WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000070001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 31
• Document Creation Date: December 27, 2016
• Document Release Date: May 6, 2010
• Sequence Number: 1
• Publication Date: June 7, 1974
• Content Type: REPORT

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Weekly Review
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rite Aliddie eat
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Syrian and Israeli military representatives,
communicating in Geneva through UN military
officials, quickly wrapped up the final details of
the disengagement accord they signed on May 21.
Among the arrimgements worked out this week
was the timetable for implerrienting the accord,
which Includes provisions for the withdrawal of
Israeli forces from all the Syrian territory oc-
cupied last October and a small pad of the area
taken in 1957, the stationing of UN forces in a
buffer zone, and the graduai thinning out of
forces on both sides. Under the terms of the
accord, disengagement must be completed by no
later than June 26.
Both the lsraelk and Syrians began with-
drawing 50r119 of their artillery battalions from
the Golan front even before the final agreements
were signed on June 5.
The first group of UN troops, drawn from
the force that is policing the Egyptian-Israeli dis-
engagement, arrived in the area the same day.
Additional UN units are due to arrive in the
Golan Heights over the next few days. The forciL-,
which became operational on June 6 is expected
to attain its full authorized strength of 1,250 reri
quickly.
The Syrian Reaction...
To try to play dawn the significance of the
accord, the Syrians barred newsmen from the
formal signing ceremony on May 31. The initial
official reaction from Damascus was equally
restrained. Syrian Foreign Minister Khaddam
stressed that the accord was not a peace agree-
ment, hut only an armistice and a firr..t step to-
ward a hoped-for lasting peace settlement in the
Middle East. After the ruling Baath PA.rty for-
mally approved the agreerrient, official reticence
gave way. to claims of victory for Syria and praise
for President Asad.
Asad's popularity and political strength have
probably been given a boost by the accord. With
characteristic caution the Syrian President care-
fully obtained endorsements for the agreement
from all of Syria's major political parties. Al-
though there is sure to be some residual
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opposition within the military, the disengagement
agreement has probably been well received by
most of the Syrian armed forces.
...anti the Israeli
Public reaction in Israel, where the Kness&
approved the agreement on May 30 by a vote of
76-36, has been generally favorable. Most edito-
rial comment has been positive. The press has
stressed the view that Israel gained more than it
was forced to give up and has underlined the
importance of the precedent established by
Syria's tmltry into an agreement with Israel.
Domestic Israeli criticism has focused on the
failure of the agreement to spell out any Syrian
?ligation to control fedayeen terrorists. The gov-
ernment has managed to offset much of this by
intimating that it has US assurances of support
reasheyym
Leb4rion
Aotipo,
Shot<
I 1
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Lino )
/ I Maurtrytirsti
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Ista?l
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HER1Hrs
GOLAN \
Linn A Y,LIn B
Line A
Line A-1
Line 13
Jordan
S551/01
1LS
entrant
DAMASCUSI,,,--1
Syria
Israeli disengagement line
Israeli civiliona only
Syrian disengagement Ilne
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for Israeli anti-terrorist actions in ttrl eveiit the
fedayeeo strike at Israel from Syria.
Israel's generally skeptical at-
titude toward the Arabs in general, and Syrians in
particular, Prime Minister Rabin told the Knesset
on June 3 that his new government's first task
will be to monitor the agreement closely to en-
sure that it is scrupulously observed.
Thu Egyptian Perspective
Syria's decision to negotiate and sign an
agreement With Israel ratifies President Sadat's
moderate policies. Sadat no longer stands alone as
the only Arab leader who has compromised with
the enemy, and radical Arab attacks on him for
having abandoned the Arab cause will lose their
bite. With Asad's support, he will be freer to press
moderation on Arab recalcitrants.
Sadat can also more easily pursue the .do-
mestic reconstruction program he has set in train.
Radicals had pointed to this program as a further
sign that he was placing Egypt's concerns above
general Arab interests. 8y the same token, Sadat
may feel he can ease some of his own verbal
counterattacks on Arab extremists, particularly
the Libyans, for trying to prevent a disengage-
ment accord.
Whatever satisfaction Sadat derives from the
Syrian agreement, however, may he. short-lived.
He has said that the next stage at Geneva must
involve not only Egypt, but also Syrio, Jordan,
and the Palestinians. It will be an arduous task
merely to det all these to agree on attending the
conference, and, even if this is achieved, the sub-
stantive negotiating problems involved will be
more difficult still. Sadat will again 11--, tempted to
move out ahead of his colleagues in resolving
Egypt's differences with Israel, and in the process
he could again face the isolation that threatened
him in the period between the two disengagement
accords.
Jordan Next?
Jordan's Prime Minister Zaid Rifai con-
gratulated the Syrian government on concluding
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Jun 7,74
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France
A FLYING START
The Promise of change, which was the theme
of both presidential candidates in their election
campaigns, has been the keynote of President
Valery Giscard d'Estaing's performance since his
inaugural reference to the dawning of "a new era
in French politics." The first indication of the
"change" that Giscard has promised will be more
evident in domestic than foreign policy.
Giscard has moved rapidly to consolidate his
carefully nurtured image of vigor, simplicity, and
ruthless efficiency. The studied informality of his
inauguration, the speed with which he formed a
government, and his unprecedented, nationally
televised explanation of his choice of ministers
have all lent credibility to his campaign promises
tor change. He has also established modest liberal
credentials by calling for:
? Suppression of all telephone tapping "if
it exists" (unless strictly necessary for na-
tional security reasons).
? Greater immunity for the press from
government interference.
? More leniency in granting political
asylum.
So far, however, the changes have been more
of style than substance. He will have to follow up
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with significant legislative reforms if he hopes to
make the image stick and avoid a costly rupture
with the left and with labor.
Giscard's most formilable task will be to
control the country's gallving inflation and im-
prove its balance of pa' merits. He is likely to
launch a maim austerity program, and the govern-
ment has already annotincect it intends to raise
taxes. The Gaullists, who still hold the largest
single bloc of seats in the assembly, would prob-
ably support such a program. As vehement critics
of Giscard's failure to tackle inflation vigorously
during the closing months of Pompidou's presi-
dency, the orthodox Gaullists could hardly refuse
to support stern anti-inflationary policies now.
The leftist opposition will fight belt
-
tightening legislation, but may be partly mollified
if Giscard balances his austerity program with
domestic reforms. According to the US embassy
in Paris, a reliable source who is close to Giscard
has affirmed that the President is planning "spec-
tacular moves" in this area, including lowering the
voting age from 21 to 19, or even to 18, and
1-dticing military conscription from one year to
six months?measures patently resigned to appeal
to youth. Whether he will go so far as to fulfill
promises made in the heat of the campaign--
immediate wage increases for the lowest paid,
equal pay for women, lowered retirement age,
increased old-age pensions, larger family benefits,
and aid to the handicapped?is more in doubt.
Many Gaullists will balk at the social reforms
Giscaid will need to pass in order to assuage th:3
left and maintain labor peace. Thus, Giscard will
be walking a narrow path between the Gaullist!,
and the leftists that will become narrower as time
passes and demands for economic and social re-
101015 increase.
Giscard's foreign policy statements since he
has been etected have not deviated from Gaullist
tenets. When tie presented his government's pro-
gram to the National Assembly this week, Premier
Chloe pledged that Prarce would remain faithful
to the Atlantic alliance and would seek Ci0;:i
economic ties with the US, but he also vowed
thai US-French re,ations would be kept on a
"strictly equal footing."
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Yitzhak Atthiii preselitiog his cabinet to the Kilesset
ISRAEL: RABIN CASINEt APPROVED
The Israeli Knesset on June 3 approved
Premier Yitzhak Rabin's 18-member cabinet by a
vote of 61 to 51. The tally was a good measure of
the balance of forces in the Knesset, where some
rough sailing lies ahead for the new government.
The core of Rabin's opposition came from the
39 ote conservative Likud bloc. Other opposi-
tion votes came from the ultra-orthodox religious
Agudah Front and the National Religious Party,
Labor's erstwhile coalition partner.
Rabin's chances of survival, however, are
reasonably good. Over the Short term the viability
of his narrow coalition?which commands only a
one-vote majority in the Knesset?will depend on
whether he c? ,ti patch up factional and personal
conflicts in his own Labor Party. Rabin took a
step in this direction when, in a last-minute
cabinet reshuffle, he named Yehoshua Rabino-
witz, the party's leader in Tel Aviv, to head the
poweriul Finance Ministry. The move should help
placate Labor's dominant Mapai faction, upset
over Rabin's removal of its colleague, Abba Eban,
as foreign minister.
Although Eban harshly criticized Rabin's
government, the other key leaders of Labor's old
guard who are missing from the new govern-
ment?Mrs. Meir, Moshe Dayan, arid cx - finance
minister Sapir --either have expressed cautious
approval of the government or have withheld
comment. Their attitudes will be crucial in
Rabin's efforts to achieve party unity.
Rabin's government will probably get Knes-
set support from the five leftist and communist
deputies on foreign policy issues and on votes of
confidence. This will be enough to give him a
majority in the event of some defections from hk
own tanks.
To improve his long-term prospects, mid
lessen the possibility of e,:rly elections, which
Labor wants to avoid, Rabin must broaden his
coalition by persuading the National Religious
Party to rejoin the government. Several Knesset
members recently told US embassy officers that
Labor will make an all-out effort to do this.
Religious party leader Burg told Ambassador
Keating last week that there was a good chance
his party would be back in the government within
the next few months.
Divisions in the ranks of the opposition may
also wor;-, to Rabin's advantage. Four inemners of
the conservative Likud bloc, for instance, are
known to have been against their leaders opposi-
tion to the Syrian-Israeli disengagement agree-
ment, even though only one of them broke party
discipline.
Rabin's maiden speech to the Knesset as
prime minister contained 110 new policy pro-
nouncements. He repeated Israel '7, long-standing
opposition to a return to the pre-1967 borders, ci
ie-division of Jerusalem, or the creation of a
separate. Palestinian state on the Jordan River's
west bank. He reiterated his belief that Israel
must advance toward a settlement with ik Arab
neighbors in stages, largely through partial agree-
ments such as the disengagement accords with
Syria and Egypt. He indicated that he will try to
repair Israel's weakened or severed links abroad;
particularly with European and African states.
Already one of Israel's staunchest proponents of
close relations with the US, Rabin called for even
stronger ties with Washington.
The new prime minister focused at length on
domestic issues. In particular, Rabin promised
that his government would heed the ferment
among Israeli young people and seek to involve
them in the nation's decision-mAking process.
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GPIETE-TURKEY: TENSION EASES
The chances for a serious confrontation be-
tween Athens and Ankara over their Aegean sea-
beds dispute have diminished for the present. The
Greeks chose to turn aside a deliberate provoca-
tion by the Turks last week, and the historic rivals
now appear willing to work for a peaceful resolu-
tion of the problem, although they are watching
each other closely.
A clash betw?en the two countries seemed a
real possibility for a time when Turkey sent a
naval research ship, accompanied by warships:
into the disputed area to survr,y for oil. During
the five-day period the ship was in the Aegean, it
apparently operated in a triangular area bounded
by the Greek islaads of Sarnothrace, Limnos, and
Lesbos. Ankara's highly publicized move was
clearly intended to underscore its determination
to stake out what it regards as Turkey's rights on
the contested continental shelf. A Greek no'te of
May 24 had stripped short of a comm:;.: iint to
negotiate Aegean l'ights as the Turks Ii.02 been
urging for months. Athens did, however, hold out
the possibility of same sort of talks.
Although the Greeks had threatened for
weeks that, as a last resort, they would defend
their clairn5 to sovereignty in the area by military
action, they made no move to challenge the Turk-
ish ships. Greek strong man General loanniclis let
it be known privately that "seismological" work
in waters over the contested seabeds would not of
fir .8bna
alt.diatibt
htt,ailniki,_._)
L ?
iht4oiinalticide
r f6rikki.
-)
Cite , I ,1 A ---
y
515'0' -
Ais? ;?N?ij
T.' (.1 IttliENd`&.
? ? r''
,4.
444
ZL,-J ?,7 )). c???"'")''
I ' tjak-
-74('
slsot; ?
aniti7Rd
itself constitute grounds foi a Military response.
He cited as a precedent some survey work pre-
viously conducted by the USSR. Ankara, having
made its .point, withdrew its ships. A Turkish
Fdreign Ministry official ormoUnced publicly, on
June 4 that the research, ship had "completed its
mission" and was heading for the !Dardanelles
port of Canckkale with its escort- probably two
destroyers. The other ships that accompanied it
to the disputed waters apparently left the Aegean
on June 2 to participate in an exercise with the
US Sixth Fleet in the eastern Mediterranean.
The Turkish official also said that his govern-
ment would soon respond to the Greek imte. He
said Turkey world seek to resolve the problem in
a spirit oi "mutual understanding," but would
defend its rights to the "bine:- end."
Athens is resting its case on international
law?specifically Ihe Geneva Convention of 1958
defining a continental shell -which the Greeks
contend endorses their position. A Greek minister
noted on June 1 that his government understood
the need to cooperate wlth Turkey but could not
permit threats to its territorial integrity.
Reports from Thessaloniki early this week
indicated that the alert that had been declared
last week for Greek forces in that area was being
eased, ';,..though mlitary movements were con-
tinoing. Most of the aircraft that had been sent to
forward areas near Thessaloniki had returned to
their borne bases by June 3. Some officials report,
however, that Greek naval units remained in the
waters around the islands of Limnos arid Lesbos
to monitor the movements of the Turkish ex-
ploration ship while it was in the Aegean. Turkish
forces are also presumed to be somewhat relaxed
from the alert of last week.
Foreign ministers of the two countries are to
discuss the issue at the NATO conference in
Ottawa on June 18-19, and other experts prob-
ably will take it up at the Law of the Sea Con-
Ference that starts in Caracas later the same week.
A long period or diplomatic wrangling seems cer-
tain, since present views of what determines rights
to the ;on shelf are far apart. With feel-
ings on the basic issue continuing to run strong in
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both governments, new threats and demonstra-
tions that could lead to an incident remain a
Possibility. I
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PAKIStAN: liF.ACTION tEST
Islainahad is deeply concerned over India's
detonation of a nuclear device on May 18, be-
lieving that one of New belhi's aims is to force
Pakistan to accept Indian hegemony in the sub-
continent. Aware that most of the vvorld has
reacted unfavorably fo the Indian blast, Prime
Minister Eihutto has launched an extensive diplo-
matic campaign designed to gain international
guarantees for Pakistan's security.
A major aspect of the diplomatic campaign
has been the disp,atch of similarly worded letters
to major world lieaders soliciting their political
sUpport. In the letters, 8hutto asserts that Paki-
stan is exposed to "a kind of nuclear threat or.
blackmail unparalleled elsewhere." Ho argues that
if the world cominunity tails to provide Pakistan
anti other man-nuclear countries with political
inturance against nuclear blackmail, these coun-
tries will feel constrained to ernbark on nuclear
programs of their own.
8liutto's view, existing assurances pro-
vided by the UN Security Council to non, Jude&
states do no provide the iNsurance he is seeking.
Noting that the Security Council has a "special
responsibility" to act in this matter, he has sent
Messages to Secretary General Waltlitelm and to
the leaders of the permanent members of the
council.
In addition, Pakistan has presented an aide
memoire to many of the non-nuclear nations of
the world, caliiriq upon them to press the per-
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manent members of the Security Council to
extend a nuclear umbrella over "threatened"
states such as Pakistan. Islamabad '',4/jrrIS' thgt
unless firm steps are taken the peiict of the world
will be in jeopardy.
Pakistan has sooght tO iittdc."t'.)t'l it; cti
cmn by postporrinn bilateral talk. 't/19-1 India err
the restoration of communication;
which were scheduled to begin on _Jone in
Claiming that the "atmosphere has become lie
favorable for ? I,:ccessful otitcome,- Islernabari
has left imams. ? .orl the question of when the.
talks would begin.
Oespite its broad diplomatic. campaign, Paki-
stan continues to concentrate on Sclitirlg 59PPUr
from the US and China. The ..;?2.,cond-faill'ine
member of the Pakistani Foreign rfitice 'fos
scheduled io visit Peking this wee!, to discuss
bilateral cooperation in the net:tear held. Chima'3
response to the Pakistani request is likely to be
16;? k:Iss firm than Islamabad wishes
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In contacts with the OS doting u?ct!nt.
months, Prime Minister Bhutto ivy; sought to
convince Washington that its embargo on the
sPpply of conventional weapons to Paldstan
shotird be lifted. He has publicly taken the posi-
tion that under the terms of bilateral treaties
signed in 1954 and 1959 the US is obligated to
supply arms. Pakistan's irtirnectiMe concern is the
rtint1errli7Atiot1 df some 965 ptritivit+ IC
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MINE-CLEARING IN THE SIIJEZ
The Soviet Union is appareritty taking steps
to implement its recent agreement to carry out
mine-sweeping operations in the Gulf of Suez.
Three SoViet minesweepers that left the
Baltic on June 2 have passed through the English
Channel and probably are on their way to Egypt
for operations in the Strait of Gttbal it the south-
ern end of the Gulf of Suez. A Cairo newspape;-
reported on June 1 that the USSR Will clear
mines and war debris from the Gulf of Suez
before August 15. Earlier,
The Soviets are eager to becothe involved in
what up to now has been an essentially VVestern
effort, heavily involving the US, The Cairo press
reports that the Soviets wilt not charge tor their
services.
The ships from the Baltic are Natya-class
mine.sweepers, the Soviet navy's Most modern
ocean-going mineswee'pers. Work is in progress to
clear the Suez Canal for trafflc, and the Natya
minesweeNrs will probably m to reach the Gul
of Suez via tte canal rather than travel around
Africa, even if this means some waiting in th::
eastern Mediterranean. Early en Arne 6, five more
Soviet minesweepers and additional support ships
departed the sea of Japan and headed south. They
probably are also en route to the Gulf of St.t.z via
the Indian Ocean.
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EGYPT
Ao '7;1;4,01
Of 115 MK
npt ntionl
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9
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MILE!, tta
I.
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EC: HOPES FOR REVIVAL
Now that new governments have been in-
stalled in the major EC capitals, community activ-
ity is picking up, with Bonn taking the 'ead. A
pragmatic mood prevails and a search is on to find
some way to prevent the increasingly serious eco-
nomic problems of most members from eroding
community solidarity beyond repair. West Ger-
many's relative prosperity is giving Bonn increas-
ing weight in EC affairs, as the members with
balance-of-payments problems ponder what help
they will need from the community.
The meeting on May 31 - June 1 between
Chancellor Schmidt and President Giscard d'Es-
taing?less than two weeks after the French elec-
tion----highlighted the importance of the Franco-
German relationship in resolving community
problems. In preparatory discussions, Bonn recog-
nized that France is politically sensitive about a
too obvireas monetary dependence on West Ger-
many. Bonn, therefore, reportedly favors a sub-
stantial contribution to a community assistance
plan peculiarly addpted to French needs.
Bonn believes that if France and the other
partners were to adopt Italy's recent stratagem of
import restrictions, the two pillars of European
integration?the customs union and the common
agrieultura market?would collapse. Free trace
movement within the common market is particu-
larly important for Germany becairse widespread
Import restrictions would cut German employ-
ment. On economic grounds alone, there is ample
reason for an active German seerch for a solution.
On June 4, Foreign Secretary Callaghan out-
lined for the EC foreign ministers the UK's posi,
(ion on "renegotiating" the terms of its member-
ship. Callaghan sought community approval for a
formula under which Britain's net contribution
would be related to Britain's share of the commu-
nity's gross national product. The British sug-
gestion would do some violence to the concept of
the community as a unit deriving income from its
own resources, composed of common tariffs, agri-
cultural levies, and ultimately a percentage at the
value-added tax receipts.
Community members may nevertheless be
willing to look for some practical way to reduce
Britain's net contribution to community funding,
a matter of considerable political importance to
the Wilson government, Bonn, the community's
rich uncle, is less willing to go out of its way for
the British than for the French. This is particu-
larly true as long as the UK's commitment to the
community is in doubt.
The EC also made an effort on June 4 to find
an acceptable way to cope with Italy's insistence
that it must restrict imports to combat its dis-
astrous balance-of-payments problem. Rome had
imposed a deposit requirement applying to cer-
tain imports. At the meeting, Rome agreed that
its farm imports, which come largely from France
and Germany arid are subject to the common
agricultural po!icy, should be exempted for the
most part. A 12.5-percent decrease in the agri-
cultural exchange rate was accepted as a partial
substitute--a measure that should diszourage for-
eign competition. This will be less apt to provoke
retaliatory protectionist measures and hence less
destructive for the community.
Efforts to find a community solution to the
members' problems are only beginning, EC mem-
bers face a full schedule of consultations this
month and are showing some optimism. The
ehlem of curbing inflation while avoiding reces-
sion may, however, prove intractable for the EC
workina alone.
Fag* 13 WEEKLY REVIEW
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NATO: SEEKING UNITY
The question of allied confidence in the US
commitment to Europe will loom over the series
of NATO ministerial meetings this month, cul-
minating in a foreign ministers' session in Ottawa,
At the same time, many Europeans will be seek-
ing reassurance that Europe's role will be that of
an equal partner and that the US will support the
slow steps toward eventual European unity. Non-
EC members, meanwhile, are wary of the atten-
tion that the phenomenon of "the Nine" com-
mands within NATO deliberations. The effort to
balance these conflicting requirements presents
the ministers with a difficult task.
The eight defense ministers, including those
from the US and UK, constituting the NATO
Nuclear Planning Group, will gather in Bergen,
Norway on June 10-11, They will concentrate on
a review of tactical nuclear weapons strategy and
the impact on military planning of the latest US
nuclear research and development, e.g., "mini-
nukes." The ministers will be after a fuller exposi-
tion of US plans for retargeting strategic nuclear
weapons and the effect this might have on the US
commitment to Europe. Despite US assurances,
there still are lingering doubts about the US
strategy of a graduated nuclear response, partic-
ularly the willingness of the US to risk massive
nuclear attack against US cities in responding to a
Soviet nuclear strike against Europe.
Ail the alliance defense ministers, except the
French, will meet in Brussels on June 14 in a
session of the Defense Planning Committee. The
ministers will review the rather dismal prospects
for attainment of conventional force goals for
197501980. Recent announcer. ants by the British
and Dutch of their intentions to make substantial
defense cuts threaten to upset furthk,;r the NATO -
Warsaw Pact balance in Europe. The defeme
ministers will try to forestall a bandwagon effect
of unilateral force reductioes that could result in
increased congressional pressure for major
reductions of US troop strength in Europe. The
ministers will also review the status of East-West
negotiations on troop reductions. Confidence in
the US commitment to Eueope will be crucial in
helping to allay growing ;ears in Bonn and
London that a force reduction agreement in-
volving the West Europeans would threaten
European security,
The defense ministers will also consider the
Euragroup's efforts to standardize European
armaments, an issue that raises the problem of
how the Europeans and the US can cooperate to
maintain a viable European armament industry
without jeopardizing the needed llow of sophisti-
cated US weapons and technology. Questions of
US-European baleoce within the alliance will also
be involved in liscutsions on the specialization of
roles for national forces, improvement of allied
cooperation in the areas of communications and
intelligence, and a reduction in the US share of
NATO infrastructure expenditures as part of the
effort to ease the foreign exchange costs of main-
taining US forces in Europe.
The NATO foreign ministers at their meeting
on June 18-19 are likely to approve an Atlantic
declaration marking the 25th anniversary of
NATO. NATO representatives have been strug-
gling to agree on such a document following Sec-
retary Kissinger's call early last year for a "new
Atlantic charter" to redefine US-European rela-
tionships. Most of NATO's EC members are not
happy that work on a parallel US-EC declaration
has virtually come to a halt. France may now be
easing its objections to wording in the current
NATO draft that calls for allied consuitatiom on
non-military issues covering areas outside of
Europa.
A review of progress at the CSCE and MB,FR
talks is also hie', on the agenda of the foreign
ministers, The EC Nine are increasingly pessimis-
tic over the possibility of concluding the CSCE
talks this summer. They are seeking a common
position with the other NATO aIlies that would
enable the West to extract further concessions
from the Soviets. Like the defense ministers, the
foreign ministers will also review progress in
achieving aSlied goals at the MBFR talks. The US
again will be pressed to ease European concerns at
both sets of negotiations.
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ENERGY: EUROPEAN VIEWS
Preparations for the ministet'ial meeting on
June 16-17 of the 12 nation Energy Coordinating
Group continue, but there is a growing uneasiness
among some of the West European members who
fear that the US commitment to the group is
waning,
The coordinating body was established by
the Wahington Energy Conferenct? last Febarirry
to study the problems common to oil-consuming
nations and to set the stage for an early confer-
ence between oil-producing and consuming ra-
tions. France split with its community partners
and argued against focusing the follow-on activi-
ties of the conference in the coordinating group,
The European members remain strongly
committed to the group and regard it as a desir,
able mechanism for contact with the oil pro-
ducers. In recent days, they have been urging the
group's members to lobby directly with members
of the oil-producing cartel against possible in-
creases in oit nrIces which OPEC wilt consider at
its meeting in Quito on June 15. There is substan-
tial agreement among the European members that
the technical work clone by the energy group's
various subcommittees has been successful and
practical. Nevertheless, they are blaming the slow
progress toward a consumer-producer conference
on the lack of political focus in the discussions,
for which they feel the US is in large part re-
sponsible.
INFLATIONARY PRESSURES INTENSIFY
All of the major OECD countries, except
West Germany, experienced double-digit infla-
tion in the first quarter of 1974. Higher crude
oil costs directly account for about one quar-
ter of the increase in consumer prices. Much
of the one-time effect of higher raw material
prices is now past, but the rate of increase of
prices of manufactured goods is accelerating.
Consumer prices, consequently, will continue
to grow rapidly, although the rate should
slow.
Increases in Consumer Prices,
Major OECD Countries*
(percent change at annual rates;
Canada
Us
Japan
France
Germany
Italy
UK
Fourth Quarter
First Quarter
1973
1974
6.8
11.2
8.8
13.2
20.0
34.0
10.4
16.8
11.6
6.8
13.6
25.2
14.0
18.0
*OECIldata
Provisions for sharing both oil, in the event
of another oil emergency, and uranium enrich-
ment technology are also in contention between
the US and other group members. The European
states are asking the US to express a willingness to
share, if necessary, domestic oil production, al-
though they also concede that implementation of
such a measure would not be possible until the
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US is closer to oil self-sufficiency. The Europeans
also feel that the US has backtracked on the offer
to provide uranium enrichment technology made
by Secretary Kissinger at the Washington con-
ference.
The Europeans' concern about US intentions
in the energy group has not, however, reduced
their interest in its work. At the ministerial meet-
ing, the members will try to aim for a meaningful
conclusion to the group's work by September in
order to allow the smooth transfer of both techni-
cal and political questions to committees of the
Organization for Economic Cooperation and De-
velopment and other international oraaniza-
tions.
OECD: AGREEING TO ABSTAIN
Members of the Organization for Economic
Cooperation and Development last week agreed
to abstain for a year from using beggar-thy-
neighbor policies to deal with economk problems
induced in part by their severe payments deficits
problems. The agreement means different things
to each country involved, however, and its imple-
mentation will entail difficult negotiations in the
months ahead. While not legally binding, the dec-
laration will help the governments 'r esist growing
protectionist pressures.
At the meeting in Paris, representatives of
the 24-member group pledged to:
? Avoid unilateral measures to restrict im-
ports and other current account outflows.
? Avoid artificial stimulation of exports,
including competitive use of export credits.
? Avoid export restrictions contrary to the
objectives of the charter.
? Consult with one another on t.,lergency
measures.
? Give due regard to the special needs of
deweloping countries.
The declaration provides no mechanism for
enforcement and generally leaves Interpretation
of the provisions to individual countries. Italy and
Denmark will be allowed to maintain unilateral
trade restrictions adopted in recent weeks; both
countries have promised to moderate the meas-
ures when their situations improve. Other coun-
tries in serious straits?including the UK, Greece,
and New Zealand?interpret the declaration to
permit actions to correct persistent deficits not
related to high oil prices.
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The wording or the ban on export restric-
tions had to be particularly loose to satisfy all
parties. Natural resource exporters?such as Can-
ada, the Nordic countries, and Australia?were
reluctant to accept such a ban. They feared that a
sudden rise in export orders could further disrupt
their eco, imies. Japan and the EC, which are
natural resource importers, were determined that
a ban should be included, fearing stringencies in
key raw materials.
To back up the present alcord, the more
prosperous member countries will have to adopt
cooperative lending policies, and the nations in
trouble will have to introduce austerity measures.
The burden of cooperative financing will fall
mainly on West Germany and the US.
Bonn is willing to grant credits to EC mem-
ber states in balance-of-payments difficulties, but
only if they undertake effective stabilization pro-
grams. The new governments in Rome and Lon-
don, however, may not be politically able to put
their economic houses in order. These two coun-
tries alone are expected to accumulate current
account deficits totaling $18 billion this year.
Bonn is sufficiently alarmed about Italy's plight
to consider participating in a large loan, provided
that Rome puts up part of its gold reserves as
collateral.
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YUGOSLAVIA: TENTH PARTY CONGRESS
The Yugoslav party's tenth congress last
week turned out to be a fairly rot time unusu-
ally enthusiastic?reaffirmation of Titoism and a
clemonstraWm of the unity and discipline forged
nuring the past three years of political house-
cleaning. Tito accepted tl.w position of party
president for an unlimited term, but he refused to
bow to pressures to designate a party successor.
With the exception of Tito, Edvard Kardelj
and Slane Dolarc remain the tv.r most influential
men in the leadership. As party theoretician and
long-time associate of Tito, Kardelj is closely asso-
ciated with the creation and elaboration of the
sel f-management and nonalignment policies,
which form the core of Titoism. For the past
three years, however, he has been busy writing
the new constitt.!ion and has reportedly lost some
of his political clout. A younger, high-level patty
official recently asserted that Kardelj, at 64, is
becoming "senile" and can no longer contribute.
Nevertheless, he was re-elected to the presidium,
and he is also a member of the State Collective
Presidency. These positions assure Kardelj a con-
tinuing influence in the decision-making process.
Dolanc retains his strategic post as secretary
of the Executive Committee, which oversees both
the implementation of party policy and the prep-
aration of policy options for the presidium. The
size of the committee has been increased from 8
to 12 members, thereby increasing its potential
for guidance and control. The prominence of the
48-year-old Dolanc has, however, put him in a
delicate position regarding more senior members
of the regime. Indeed, rumors in Belgrade prior to
the congress claim that he was mildly chastised
for being too much in the limelight.
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Personnel changes at the congress appear to
have created a woeking collective of civilian and
military leaders under the party's watchful eye.
For example, all members of lhe State Collective
Presidency plus some key cabinet officials?the
premier and the foreign and defense ministers?
are now presidium members. In addition, a mili-
tary man was elected to the Executive Com-
mittee.
With the new constitution adopted in Febru-
ary, the governrIental cpparatus installed in April,
and the party changes at the tenth "landmark"
congress, the Yugoslays have now largely created
he institutional framework that will carry them
through the succession period.
USSR: SS-11-SILOS MODERNIZED
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paving the way for installation of new
ICBMs. All 12 of their SS-11 missile complexes
are no .v involved to some degree in these pro-
yams.
At six SS-11 complexes?comprising 420
silos?the Soviets are modernizing in preparation
for installation of an improved version of the
SS-11?the Mod 3, which carries three re-entry
vehicles that are not independently targetable.
Modernization does not involve substantial struc-
tural changes to the silo and requires four to six
months for completion.
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1973. They have finished work at 100 of these
silos, where the SS-11 Mod 3 is now installed. At
their present pace, they could have all 200 silos at
the three complexes completed by the end of the
year.
Silo modernization continues at three other
SS-11 complexes, where 40 of the 220 silos in-
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Based on the progress in the eastern USSR, the
modernization program at all six complexes could
be completed sometime in early 1976.
The silos at the other six 55-11 complexes
are either under.going conversion or soon will be.
The missile for these silos is either the SS-X-17 or
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viets were clearing an area near a railhead, prob-
ably to store construction materials that would be
shipped in prior to silo conversion.
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three SS-11 complexes in the eastern USSR in
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PERU: CABINET RIFT WIDENS
The forced resignation last week of Navy
Minister Vargas was followed on June 4 by the
resignation of two more cabinet-level admirals. In
addition, some 147 tiny officers of various ranks
reportedly have quit in protest over the Vargas
affair.
Although the threat of an immediate violent
split between factions in the upper levels of the
Velasco government appears to have subsided, the
rift is likely to have important long-range effects
on the style and pace of the siy-year-old,
military-
led "revolution." In the short run, the authoritar-
ian tendencies of President Velasco probably will
be strengthened, and radical officers are likely to
try to increase their influence in the government.
Vargas' resignation was precipitated by his
public statements supporting limited press free-
dom and the right of political opponents of the
regime to criticize it openly. Velasco, who favors
tight contr.)i of the news media and strictly cir-
cumscribed political parties, demanded that
Vargas retract his "political statements" or resign.
Despite reported resolve within the navy to back
him with force if necessary, Vargas resigned in the
interests of preserving armed forces unity. This
unity has been weakened considerably, however,
as a result of the most recent resignations.
Neither Vargas' statements nor a recent pub-
licized meeting of two opposition political parties
presented any threat to Velasco's grip on power.
The President's long-standing sensitivity to criti-
cism of niy sort, however, apparently has been
magnified recently by counsel he is receiving from
his more radical advisers. Velasco has now out-
lawed the Popular Action Party, and the coun-
try's bridled press is likely to be in for even
rougher times. Moderate officers fear that such
moves will only further alienate the military from
the majority of the civilian population.
An unknown element is Prime Minister
Mercado. President Velasro has deep personal and
President Velasco
political differences with the Prime Minister, who
has presidential ambitions of his own. Velasco'5
successful mo4e against Vargas sets a precedent
for ousting Mercado, the army member of the
three-man junta, before next January when he is
scheduled to retire. This added pressure on
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A further problem for Velasco lies in the
fact that the new navy minister, Vice Admiral
Arce, apparently shares many of his predecessor's
moderate views. In the past, relations between
Velasco and Arce have been strained.
The navy is incapable of seriously confront-
ing the army with military force even if it had the
cooperation of the moderate army officers who
might consider opposing Velasco. These army of-
ficers do not control the important troop com-
mands, which apparentIy remain in the hands of
loyal Velasquistas. Under these circumstances, the
most the moderates are likely to do is leave the
government. Should top-level moderate army of-
ficers decide to do this, the government probably
would shift further leftward and become more
authoritarian. It appears, therefore, that the
moderates will await further developments before
deciding on a course of action.
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CHILE
BREAKTHROUGi-t ON ASYLEES
A dramatic exercise in personal diplomacy
by Mexican Foreign Minister Rabasa has dearer,
the Mexican embassy in Santiago of anylees and
revived sagging bilateral relations. Similar irritants
in Santiago's relations with Colombia and Vene-
zuela are in the process of being removed.
Rabasa's sudden initiative apparently sur-
5,rised the Chilean leadership, but junta President
Pinochet was pleased that the foreign minister
came bean i '1 proposals rather than demands. In
return fr.. he immediate granting of safe con-
ducts fur the asylees, Mexico agreed to a restora-
tion of full diplomatic and trade relations. Pino-
chet also promised Rabasa that former Chilean
foreign minister Alrneyda would be free to go to
Mexico if he is acquitted at his coming trial.
Rabasa already is receiving kudos at home
for having achieved a personal triumph, although
there is some dissent from those who oppose any
compromise with the Chilean junta. The junta has
long promised that all those seeking asylum will
be given safe conducts eventually, and a recently
established informal deadline for clearing the em-
bassies has only a few more weeks to run. By
loosening slightly its rigid procedures for granting
safe conducts, the junta received assurances that
deliveries of badly needed Mexican fertilizers will
go forward. Another benefit, a badly needed
boost for Chilean prestige, could come in the
form of a "technical" stop in Santiago by Mexi-
can President Echeverria when he tours South
America next month.
Fewer than 100 asyiees now remain in "de-
ferred" status?i.e., with safe conducts still being
processed?and the number is shrinking daily.
Some prominent leftists are among those finally
being allowed to leave, including former Socialist
senator Adonis Sepulveda from the Colombian
embassy, former minister of agriculture Jacques
Chonchol from the Venezuelan embassy, and
Miriam Contreras?the late President Allende's
secretary and mistress?from the Swiss embassy.
Elimination of the asylee problem will help
restore more normal relations between Chile and
several Latin American nations. Chile has a long
way to 0 before it is restored to international
good graces, howeve, and Santiago still faces
serious ;oreign policy problems unrelated to asy-
lum.
THE ECONOMY
Vigorous expansion of copper production is
leading Chile's economic recovery. Copper pro-
duction is expected to rise 15 percent to 850,000
metric tons, reflecting the more effective use of
existing capacity and greatly improved manage-
ment and labor practices. Gross domestic product
will probably increase by 6-7 percent this year.
Other sectors are recovering more slowly.
Periodic wage increases, restoring purchasing
power to about the January level, have only pre-
vented consumer demand from falling further.
and have not encouraged industrial output. Agri-
culture spurred by greater livestock production,
will increase slightly. This year's cereal harvest
was low because most planting occurred while the
rural sector was in disarray. Sharply higher com-
modity prices and $150 million in new credits to
farmers are expected to encourage increased
plantings for the 1974-75 crop. Long-term agri-
cultural recovery, however, will require several
years of rural siability and continuing price in-
centives.
Runaway inflation remains one of the most
pressing economic problems. The cost-of-living in-
dex jumped about 87 percent from January to
April. Nevertheless, the junta has elected to con-
tinue with the free market economic. program
supported by Economic Minster Leniz. Gmern-
ment employment is to be cut, subsidies to roiost
government agencies ended, and public works
projects eliminated. Additionally, tariffs have
been reduced to increase imports, thus easing the
pressure on limited domestic supplies and provid-
ing price competition to domestic producers.
Most foreign inves'cors are waiting until Chile
establishes a viable economic track record before
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committing substantial amounts of new fonds.
The junta Is drafting a new investment code that
it hopes will attract more foreign capital. Mean-
while, an interim decree has assured free repatria-
tion of capital and profits, Japan already has
committed more than $100 million over the next
few years to develop an iron ore deposit and build
a pelletizing plant.
Balance of nalimerits and reserves prospects
appear bright. Santiago expects its best payments
position since 1970, The trade deficit this year
will be ihe lowest in several years, primarily be-
cause of a fortuitous surge in world copper prices
and increased copper export voli,;ne. The resched-
uling of debt payments and about $475 million in
new credits will bring Santiago's balance-of-pay-
ments schedule Into
Chile's economic progress COUld falter after
this year. While increased copper production
could offset the likely drop in world copper
prices, debt service needs and persistent demand
for capital and for food and fuel imports require
large foreign exchange earnings. Continuing ram-
pant inflation anti falling purchasing power could
depress industrial expansion, shake investor confi-
dence, and sharply curtail economic wowth.
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BOLIVIA: BANZER SURVIVES AGAIN
Forces loyal to President Banzer quelled a
coup attempt on June 5 by dissident military
officers, but the uprising his revealed serious op-
position to his administratton. Banzer will prob-
ably crack down immediately on his most visible
enemies, but a general purge of the armed forces
is unlikely as it would further erode his support.
The two army officers who led the revolt,
Raul Lopez and the popular Gary Prado, appar-
ently acted on impulse after the government
exiled one of their co-conspirators earlier this
week and indicated it was investigating rumors of
an impending coup. With Banzer in Sucre-250
miles away from the capital?rebellious troops
managed to surround the presidential palace early
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on June 5, but they were persuaded by more
powerful relirnents to withdraw peacefully after a
few hours. Both Lopez and Prado subsequently
attempted to obtain diplomatic asylum,, but press
reports indicate that they have been arrested for
questioning. They have beer promised eventual
safe ,.induct out of the country.
This latest attempt to overthrow the Banzer
govarnment follows a series of protests by work-
ers and students. The students heve been demon-
strating for several weeks against what they call
government interference in university administra-
tMn. Both university and secondary students are
on strike, and their demands are being .rupported
by the major Bolivian labor unions. They also
assert that the economic agreement recently nego-
tiated with Brasilia is tantamount to giving Brazil
economic hegemony over Bolivia.
In these circumstances, rumors of an im-
pinding coup by a group of young military offi-
cers revived, and Banzer ordered the military to
increase its state of readiness. The young officers
had been conspiring for several months, but ap-
parently were not yet prerarec, to move. Similar
pre-emptive moves in the past have enabled Ban-
zer to quash a number of coup attempts, and
these tactics may continue to sustain him in of-
fice for some time. This latest incident provides
fresh evidence of his ability to thwart plots by
stOking against his enemies before they are ready
to move.
With each successive coup attempt, however,
Banzer appears to be in a weaker position. During
the past year, he has lost some major political
allies. Among them are former president Victor
Paz, head of the National Revolutionary Move-
ment, who was exiled early this year. and the
party's current chief who took asylum this week.
The open opposition to the government by Gary
Prado, a spokesman for younger officers, will
undoubtedly increase unrest in the armed forces,
on which Banzer is now increFicingly dependent to
remain in power.
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ECUADOR: EMBARRASSING RICHES
Ecuador's finaocial position has improvv,d
markedly since it became a petrole.urn TA porter in
rnir2-1972. Oil revenues totaled about $180 mil-
lion in 1973 and are expected to reach $600
million this year. High wor'd prices for most of
Eetrador's other import it exports?sugar, coffee,
and cocoa have also generated large earnings.
During 1972-73, foreign exchange reserves
jumpx-id tenfold to about $250 million.
Quito plans to use its newly acquired wealth
to meet increasing consumer and industrial de-
mands. Officials plan a 30-percent increase in
imports -iWs year to about $750 million, mostly
in the form of consumer goods, raw materials,
and industrial and agriculturat machinery and
equipment. Last year, Quito devised a national
development plan for 1973-77 calling for $3 bil-
lion of private and public investment to generate
a 10-percent annual growth in gross domestic
product. A national development fund has been
set up to fieance priority projects, the first of
which will be an oil refinery.
The rapid influx of sizable funds, however,
has boosted Ecuador's inflation rate. The cost of
living jumped 18 percent last year. It climbed
another 11.4 percent in the first quarter of this
year, led by a 16.8-percent rise in food prices.
Shortages of basic foodstuffs further aggravated
the situation as Ecuador's agriculture continued
to stagnate., in part because the government is
maintaining artificially low food prices, thus
making production unprofitable. Conso,riers find
little. benefit in the, low prices, hovvever, because
the state-owned supermarkets are plagued by
shortages. The alternative for the consumer is to
pay the exhorbibmt prices charged by small shop-
keepers.
Quito plans to stimulate agricultural produc-
tion and imports, but there is disagreement within
the government over how best to proceed. Reval-
uation of Ecuador's currency is being considered
as a device to soften the inflationary effect of the
influx of petroleum dollars and to encourage im-
ports by lowering their domestic currency costs.
Petroleum exports, however, affect only a small
segment of the population. The exporters of
other prod.,cts, mostly agricultural commodities,
would suit serious ;osses.
Although the military government is not ac-
countable to any representative body, it has
shown responsiveness to major social needs. Con-
cern for raising living standards plays a part in the
decision to use the new national wealth for devel-
opment, but the Rodriguez administration also
hopes to appease growing oppocition forces.
As the government's anti-inflationary pro-
gram has developed over the past five months,
civilian politicians and labor leaders have begun to
complain that wage increases have not kept up
with inflation. Rodriguez has moved to stop the
wage issue from becoming a rallying point for the
opposition by providing for periodic reviews of
wages. Nevertheless, the continuing severity of
inflation, coupled with a political opposition in
search of a cause, may oblige an across-the-board
wage increase before August.
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SOUTH VIETNAM: ACTIVE BATTLEFRONTS
Fairly heavy fighting continued this week in
each of the country's four military regions as the
communists increased their shellings and rocket
firing-':, at government targets and offered gener-
ally effective resistance to South Vietnamese
counterattacks.
In the northern coastal provinces govern-
ment troops gained some ground during a clearing
operation in the hills near Hue. Farther south, a
new drive into communist territory south of Da-
nang relieved some enemy pressure on resettle-
ment camps in that area. In Quang Tin Province,
the communists launched their V:rst major at-
tempt since the cease-fire to gain a position along
Route 1. In neighboring Quang Ngai, they in-
creased the threat to the provincial capital and
the southern parts of the province, including the
seaport town of Sa Huyen.
In the central highlands, South Vietnamese
retaliatory operations against a major North Viet-
namese supply base in Kontum Province were
stalled by strong opposition just north of Kontum
City. Government counterattacks north of Saigon
aimed at retaking territory lost several weeks ago
made limited progress in the face of sharp re-
sistance. There were signs, meanwhile, that fresh
communist troops may carry off new attacks
northwest of the capital to draw off government
forces. More rocket attacks, such as the heavy
bombardment of Bien Hoa this week, are also
likely.
Armored unit north of Saigon
Elsewhere, South Vietnar.7.J units in the
delta kept trying to retake positions near the
Cambodian border, while the communists re-
tained much of the initiative in the region's south-
ern provinces. Most of the week's action was
centered in Dinh Tuong and Kien Phong prov-
inces, however, where the South Vietnamese have
been attemptiny to disrupt the flow of men and
supplies into communist base areas in the delta.
The increase in the fighting and the resultant
setbacks on certain battlefields apparently has not
changed the outlook of most South Vietnamese
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military nfficers, who are still cautiously opti-
mistic that they ..:an prevent the communists from
making any significant gains in either territory or
population. This attitude was particularly evident
during a meeting late last week between President
Thieu and his four regional commanders.
The commander of Military Region 1 said
that while the situation in Quang Tin was serious,
the assignment of a Ranger group to that province
would contain the attacking North Vietnamese.
He also assured the President that the situation
south of Hue and the increased communist activ-
ity in Quang Ngai were under control. For his
part, the commander of MR 2 ignored the situa-
tion in the western highlands and described the
rest of his region as quiet. The relatively new
commander of MR 3 expressed confidence that
his forces would soon recapture recently lost out-
posts in Binh Duong Province. Finally, the com-
mander of the delta provinces only presented his
plan to reduce the number of outposts in his
region to increase the mobility of his units. The
South Vietnamese high command reportedly has
concluded that each of the commanders has
enough assets to contain the current level of com-
munist military activity, which it expects will
continue throuth June.
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CAMBODIA
A BLOODY CONFRONTATION
Long-standing student and teacher unrest in
Phnom Penh took a tragic turn early this week
with the assassination of the minister of educa-
tion and a presidential aide following their abduc-
tion by student agitators. The officials reportedly
were shot by a leading student activist when
police stormed the high school that the students
were using as a headquarters. At least six students
were killed or wounded in the melee. The stu-
dents initially had planned to ransom the two
victims for the release of nine students and teach-
ers recently charged with conducting subversive
activities.
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The government thus far has not over-re-
3cted to the unprecedented display of student
violence. An extended curfew was imposed in
Phnom Penh and classrooms were closed for sev-
eral days. Many students have been arrested, but
at midweek the police had made no further moves
against some 20 students still holed up in the high
school. The relatively mild countermeasures re-
flect President Lon Nol's desire to avoid further
confrontations that could lead to massive dis-
orders.
Adverse public reaction and the roundup of
student agitators should help to defuse the situa-
tion for the time being. The government, how-
ever, will probably still not be able to do much
about redressing the causes?primarily spiraling
inflation?that are behind much of the student-
teacher discontent.
PARTISAN SQUABBLING
The government also came under political
attack this week from another quarter. Several
months of political sniping by members of Lon
Nol's dominant Socio-Republican Party culmi-
nated on May 30 in the interpellation of Prime
Minister Long Boret and his cabinet by the Na-
tional Assmbly. Egged on by party leader Pan
Sothi, a handful of Socio-Republican assembly-
men issued a "decision" criticizing the govern-
ment for being inept and for failing to abide by
certain constitutional procedures.
The document was primarily aimed at the
four cabinet ministers who are members of the
minority Republican Party. They subsequently
tried to resign, but at last report Lon Nol was
demanding that they stay on to preserve unity
and maintain the cabinet's coalition character.
The assembly action underscores the diffi-
culties Lon Nol has been having with the obstrep-
erous Socio-Republican leadership, particularly
Pan Sothi. Early last month, Lon Not clashed
with Sothi over the latter's persistent attempts to
discredit the Republicans and their chief, Sink
Matak. There is some evidence that Sothi ulti-
mately is trying to force Long Boret out and
install himself as prime minister.
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LAOS: COMMUNIST TROOPS STAY ON
The 60-day period for the withdrawal of all
foreign military personnel from Laos ran out this
week, but only the US and Thailand complied
fully with the deadline of June 4. On the commu-
nist side, sizable numbers of North Vietnamese
troops are still in Laos, and they show no signs of
leaving. Chinese engineering and support troops
also remain in northwestern Laos.
There are now an estimated 47,000 North
Vietnamese troops in Laos. Of this total,
37,000?including four combat infantry regi-
ments?are in central and southern Laos, while
the remaining 10,000?including two combat in-
fantry regiments?are based in northern Laos.
Approximately three fourths of the North
Vietnamese personnel are concerned primarily
with supporting Hanoi's war effort in South Viet-
nam by keeping supplies and personnel moving
along the eastern Lao infiltration corridor, and
they will probabl st force for some
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VIETNAM
76
Besides their priority interest in using the
bulk of their forces in Laos for infiltration and
logistic purposes, the North Vietnamese are evi-
dently determined to keep a limited main force
combat presence in parts of the Lao interior?at
least for the time being. This presence is aimed in
part at preventing potential rightist military
moves against the so-called "liberated areas" or
against the new coalition government itself. In
addition, Hanoi evidently plans to continue to
train, advise, and to some extent logistically sup-
port the Pathet Lao until the North Vietnamese
are convinced that the Lao Communists can hold
their own against the Lao army, and can do
reasonably well in future general elections.
As for the Chinese, Peking similarly intends
to continue to exert an influence in Laos, in part
through diplomatic activity in Vientiane but also
through its road-building activities in the north- 25X1
west. While it is true that nearly all of Peking's
combat forces have left Laos, the 23,000 or so
engineer and support troops who remain are reg-
ular members of the People's Liberation Army. 25X1
The Chinese may consider these road-construc-
tion and maintenance forces a useful counter-
weight to the more substantial n. :Tiber of North
Vietnamese troops in Laos. They may also see
them as a contribution to the Pathet Lao cause
equal to that made by Hanoi.
In addition to failing to abide by the troop
withdrawal deadline, the communists have
blocked progress on a prisoner exchange. Al-
though June 4 was also the deadline for the
return of prisoners of war of all nationalities,
none have been exchanged and there is tittle pros-
pect for their early release.
The Pathet Lao admit to holding only one
American prisoner?civilian contract pilot Emmet
Kay?who was captured on May 7, 1973. This
week, a Pathet Lao spokesman in Vientiane told
the press that Kay would not be released because
"the US had refused" to abide by the peace
agreement in Laos. Besides Kay, four other Amer-
icans are believed to have been captured in Laos
prior to the cease-fire agreement of February
1973, and 314 are Ii ri as missin
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THAILAND: MOVING TOWARD ELECTIONS
Prime Minister Sanya's reluctance to head up
a caretaker government indefinitely?underscored
by his resignation last month?has spurred high-
level moves to speed up the process of holding
elections. According to Thai law, elections cannot
take place until the National Assembly promul-
gates a new constitution. Consequently, pressures
are bui/ding far the assembly either to expedite
its review of the new draft constitution or to
shelve it for the time being.
King Phumiphon, anxious to see an elected
government assume office as soon as practicable,
favors putting aside the current draft constitution
and adopting some earlier one?eight consti-
tutions have been written arid promulgated since
1932. The King prefers the 1949 version, which
gives him limited constitutional responsibilities.
Phumiphon's thinking has been given public sup-
port by army chief Krit Siwara, the chief power
broker behind the scene, and by the Bangkok
pt;ess, which has been clamoring for a constitution
to be approved as soon as possible.
In response to this pressure, Prime Minister
Sanya has set a rough timetable under which the
draft now before the assembly would be com-
pleted as early as August, and elections held in
September or October. By Sanya's timetable, an
elected government would take office no later
than December.
Besides promulgating a constitution, several
important measures must be adopted before
the election process can begin in earnest. The
assembly has yet to pass a bill authorizing politi-
cal part ies?a military decree banning such
activity is still on the books. The assembly must
also decide how the prime minister will be se-
lected, although most Thai politicians currertly
are leaning toward a British parliamentary system.
The country's preoccupation with institu-
tionalizing a more democratic form of govern-
ment does not mean it will be all smooth sailing
for the Sanya government in the months ahead.
Various pressure groups are already urging Sanya
to begin laying the groundwork for meeting some
of Thailand's long-range social needs, principally
in the fields of education and land reform. The
students also are threatening to launch protests
against the US military orecrinre_.
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BURMA: LABOR UNREST
The Burmese government is faced with its
most serious crisis in years because of the spread-
ing labor unrest. Since he assumed power in 1962,
President Ne Win has had to cope with only a few
major domestic problems. The principal ones have
been the depressed economic conditions, which
have persisted for years, and the continued in-
surgent activity in outlying areas, which remains a
source of some concern. But neither of these has
directly threatened Ne Win's position or caused
particular dissension within government ranks_
During the past two months, strikes have
taken place at factories in Rangoon and other
cities, where workers are demanding larger rice
rations and higher wages. This week the situation
in the capital approached a general strike. Thus
far, the government has been able to end most of
the disturbances by promising to meet the de-
mands of the strikers, but the question of how to
handle the strikes is apparently causing friction
within the regime. Although the authorities have
so far acted with restraint and there has been no
violence, some ministers favor a harder line.
The situation could become more serious,
since some workers reportedly are becoming
restless over the government's delay in giving
them more rice as promised. Until recently,
strikes had been rare in Burma, but if the workers
achieve their goals, they may be encouraaed to
make other demands.
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INDONESIA?PH/LIPPINES: SUMMIT DIPLOMACY
Despite mediation efforts by President
Suharto, the Philippines and Malaysia remain at
loggerheads over the question of Muslim insur-
gency in the southern Philippines. Suharto met
with Malaysian Prime Minister Razak in early May
and followed with talks with Philippine President
Marcos last week.
Accounts of the meetings indicate that
neither party has changed its position signifi-
cantly from June 1973, the last time that Jakarta
tried to mediate their dispute. No tripartite sum-
mit is likely in the near future, although there
may be talks at a lower level. Suharto is skeptical
of the intentions of both sides and probably will
not take the initiative in organizing further
meetings.
The latest round of talks was prompted by
Marcos. The timing suggests that Marcos wanted
to gain Suharto's sympathy for his position in the
hope that Indovesia would then oppose any anti-
Philippine moves that might arise during the
Islamic Foreign Ministers Conference later this
month in Kuala Lumpur.
Two r.sparate but related points of conten-
tion have clouded Philippine-Malaysian relations
for several years. Manila charges that Kuala
Lumpur is providing Philippine Muslim rebels
with weapons, training, and safehaven. Recently,
Marcos provided various potentially friendly gov-
ernments, including Indonesia, with interrogation
reports of captured rebels as evidence. During the
meeting with Suharto, Marcos tried to document
his case against Malaysia. He also provided details
of his domestic programs to help the Muslims in
order to ward off Malaysian charges that Manila
oppresses its Muslims.
For its part, Kuala Lumpur has always
denied official involvement in the insurgency, al-
Razak hs said that private individuals in
Malaysia's North Borneo state of Sabah un-
doubtedly favor the rebels' cause. Razak asserts
that Manila is primarily to blame for the tension
between the two states because Marcos refuses to
renounce his claim to Sabah, which is based on
the historic claims of the former sultanate of
Sulu.
President Marcos has hinted that he would
be willing to drop the Sabah claim in return for
concessions from Malaysia. Among others, he
wants compensation for the heirs to the Sultan of
Sulu and a statement by Kuala Lumpur disasso-
ciating itself from the rebel Muslim cause. Marcos
is also increasingly interested in the possibility of
oil deposits on the seabed between the Philippines
and Sabah, and he may well hc,pc to get a favor-
able arrangement on oil exploration there. Al-
though Razak has always said that Kuala Lumpur25X1
would provide at least token compensation to the
Sultan's heirs, it is highly unlikely that Marcos
will get an satisfaction on is
mands.
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