate of Soviet and Eastern
European auto sales in Western Europa is causing
concern, particularly in the UK, where the impact
has been greatest. British imports from the USSR
doubled last year and are expected to double
again in 1974. Imports from Eastern Europe are
also growing steadily. British dealers complain
that Communist-made cars-the Soviet Moskvich,
the Czech Skoda, and the East German Wartburg
with price tags of $1,700 to $2,100-are much
cheaper than comparable Western-made cars.
Moreover, this year two new models, the Soviet
Lada and the Polish Fiat 125, both built under
license from Fiat of Italy, are being marketed in
Western Europe at prices several hundred dollars
bciow similar Italian-ir.ade Fiats.
Although imports of cars from the Commu-
nist countries amount to less than one percent of
Western Europe's 12 million annual output, they
are increasing rapidly as new dealerships are estab-
lished. Last year, Western Europe imported
106,000 cars, about 50 percent more than in
1972;leading importers after the UK were France,
Finlanj, and West Germany.
This year, for the first time, Soviet sales may
outstrip those of other East European manu-
facturers. Moscow is setting up dealerships for its
Lada in the UK, Fiance, West Germany, and
Austria; Soviet dealerships already are operating
in Belgium, Switzerland, Finland, and Scandi-
navia. Last year, about 20,000 Ladas were mar-
keted in Western Europe and the number this
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year could rise to 100,000; total Snviot car out-
put is expected to reach 1 million cars.
Exports of Communist Cars
to Western Markets
USSR
41,000
Czechoslovakia
33,000
Yugoslavia
17,000
Poland
10,000
East Germany
5,000
Total
106,000
Communist automotive industries have
limited experience with modern production tech-
niques, so that their cars are lower in quality and
workmanship than Western counterparts. The
Moskvich brake system is not satisfactory b.' Brit-
ish standards, for example, and the Wartburg was
built with defective front wheel bearings that
necessitated a recall. Moreover, most Communist-
made cars, even those built under Fiat licen;o,
lack the smooth riding and easy handlinri .harp c-
teristics of Western models.
Despite these drawbacks, buyers in the West
are attracted by the cheap prices, economy of
operation, and ru'ged construction of the Com-
munist-made cars, which are built to last on rough
roads and are often featured as "country cars."
The low prices of Communist cars are becoming
even more attractive as inflation drives up the
price of cars made in the West. On the British
market, for example, the price of a Moskvich has
changed little since 1970, whereas other car prices
have increased 10 to 20 percent.
The Soviet automobile industry is already
bearing much of the burden in Moscow's attempt
to increase sales of manufactured goods in the
West. After 1975, when Soviet planners expect
domestic demand to moderate, exports to West-
ern Europe could reach even higher levels. Else-
where in Eastern Europe, Poland is pushing ex-
ports of the Fiat 125, Czechoslovakia is doubling
the size of its industry to boost exports, and
Yugoslavia, already burdened with a mounting
inventory of unsold cars, is seeking to increase
exports to the West. The long run success of these
Communist export programs will depend on the
ability of domestic industries to turn out hioh-
quality cars backed up by reliable service. Mar-
keting cars in the West is certain to become more
difficult in the years ahead as regulations on emis-
sion control, safety, and fuel economy impose
new burdens on Communist producers.
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Typical Prices of Communist
Cars in the at
Moskvich (USSR) $1755
Wartburg (East Germany) 1910
Skoda (Czechoslovakia) 2085
Fiat 125 (Poland) 2200
Lada (USSR) 2315
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Baghdad is apparently attempting to im-
plement its Kurdish autonomy plan by decree
rather than by force. On March 26, the govern-
rrwent's deadline for Kurdish acceptance of the
plan, President Bakr issued several decress de-
signed to set the ' asic plan in motion. The de-
crees, announced over Radio Baghdad and relayed
to the international press by the Iraqi News
Agency, provide for:
? regional elections in the Kurdish area by
October 1 and the formation of an 80-
member Kurdish legislative council;
? an "appeals district" in the rebel area,
presumably to deal with Kurdish complaints
against the governmcnt;
? a 30-day amnesty period for all Kurds
who had once served in the Iraqi Army or
civil service but had since defected to the
rebels.
Other decrees presumably will follow if the
area remains calm. The wide play being given the
decrees suggests they are intended more as propa-
ganda than as serious attempts to resolve the
dispute. In any case, implementation of the plan
will be opposed by the Kurdish rebels. Their
leaders rejected the government's autonomy plan
earlier this month, and there is no sign that ,". ,ey
have changed their views.
Claims by both sides to the oil-rich Kirkuc,
oil region remain the major obstacle to an easing
of the situation. Rebel leader Barzani claims the
area belongs within Kurdish jurdisdiction and that
oil revenues from the area should be split evenly
between the government and the Kurds. Baghdad,
because of the importance of Kirkuk oil to the
Iraqi economy, claims the majority of the in-
habitants ai the Kirkuk area are not Kurds and
regards the issue as non-negotiable.
both sides seem to be moving cautiously. The
government, which is continuing its military
build-up in the vicinity of Kirkuk, now has more
than three divisions ready to move against the
Kurds if nocussary. There is no indication, how-
ever, that an all-out attack on tribal strongholds Is
imminent. The Kurdish rebels also have mobilized
but, for the moment at least, do not appear read,
to take offensive measures.
Marshal Grechko was in Baghdad this week,
charged with strengthening Soviet-Iraqi ties. With
Their influence ebbing elsewhere in the Middle
East, the Soviets attach even greater importance
to keeping Iraq as one of their most dependable
friends in the region.
The status of Soviet military aid wa;
prcbably a major topic of discussion. Iraq was the
third largest recipient of Soviet arms in the
Middle East in 1973, after Egypt and Syria.
Soviet naval visits to the port of Umm Qasr may
have also been discussed. Soviet use of this port
increased considerably during the past year.
The Kurdish problem, which threatened to
heat up during Grechko's stay in Baghdad, was
probably also on the agenda. Moscow has publicly
backed Iraq's plan for Kurdish autonomy and
Grechko may have offered ai?vir,. on how to
resolve the issue.
Grechko may also have encouraged Iraq to
settle peacefully the border dispute with Iran.
While Moscow leans toward Baghdad rather than
Tehran, the Soviets in public have stayed neutral
and have tried to maintain good relations with
both. The communique follow'vng Grechko's visit
makes no mention of either the Kurdish problem 25X1
Scattered skirmishes are continuing and
heavy fighting could break out at any time, but
or the border dispute with Iran.
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Despite massive foreign relief commitments,
food supplies are still critically short in five of the
six countries of the famine-stricken African
Sahel -Chad, Mali, Mauritania, Niger, and Upper
Volta. The continuing drought is as disastrous for
crops this year as last, and Ethiopia and several
other East African countries recently joined the
list of afflicted nations. Only Senegal, which was
stricken last year, has had nearly adequate rainfall
this year.
As they did last year, donors are concen-
trating on immediate relief needs, especially food.
Last year, most aid came from Western donors.
Communist countries provided less than 10 per-
cent of the total; the US contribution was about
30 percent, and the EC's 22 percent. Donors
committed themselves to provide 620,000 tons of
grain (almost half by the US), but only about
450,000 tons were delivered in time because of
lagging shipments by donors and inland transport
problems.
The amount of grain committed for 1974
should satisfy estimated import requirements of
approximately 600,000 tons for the Sahel coun-
tries in the first nine months of 1974. Pledges of
high-protein foods, money, and relief supplies
should also be adequate. Distribution of food to
outlying areas has been slow, however, and as in
1973, may again result in widespread food short-
ages. UN Secretary General Waldheim pointed out
after a recent trip to the region that transporta-
tion and internal distribution are now the major
problems rather than obtaining new shipments.
Meanwhile, longer term corrective programs
such as irrigation and reforestation are being
started, but they require substantial time to
implement. A study by the UN Development
Program of medium- and long-term economic
development requirements is tinder way, but it 25X1
will not be completed until 1975.
Drought Stricken Areas 25X1
~ LTAI.
``
(
ETHIOPIA
/.EP000c
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ETHIOPIA: RENEWED MILITARY UNREST
Military impatience with the government's
failure to prosecute corrupt officials and dismiss
discredited senior officers has Ind to renewed urn-
rest. Most of the dissidents, although pressing for
swifter government action, are apparently still
willing to back the new regime. These moderate
elements appear to hold the upper hand, but
tension between thoni and radicals in the military
is likely to persist for some time. The radicals
have split with their more moderate colleagues on
the issue of support for Prime Minister Endalkat-
chew's cabinet.
On March 25, radical air force personnel
revolted at Ethiopia's main air base near Debra
Zeit. The air force rebels had planned a move
against the government but were stopped by an
airborne unit and other troops at tt base.
The air force rebels form the core of dissatis-
fied radicals in the ;nilitary. Primarily junior and
non-commissioned officers, the radicals are impa-
tient with the new cabinet's progress in imple-
menting promised economic and political
changes. They feel that continued agitation is the
only way to maintain the momentum set in
motion by the rebellion last month. They are
particularly angry because the Emperor appar-
ently continues to seek advice from the discred-
ited former officials and military officers.
On March 26, police and army units in As-
mara, which line up with the moderates, arrested
20 police officers including the police commis-
sioner of Lr.trea Province and one of the com-
missioner's top assistants. The police officials
were charged with misuse of police funds and
other abuses of their offices. The dissidents also
reportedly arrested several unidentified air force
officers.
On the same day, Asmara 'Radio broadcast a
statement in the name of the "northern armed
forces" demanding swift judicial action for senior
military and civil officials charged with corrup-
tion and incompetence. The statement called for
the armed fords to be represented when the
courts hear the cases. The dissidents also de-
manded assurances from the new government that
no action world be taken against those involved
in the military rebellion that forced the ouster of
the former government.
Legal proceedings on the corruption
charges pose political risks for Haile Selassie and
for Prime Minister Endalk,dchew's government.
The Emperor's prestige will suffer if 4he investi-
gations reveal widespread corruption among
officials who have enjoyed his confidence. En-
dalkatchew, a minister in the former cabinet, is
believed to have used his official position for
personal gain. Charges of illegal dealings may also
involve some administrative officials in the new
government, although the dissidents' demands are
mainly directed against former cabinet minis-
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President Idi Arnin continues in control after
another violent clash between his supportet; and
opponents in the tonsion-riddon Ugandan Army.
The latest bloodshed occurred against a back-
ground of Increased tribal and ruligiou;; ar;hnos-
itics stimulated by i rain's determination to elimi-
nate all potential rivals and to convert Ugandh to
a Muslim state.
The circumstances surrounding thu shooting
between army :,icments in Kampala on March 24
remain obscLrr,. The regime attributed the "con-
fusion" to a prominent Christian officer, Briga-
dier Charles Arube, who was accused of having
duped soldiers of an elite unit into occupying key
installations. Government broadcasts said that appears to have beer stepped '.p as he has pressed
loyal troops had quickly restored order and that for political and military ties with the Arab coun-
Other versions, which appear more credible,
say the trouble began with the kidnaping of
Arube by security officials Amin's behest.
Troops from the Lugbara trip. . sympathetic to
Arube and having other grievances against Amin,
reportedly stormed several installations, including
the prison where it was believed Arube was being
held, before being crushed.
Initially, the Lugbara supported Arnin, a
member of the small Kakwa tribe, against other
tribal groups, but during the past year Amin had
come to suspect their loyalty and began removing
them from key military positions. As a result,
Lugbara hostility to Amin grew, reaching a high
point two weeks ago when a pop l:ir Lugbara
officer and former foreign minister was kidnaped
and murdered by Amin's men. Press sources re-
port that Amin has now begun a large-scale purge
of Lugbaras from Cie army.
Tribal friction within the military has been
intense ever since Amin took power in a coup in
January 1971. Men and otficers from several
tribal groups have, in turn, been purged and some-
times killed as Amin has pushed forward members
of his small Kakwa tribe. In recent months, Amin,
a member of Uganda's small Muslim minority, has
added to tensions in the army by deliberately
remo":ng Christian officers from troop com-
mands. Amin's vendetta against Christian officers
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BANGLADESH; AILING LEADER, AILING COUNTRY
Decision-mnkirrg in troubled Langladesh will
i,t' virtually paralyzed during the absence of the
country s founding father, Prime Minister Mujibur
flahnian, who flow to the Soviet Union last week
for medical treatment. Mujib, who may be seri-
ously ill, left behind a fragmented administration
and a deteriorating law-and-order situation.
In a health bulletin issued in Moscow on
March 25, Mujib's illness was officially described
as acute bronchitis, and it was said that treatment
would require a mir,imurn of three weeks. Ru-
mors have circulated in Dacca and elsewhere on
the subcontinent that Mujib may have a heart
condition or lung or throat cancer. Another possi-
bility is pulmonary tuberculosis, a disease he has
had in the past.
The Prime Minister has insisted on ret? ining
in his own hands the entire decision.-making
authority for his government. Cabinet members,
grouped into competing factions, presumably will
mark time until their leader's return, Ministei of
Commerce Syed Nazrul Islam Is acting prime rrin-
istor, but he exercises little real authority. Should
Mujib be removed from the political scone in the
foreseeable future, a disruptive struggle for power
could result, with little indication as to who
would emerge victorious, No other politica' ,order
can claim even a small part of the massive popular
support thir Mujib enjoys.
Murders, many politically motivated, con-
tinue in Bangladesh. Two prominent loaders of
Mujib's ruling Awami League were killed in a
48-hour period on March 22-23. At least several
hundred persons have been killed for political
reasons since independence in December 1971.
Additionally, bands of political extremists are
roaming through rural areas, often attacking
police stations in attempts to secure arms. Non-
political crimes are also on the incrr,ase because of
bad economic conditions.
On March 17, an anti-government demon-
stration in Dacca by the largest of the opposition
parties, the Jatiya Samajtantrik Dal, resulted in a
clash with police, several deaths, and many in-
juries. The party's two leaders were promptly
arrested on charges of fomenting violence. As has
happened in the past when opposition parties
precipitated violent confrontations with the gov-
ernment, the Awami League and its satellite
organizations responded, apparently setting fire
the following day to the Dacca headquarters of
the Jatiya Samajtantrik Dal party.
Bengal.
The public is p--;:sently heaping much of the
blame fo1 the c,-onomic ills of the nation on
neighbo-Ing India. The cvernment, under-
standably, has not been unwilling to see New
Delhi tagged with the responsibility-however un-
warranted-for shortages and high price,. Anti-
Indian feelings, however, may eventually be re-
flected in growing resentment of the Hindu
minority in Bangladesh, with the possibility of
communal violence that has long plagued
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PERU: SOCIAL PROPERTY LAW READIED
During his most recent press conference,
President Velasco indicated that his military gov-
ernment is ready to promulgate the long-delayed
social property law. This will complete the re-
gime's basic blueprint for restructuring the coun-
try's economy.
A draft of the law was made public last
August and aroused considerable debate, in-
cluding criticism by some top generals. Velasco
has denied charges that the law is an atterr.pt to
communize Peruvian economic life. The character
of the program, however, will probably leave little
doubt that the government plans to strengthen its
control of the nation's economy. When the law is
implemented the social property system will be
added to the three existing operation,-0 "sectors"
into which commercial enterprises have been
divided:
? "basic" industries under exclusive state
control;
? "industrial communities" that even-
tually will allow workers to control fifty per-
cent of individual businesses;
? completely private business limited to
the smallest firms.
GRENADA: A TROUBLED ECONOMY
In addition, since 1970 the government has
carried out an extensive agrarian reform program,
whereby private holdings are being transformed
into worker-dominated cooperatives.
As envisaged in the draft law, the govern-
ment will provide financing for workers to estab-
lish social property enterprises in any business not
set aside for state control. In addition, a large
portion of the profits from the enterprises will ba
plowed back into a central fund to provide capital
for new enterprises. Apparently, the government
hopes that the social property sector eventually
will become the dominant element among small
and medium-sized businesses.
The transition of the social property concept
from a basic law to a viable program is likely to
be long and painful. One of the first problems the
regime must face is the extent of government
control. There are indications that the military
has learned some lessons from its experience in
attempting to develop a base of popular support
through its national mobilization agency,
SINAMOS. Basic distaste for military tutelage and
the regime's often heavy-handed tactics have
created opposition among the poor-the very
people in whose interests it claims to be working.
In addition, independent businessmen are likely
to resist efforts to convert to or compete with
social property enterprises.
Nevertheless, the government, particularly
President Velasco, appears committed to the
social property concept in some form. If neces-
sary, the regime probably will force private busi-
nesses to go along. The risks of further opposition
and possible economic disruption would thereby
be magnified, a prospect that is likely to prompt
the government to operate gingerly during the
initial phase of the new program.
Political factions attempting to topple the
oppressive and economically irresponsible regime
of Prime Minister Eric Gairy have brought the
island's economy to a standstill. Striking dock-
workers have curtailed imports of foodstuffs and
petroleum products and have blocked agricultural
exports. Urban and rural unemployment is
mounting rapidly. The continuing instability has
practically halted the normally thriving tourist
industry, which provides more than half of the
island's national income.
With the economic decline, the government
faces serious problems in finding the $1.5 million
needed monthly to pay salaries and meet other
obligations. Tax revenues have all but
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disappeared. UK budgetary aid, which has been
granted annually, ended when the island became
independent on February 7, and other types of
foreign grants and loans have dried up. The Prime
Minister has been seeking, unsuccessfully so far,
new aid from the US and the UK.
Unless Gairy turns his efforts to economic
planning, sounder management, and accom-
modation with the opposition, the economic situ-
ation will continue to deteriorate. Only reopening
the ports and a return to normal conditions will
halt the downturn and revive tourist trade. Sea-
men and dockworkers, whose three-month strike
has thoroughly disrupted the economy, have
offered to return to work if Gairy will reopen an
investigation into police brutality. Gairy has
ignored even this moderate condition.
UN: SPECIAL SESSION APPROACHES
Although the special session of the General
Assembly on the problem of raw materials and
development opens on April 9, preparations are
far from complete. The Group of 77-in fact, 96
developing countries who coordinate policies
within the UN framework-is still divided on the
question of including on the agenda an examina-
tion of the impact of higher oil prices on the
economies of developing states. The developed
states, for their part, are increasingly aware of the
potential of third-world countries to control raw
materials, and the possibility that raw material
suppliers might organize additional cartels. The
industrialized states would, in general, prefer that
the session not undertake any moves that might
lead to a substantial re-ordering of world eco-
nomic relationships.
The terms of the session, called by Algerian
President Boumedie:ie. are based primarily on
resolutions passed at the fourth nonaligned
Gairy has already proven himself unequal to
the task of economic planning and unwilling to
effect accommodation with his political op-
position. Private investment, a necessary in-
gredient in economic recovery, is unlikely to rise
as long as Gairy remains in control, and Gairy is
not likely to be ousted in the immediate future.
Time is on the side of the opposition,
however. Despite his support among the rural
poor, the pressures for Gairy's resignation are sure
to increase as economic cond;tions deteriorate.
Gairy would not be able to hold out for long if
participants in the pre-independence general
strike, augmented by unpaid school teachers and
civil servants, should combine for.-es in a renewed
effort to oust him.
conference held in Algiers last September. These
resolutions, drafted largely by Algeria, call for a
new economic equilibrium between developed
and developing states, and for the nonaligned
states to assert greater control over their natural
resources.
The Group of 77 and the nonaligned nations
have met almost continuously since the session
was formally called in an attempt to develop a
common po.,ition for the conference. They have
formulated a far-reaching but non-specific declar-
ation of principles that includes:
international cooperation to banish dis-
parities among nations, with special concern
for the needs of the least-developed states;
? recognition of every country's sover-
eignty over its own resources and domestic
economy;
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? regulation and control of multinational
corporations;
? an end to colonial and racial domination
of developing states and assistance to over-
come such domination;
? transfer of technology; and
? reform of the international monetary
system and development of preferential trade
privileges for developing economies.
No agreement has been reached, however, on
the most sensitive issue-the effect of the increase
in energy prices on the economies of the de-
veloping states. Oil-e porting members do not
want the session to focus on oil, while the oil-
importing states of Africa, Asia, and Latin
America insist on discussing the oil problem. The
issue of higher oil prices is the first major test of
nonaligned solidarity in the face of competing
national interests since the summit last
September.
The stand of the oil-producing states may be
strengthened by continued interest in a French
proposal for a separate UN conference on energy
matters. The French UN delegation-with Al-
gerian approval-recently reaffirmed Paris' con-
tinued interest in such a meeting, originally pro-
posed before the Boumediene initiative. The
French intend to explore the question in various
UN regional economic organizations before
calling for a world conference.
The oil importers among the developing
states as well as the more moderate countries in
the Group of 77 feel that the approach taken in
the declaration of principles may not only pro-
voke a confrontation with the developed states
but could also fail to provide practical solutions
to development problems. A nine-member group
is meeting to draft an alternative proposal. The
group, which includes oil producers as well as
importers, will seek to develop specific economic
points for General Assembly consideration. The
working group will present its findings to the
Group of 77 on April 4.
Among the developed countries, a change of
focus in how to deal with the question of re-
sources is affecting their policies toward the third
world and slowing their attempts to develop a
policy for the session. This change is illustrated
by the shift in emphasis in the EC's preparations
for negotiations with the associated and would-be
associated African, Caribbean, and Pacific states.
The EC Commission is now thinking of programs
that would provide assured supplies of raw ma-
terials to EC members-as a quic pro quo for
guaranteed minimum purchases at established
prices from the developing exporters. Earlier, it
had been considering programs that would have
provided development aid through revenue sup-
plements to exporters during lean years.
On April 1, the EC will consider a proposal
formulated by the EC Commission for an inter-
national fund to provide aid to those developing
countries most affected by the increase in cil
prices. As envisaged, the $3 billion fund, to which
the EC would contribute $500 million, would
also receive money from the US and oil-producing
states. The commission's intention was for the
proposal to be presented to the General Assembly
as a community initiative, but approval by all the
Nine now seems unlikely.
Divisions among third-world countries may
mitigate the overwhelming voting superiority of
the Group of 77 and the nonaligned in the Gen-
eral Assembly, and thus soften or even turn back
radical proposals. Complete frustration of the
developing countries' desire for recognition of
their being "short-changed" on raw materials
trade, however, could provoke the kind of rich-
poor confrontation that the industrialized nations
hope to avoid. In such an atmosphere, some 25X1
the developed countries could become more i..
terested in vying for third-world favor than in
maintaining solidarity.
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