WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000070006-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 28
• Document Creation Date: December 27, 2016
• Document Release Date: May 6, 2010
• Sequence Number: 6
• Publication Date: July 5, 1974
• Content Type: REPORT

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eview
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5 July 1974
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The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes sigiticant
developments of the week through noon on Thursday. It
, frequently includes material coordinated with or p(epared by
the Office of Economic Research, the Office of Strategic
Research, and the Directorate of Science tind Technology.
Topics requiring more comprehensive treatment and therefore
published separately , as Special Reports are listed in the
contents. .
CONTENTS (July 5, 1974)
EUROPE:
MIDDLE EAST
AFRICA
EAST ASIA
PACIFIC
WESTERN
HEMISPHERE
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1 Argentina: An Interim Successor
2 Latin America: The New Dialogue
4 China: A Monkey on Its Back
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5 Canada: Minority or Coalition
6 Iceland: A Swine to the Right
7 USSR: 0-class Submarines
8 UK: De ense Reductions Planned
10 USSR-China: Back fn poidnr,
polish Plenum Charts Course
/2 Eastern Europe: Visit from .-adat
13 OECD Economic Forecasts 25X1
13 EC: Dialogue with the Arabs
14 Iran-France: Economic Cooperation
15 Turkey: Poppy Ban Lifted
16 Fedayeen: Border Raids Suspended
17 Syria-USSR:
18 Portuguese Africa: Growing Unez-
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19 Cyprus-Greece: Test of Wills
20 Ethiopia: Arresting the Old Guard2
21 Cambodia: A Good Military Showing
22 Laos: A Political Bombshell
23 Japan: Election Con iing Up
24 Chile: Junta Presidency Strengthened
24 Venezuela: One Hundred Days Plus
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rge tina
AN INTERIM SUCCESSOR
The death of President Juan Peron has left
the country without an obvious successor. Peron
himself recently remarked that he had no heir
apparent, suggesting that he did not expect Mrs.
Peron to last very long in the top job.
For the time being at least, it is unlikely that
there will be any major changes in the administra-
tion. Shortly after annoincing her husband's
death and asking for public support, President
Maria Estela de Felon reconf ii med the appoint-
ments of all cabinet ministers and senior military
officers.
Mrs. Peron, however, may last only as long
as it takes for political and military leaders to
work out a mutually acceptable solution. Since
Peron's illness last fall, various right-wing Peron-
ists have been meeting secretly with both retired
and active-duty officers to discuss the succession
question.
Military leaders prefer an orderly institu-
tional succession, as do major political leaders,
Peronist and non-Peronist alike. With the Peronist
movement likely to undergo a gradual disintegra-
tion, the military will play a key role in estab-
lishing whatever government eventually evolves.
One of the major problems may be to per-
suade Mrs. Peron to stay in the job for the interim
and thus avoid the election that otherwise would
be necessary. In the past, she has expressed a
reluctance to assume the presidency. She is not
popular, and she knows it. She also recognizes her
lack of experience and her inability to contend
with the country's grave problems.
Appeals to patriotism and her husband's
memory will persuade her to stay on for the
immediate future. Jose Lopez Rega, Peron's pri-
vate secretary and confidant, is probably more
interested than an) one else in keeping her in the
presidency. He is ambitious, and with Peron gone
he needs Maria Estela if he is to hold on to a
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A reuctant President
position of power. He is almost universally feared
and detested by political and military, leaders,
who probably are already maneuvering for hiF
ouster and exile.
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If Mrs. Peron decide3 to step down, however,
under the present arrangement her successor will
be Senate President Jose Allende. He must, within
30 days, set a date for elections, according to the
constitution.
The sudden return of former president
Hector Campora to Buenos Aires last week from
his post as ambassador to Mexico increases the
likelihood of the formation of a new leftist coali-
tion. Two wc11-placed US embassy sources have
reported that Campora has come back to become
involved in "skulduggery." and he reportedly con-
siders himself the guardian of Peronist ideology.
A leftist coalition with Campora as its titular
leader would create turmoil and division, provid-
ing the military with another reason to try to
postpone an election campaign until a strong can-
didate can be agreed upon.
Even though all political leaders officially
pledged to support Mrs. Peron when she was
installed as temporary chief of state on June 29,
the various Peronist factions can be expected to
act independently now that Peron is dead. This is
especially true of the leftist youth leaders, who
were all but read out of the movement by Peron
himself for their disruptive demonstrations and
public attacks on his wage and price stabilization
policies.
Terrorist groups will also take advantage of
the leadership vacuum that now exists. The
People's Revolutionary Army will probably step
up acts of violence, and other guerrilla organiza-
tions on the fringes of the Peronist movement
may expand their operations as confusion grows
in the government. Army leaders reportedly are
planning pre-emptive moves against the guerrillas.
A general breakdown in order of a mag-
nitude that would force military intervention,
however, does not appear likely at this time. The
extremists, although well financed, lack numerical
strength. They also have shown some sensitivity
to public opinion and probably will not overplay
their hand in the immediate future.
Latin America: The New Dialogue
Latin American governments have been
actively testing the new dialogue established with
the US during the series of meetings with Secre-
tary Kissinger some months back. The mutual
commitment id a fresh start on hemispheric part-
nership has become the benchmark against which
the Latin Americans measure both the state of
bilateral affairs and US positions at various inter-
national assemblies. Wriile most governments are
showing a positive view of US intentions toward
them, their basic skepticism is reinforced by any
current point of real conflict and by many sup-
posed slights.
How the latinos weigh the evidence and for-
mulate attitudes about the new dialogue is af-
fected by shifting and sometimes conflicting con-
siderations. A few of the smallest countries ?Par-
aguay, the Dominican Republic, Haiti, and Cen-
tral America, for example?hold to an uncom-
plicated pro-US line in most -multilatera! affairs
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and are for the most part satisfied with the bilat-
eral benefits derived from this association. For
most governments, however, traditional ambiv-
alence toward the US has been intensified by the
importance of bloc politics in international rela-
tions, and by aspirations or fears aroused by the
producer-consumer divisions. They are also af-
fected by their uncertain reading of the oppor-
tunities and hazards in such international efforts
as the Law of the Sea conference, a charter of
economic rights and duties, and other proposals
to reconstruct the bases for international conduct
and alliance. Their view of the US and the outside
world as a whole is further distorted by domestic
instability (Argentina, Uruguay), by local rivalries
(Brazil-Argentina, Peru-Chile), and by touchy
bilateral issues (Panama Canal ti'eaty).
The Latin Americans remain encouraged by
the frank tone and cordial atmosphere in various
negotiating forums with the US, yet they feel that
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the new dialogue so far has produced little of
substance. Their frustration is deep in two broad
areas. Ona is their suspickn that the US is un-
willing to sacrifice traditional interests to help the
poorer countries catch up with the modern world.
The other relates to their teeling that Latin Amer-
ica remains peripheral ,n the US scope of interna-
tional interests.
Even the mos' dvanced of the L:itin Ameri-
can nations are naggcd by a sense of "victimiza-
tion," and their search for some hidden signal of
exploitation has been evident at the numerous
recent sessions of inter-i-,mb;ican working groups.
The latinos have revealed particular sensitivity to
US actions or proposals on trade problems, the
conduct of transnational corporations, and the
transfer of technology. They claim to detect a
protectionist bias toward US industry, and see no
real commitment by the US to correct the im-
balance between the have and have-not nations.
Brazil has been part!cularly vocal in expressing
Latin American frustrations over terms and condi-
tions of US proposals, especially the high cost of
technology that drains resources needed for eco-
nomic and social projects. Brazil emphasizes that
the profit motive can no longer rule, and that the
US must display the political will to aid less
fortunate neighbors. The Latins' anger has been
sharpest toward US import restrictions, which
they claim contradict the policy agreed to be-
tween them and the US at the meetings with
Secretary Kissinger.
The Latins have further expressed resent-
ment at continued US attention to the Middle
East, Europe, and the USSR. Even some of the
governments most receptive to Wastmigton have
complained that US inattention to friends, along
with a lack cf flexibility in dealing with the small
countries, is costing the US influence in the UN
and other assemblies.
Although the Latin Americans continue to
criticize US positions, their complaints are more
often expressed in joint, semi-private sessions
than in the past. The stridency and attack mental-
ity of recent years have given way to a spirit of
frank exchange. Moreover, the latinos have ap-
proached problems in an increasingly construc;ive
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manner, by working together more successfully in
forging considered positions and proposals of
their own.
Cc ming months will see a large number of
international assemblies and inter-American work-
ing groups at which the Latin Americans will
continue to measure and study the US. They will
be concerned about US domestic affairs that
impinge on them, particularly such matters as
congressional action on trade bills. The next inter-
American foreign ministers meetina is now set for
March 1975.
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PANAMA: CANAL TREATY TALKS
The Torrijos government has taken a
moderate position in the first stage of the
negotiations toward a new canal treaty. In
the talks last week in Panama, Foreign
Minister Tack accepted a proposal that
would give his country a measure of partic-
ipation in the management of the canal,
although the US would retain effective
control for the duration of the treaty. The
Panamanians' willingness to compromise
on this issue derived from their assump-
tion that control of the canal was a pro-
vision the US would require in any new
treaty. Their basic goal WaS to gain a share
in management that would prepare them
eventually to run the canal.
They are likely to take a similarly
reasonable stance toward the defense of
the canal. They assume the US must have
ultimate responsibility for its protection,
but claim they should have a role in its
defense. Panama's bargaining posture is
likely to harden when sensitive issues
come up, such as the jurisdiction over the
canal and the duration of the treaty.
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China, vi ii/tonkey On Its Rack
Whatever the political effects of the Peking
wall posters, they have created a new celebrity: a
Peking factory worker who signs his posters the
"Golden Monkey." In classical Chinese literature,
the golden monkey used his club to clear the
universe of dust; in a political context, the mon-
key symbol was used by leftists in the Cultural
Revolution to describe the purge of their oppo-
nents, and the present monkey also may be a
leftist. In any case, he has taken aim at the party's
top leadership. In an entertaining series of
posters, he has accused Peking city officials of
attempting to supprrss the campaign to criticize
Lin and Confucius, and he has charged that un-
named figures in the party's "upper ranks" are
"traitors" in the Lin Piao/Liu Shao-chi mold. The
monkey's antics have evidently irked local author-
ities: his June 30th poster predicts his own arrest.
A People's Daily editorial on July 1, th.-: first
in three years to commemorate the anniversary of
the founding of the party, may have been
prompted by the increasing number of posters?
some of which attack party officials by name.
While admitting that "mistaken ideas" do exist in
the party?a condition the editorial terms "nor-
mal"?and that criticism from the masses must be
"welcomed," it clearly states that the 'wrong
ideas" expressed in some criticisms must he co--
rected by the party. But People's Daily also warns
that criticism must not be used to weaken the
party's leadership. In all, the July 1st editorial
seems to be in line with the efforts of political
moderates to allow intraparty debate while trying
to provide direction and to maintain control over
the campaign.
Factional divisions within the party have
prevented the central leadership from clearly
identifying which ideas are wrong, and a flurry of
contradictory posters and violence has resulted in
most provinces. Some criticisms are the work of
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contending factions, but others are highly per-
sonal complaints of maltreatment by the system
or by the local authorities who run it. The posters
are touching raw nerves among the authorities.
Several have been torn down, especially those
that name names, and some authors have been
arrested and detained. In one instance, Peking
police and firemen turned fire hoses on would-be
poster writer
The present level of activity is nowhere near
the violence of the 1966-69 period and, unlike
the Culturai Revolution, today's posters are
aimed at toppling specific individuals, not the
entire party structure.
Peking has tried to put the best face on the
current political situation; one national figure
cited the posters as an example of democracy,
and another assured a foreign visitor that "we
know what we are doing." But fear of a continu-
ing erosion of authority can be seen in party
propaganda, and a determination to keep the anti-
Lin/anti-Confucius campaign under control has
characterized the party line from the beginning.
Significantly, the July 1st editorial concludes by
once again admonishing everyone to "obey orders
in all our actions and marc
tory."
9 ? I
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Canada: Minority or Coalition
After eight weeks of hard-hitting campaign-
ing for the national election on July 8, neither the
Liberals nor the Tories have been able to gain a
decisive lead. As a result, Ottawa is likely to have
a minority or coalition government after the elec-
tion. Inflation has emerged as the main campaign
issue. The cost of living rose 9.1 percent in 1973,
and the latest figures show it running at an annual
rate of 13 percent for this year.
Progressive Conservative leader Robert Stan-
field has proposed an income and price freeze to
be followed by a more permanent program to
combat inflation. Stanfield's proposals, vigorously
attacked by the other parties, have not caught on
with the public. Prime Minister Trudeau has
stressed measures to increase corporate taxes arid
protect hard-pressed consumers from the worst
effects of inflation. The New Democrats, the de
facto junior partner in the last government, have
pushed variations of Trudeau's promises and have
added a proposal to establish a two-price system?
domestic and international?for basic commod-
ities produced in Canada.
Recent nationwide opinion polls show
Trudeau's Liberals edging ahead, but the polls are
misleading because they incorporate the very
heavy majority that Liberals always receive in
Quebec. The electoral overkill in Quebec, there-
fore, is not as important as winning individual
parliamentary contests, which are expected to be
close in many areas of the country.
There are no available polls, for example, to
show the trend in the key province of Ontario.
The Liberals, Tories, and New Democrats each
claim that their private polling shows them doing
well in that province. About one third of On-
tario's 88 parliamentary seats were won by less
than 2,000 votes in 1972, and there will be many
close three-way battles this year. Party leaders
spent much of this week in Ontario in hopes of
tipping the balance in these races.
The nationalist-minded New Democrats have
a good chance of again winning the balance of
power in parliament. In the last parliament, they
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Lewis
kept the minority Trudeau administration afloat
by informally participating in the government?an
arrangement that freed them from the principle
of collective responsibility, which inhibits public
criticism of government policies by government
members. Recently, however, party leader David
Lewis stated that he did not expect elections
again for several years no matter what party
headed a minority government. He may be hint-
ing that the New Democrats would be prepared to
join a formal coalition if the right kind of deal
can be made.
Canadian-US relations surfaced on the mar-
gins of the campaign recently when the US threat-
ened to take retaliatory action against Canadian
farm exports to the US unless Ottawa allowed
resumption of US beef exports. This issue has
been receiving heavy?and sometimes emotional?
media coverage. Trudeau and Agriculture Minister
Whelan have reacted sharply in an obvious -at-
tempt to head off potential opposition charges of
knuckling under to the US.
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ICELAND: A SWING TO THE RIGHT
The national elections on June 30 revealed a
marked shift to the right that enabled the
strongly pro-Western Independence Party to
strenothen significAntly its position in parliament.
Although still lacking a majority, the Independ-
ence Party is virtually certain to be the dominant
force in the new government. The party tradi-
tionally has been r, strong supporter of Iceland's
membership in WO 0, and prospects are there-
fore bright for retaining the US-manned base at
Keflavik in the forthcoming negotiations between
the two countries.
The Independence Party increased its repre-
sentation from 22 to 25 seats in the 60-seat
Althing. It, along with the Social Democrats, had
been in the opposition in the preceding parlia-
ment. The Social Democrats, who lost ground in
municipal and local elections in May, continued
to do poorly in the national contest. The tiny
Liberal Left Organization appealed to non-Com-
munists opposed to the base during the campaign
and lost support in the election. The Progressive
Party, which headed the outgoing coalition,
retained the same number of seats it held pre-
viously. The Communists, who have been the
most vocal opponents of the Keflavik base,
picked up one seat.
Hallgrimsson
AI
Negotiations for the formation of a new
government will probably take several weeks.
Independence Party Chairman Hallgrimsson, as
leader of the party that won the largest number
of seats, will be called on firsi. by the President to
form the next government. Since the Independ-
ence Party failed to gain a majority in the elec-
tion, it will have to enter into a coalition with at
least one of the other parties. The largely isola-
tionist and rural-oriented Progressive Party is the
only non-Communist political faction that com-
mands enough seats to assure an Independence-
led government a majority in parliament.
Cooperation between the Independence and
Progressive parties would be inhibited by several
long-standing problems, including personae antag-
onism between the two party chairmen and the
traditional conflict between private industry,
which supports the Independence Party, and
rural-cooperative interests, which are the main-
stay of the Progressives. The Progessive Party was
out of the government for 12 years prior to its
membership in the outgoing center-left coalition,
however, and it is anxious to be included in the
new government . During the campaign, the Pro-
gressives tried to dissociate themselves from the
strong anti-base position of the Communists, one
of their coalition partners, and struggled to pro-
ject a r lore moderate image. Despite past opposi-
tion, the Progressive Party will probably not find
it difficult to support the Independence Party on
the Keflavik base.
A commotion of the Independence Party,
the Social Democrats, and the Progressives, al-
though less likely, remains a possibility. The
Social Democrats' labor support wou:d be an
advantage. A sizable number of Social Democrats,
however, are opposed to association with the con-
servative Indeperrience Party and may prefer to
stay out of the government.
The most urgent problem facing the new
government is Iceland's growing economic pi ob-
lems. The annual inflation rate of 45 percent, the
losses in Iceland's vital fishing industry, the
sizable rise in the cost of imports, and continuing
pressures for 'arge wage increases will require
emergency measurecc hi filo new govern-
ment.
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UK DEFENSE REDUCTIONS PLANNED
MORE D-CLASS SUBMARINES
The Soviets are producing D-class ballistic
missile submarines at a steady pace.
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The Labor government's review of defense
spending is proceeding rapidly, and should be
ready to present to ministerial-level officials later
this month. Few firm decisions have yet been
made, but the shape of Britain's future force
levels will be largely determined by the spending
cuts to be proposed.
Labor's goal is to bring the UK's defense
spending?measured as a percentage of g-oss na-
tional product?more in line with that of France
and West Germany. The UK currently spends
about 5.5 percent of its GNP on defense, while
France and West Germany spend only about 4
percent. The plan to be submitted for ministerial
review will pi obably call for phased reductions
over a ten-year peri--' with defense expenditu--
in fiscal year 1984 -ounting to about 4.5 p25X1
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The portions of the budget to be trimmed,
and the timing remain to be determined. Cuts of
the magnitude being proposed will require Britain
to withdraw some of its remaining forces overseas
and to reduce further the development and
procurement of expensive weapons and the num-
ber of personnel.
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The British Defense Ministry would prefer to
schedule the bulk of the reductions in the second
half of the ten-year period in order to minimize
the impact on procurement programs and to
allow for orderly personnel cutbacks. Funds this
year already have been slashed by $545 million,
and only minor additional reductions appear pos-
sihile without a major policy shift. Nevertheless,
tne US embassy in London believes that political
considerations could force the Labor Party to
make further sharp cuts in the near future with
disastrous effects on many present and planned
equipment programs.
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The working review group, an interdepart-
menta; body chaired by a deputy undersecretary
of defense, is recommending that cuts over the
next few years be made only in non-NATO
forces; kr example, eliminate garrisons in Hong
Kong and Singapore and reduce forces in Malta
and Cyprus. They will have little effect on
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defense expenditures; major savings vill only
come by reducing weapons and personnel ear-
marked for European defense.
Should major personnel cuts become neces-
sary in the immediate future, the working group
is proposing that mobile forces based in Britain be
reduced, rather than the British army on the
Rhine. The working group hopes that any de-
crease in the mobile force would be partially
offset by beefing up British territorial voluntary
reserves.
Over the longer term, continued pressure to
reduce rising personnel costs, accounting for
about half of total defense expenses, may cause
the Labor government to look even more favor-
ably on reducing British forces as part of a second
phase MBFR agreement. Last month, the UK for
the first time announced its willingness to reduce
in a second phase, providing certain conditions
are met. The government will probably also be-
come more interested in specialization of tasks
within NATO, a move that could allow further
economies in manpower and equipment.
Additional reductions in equipment modern-
ization prcg-ams are likely, even though these
were trimmed in the last two budgets. The con-
sensus at the Ministry of National Defense is that
overspending for navy programs got badly out of
line under former Defense Minister Lord Carring-
ton. As a result, the .--rvy is likely to suffer more
than other service. The construction schedule of
the first cruiser designed to carry VTOL aircraft
has slipped a year, and the project may be can-
celed when the first ship is completed. The Shah
of Iran has expressed an interest in purchasing the
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cruiser, and the British navy may be depi ived of
even this new ship. The governmrnt also has an-
nounced it will withdraw most of its financial
backing from the joint UK and US project to
develop an improved VTOL aircraft that was
originally intended to operate from the decks of
the new cruisers.
The European multi-role combat aircraft
continues to be the best candidate to be cut back
or canceled. Development costs on the aircraft
continue to rise, and the project is being ham-
pered by technologic:di difficulties. The UK is
believed to be considering dropping at least the
interceptor version of the aircraft. Interim deci-
sions to reduce the production run or to eliminate
variants could make the remaining aircraft so
costly on a unit basis that the project might
founder.
The budget cuts could also dim any hope the
army may have about additional purchases of the
IS-built Lance surface-to-surface tactical nuclear
missile. The army has 12 of these missile systems
on order, and would like to purchase 20 to 27
systems.
London intends to consult fully with the US
and its other NATO allies before final decisions
on the budget are made. A defense white paper
incorporatng London's decisions is to be pub-
lished by November, covering British military
strategy, concepts, and projected budgetary levels
for the next five, and possibly ten years. It will
not specify, however, the forces and items of
equipment to be cut, thus leaving open the gov-
ernment's options for future modifications
P,D;$
Multi-role combat aircraft
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USSR-CHINA: BACK TO PEKING
Moscow's pique over the helicopter incident
apparently did not prevent the USSR from
making what has become its standard conciliatory
gesture toward the Chinese on the eve of a Soviet-
US summit. Three days after making its fourth
protest to the Chinese over the helicopter in-
cident, the USSR sent its chief negotiator at the
Sino-Soviet border talks, Deputy Foreign Minister
Michel', and his deputy back to Peking. Ilichey
had been in Moscow since last July, the deputy
since November.
Moscow's negotiators probably carried with
them new proposals ostensibly aimed at getting
the border talks off dead center. Past Soviet
offers have included detailed suggestions for a
new border agreement, a nuclear non-aggression
pact, a mutual non-use of force agroement, and a
summit-level meeting. The Chinese accepted some
of these proposals in principle, but then insisted
on preconditions that the Soviets found unaccept-
able. This is probably what will happen again.
With Ilichey's return in mind, the Soviets
placed a long article in the leading Polish daily
setting forth Moscow's position on the border
question. The article betrays Moscow's sensitivity
to Peking's charge that China is threatened by the
USSR. It also sheds more light on the positions
taken by both sides at various times during the
course of the talks. According to the article, for
example, China had proposed an interim agree-
ment confirming the status quo along the borders.
Moscow had agreed until China insisted on a
troop withdrawal before the agreement was
signed. Moscow, for its part, reportedly offered to
accept the main navigation channel as the
boundary along the riverine frontier. The offer
probably was conditional on Moscow's maintain-
ing control of thr4 strategic island opposite
Khabarovsk, and was therefore unacceptable to
the Chinese.
The main point of the article is to dem-
onstrate that it is Peking?not Moscow?that is
resporrible for the impasse in the border talks.
The use of the Polish stand-in was presumably
intended to make the article less offensive to the
Chinese, but its appearance on the eve of I lichev's
departure for Peking is contrary to the normal
Soviet practice. !t may have been intended to
placate those in the leadership who objected to
any conciliatory gesture in light of Peking's recent
actions against the USSR, or, alternatively, it may
have been designed to set the record straight as
Moscow seeks to develop support for another
world Communist gathering.
The day after II ichev returned to Peking,
Moscow's frequent unofficial spokesman, Victor
Louis, published an article in a French newspaper
expressing concern about the all2ged increase in
Sino-Soviet border tensions and the fate of the
detained helicopter crew. The article was vaguely
threatening in that it alluded to those killed in the
border clashes of 1969 and to Moscow's ability to
match China's output of hostile propaganda. The
oblique message seemed to be that China had
better begin serious negotiati ns or the situation
might get out of hand.
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There is no reason to believe that Moscow
will find Peking forthcoming on either the border
Wks or the helicopter crew.
Peking apparently views the border dispute as a
political rather than a territorial issue, and as one
that Cii.na can still effectively exploit. Peking's
willingness to receive I lichev for what may turn
out to be another fruitless round of talks clearly
indicates, however, that the Chinese will avoid
being maneuvered into appearing to be the intran-
sigent, nay-saying party, particularly with a world
Communist conference in prospect. With regard
to the helicopter crew, a widQ range of pressures
have avaited Moscow nothing so far, perhaps due
to Chinese uncertain iv as to how to nro-
ceed.
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POLISH PLENUM CHARTS COURSE
The Central Committee plenum last week
heard party leader Gierek's program for changing
the Polish party into a more efficient, centrally
controlled, and ideoiogically conscious organiza-
tion within the next 18 months. His plans are
partly a response to Soviet demands for tightened
discipline throughout Eastern Europe, but they
also reflect Gierek's desire to reinvigorate his
party and to increase its ability to handle eco-
nomic problems.
In preparation for the next party congit.I.,--
scheduled for December 1975?the entire party
membership will be closely scrutinized. Party sec-
retary Edward Babiuch told the plenum that part
of the process will involve an exchange of party
cards. Babiuch stated that the first stage of the
card exchange?which was unexpectedly an-
nounced last October?has now been completed
and that interviews with party members will begin
this fall. Although Babiuch was careful not 1-r)
mention the possibility of large-scale removals, is
emphasis on the need to stabilize party member-
ship at its current level and on bringing in more
workers leaves little doubt that undesirables will
be weeded out. The party's more nationalistic and
pro-Western intellectuals?already wary of moves
to tighten up?may regard themselves as prime
targets.
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The plenum also formalized the downfall of
Franciszek Szlachcic, until recently Gierek's num-
ber two man in the party, by removing him from
the secretariat. Szlachcic had been uncere-
moniously demoted to vice premier and dropped
from the State Council on May 29. He evidently
fell before the combined pressure of Soviet dis-
pleasure with his nationalistic approach to policy25X1
making and the dissatisfaction of his Politburo
comrades, who may have felt he was gaining too
much power and attention. The number-two slot
now appears to belong to Jan Szydlak, the party's
ideological watchdog and an economic specialist
who represents the interests of the seasoned party
bureaucracy.
Econom ic considerations are increasingly im-
portant in Gierek's planning. While many o: the
indicators are favorable, the Polish economy faces
some potentially serious problems, including
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shortages of certain products in high demand?
particularly meat?and a growing imbalance in
trade with the West. In recent months, Gierek has
brought key economic sectors under closer party
supervision. In contrast to many economic assess-
ments over the last two yaars, Prime Minister
Jaroszewicz's analysis of economic developments
at the plenum admitted fewer deficiencies and
was less apologetic about them. He may have
been reflecting a decision to take a somewhat
harder line in the face of growina dissa1isfa,.1.1on
among the people.
EASTERN EUROPE: VISIT FROM SADAT
Egyptian President Sadat's visit to Romania
and Bulgaria from June 27 to July 2 focuced on
the recent disengagement in the Middle East, the
Palestinian problem, and bilateral relations. This
is the first trip Sadat has made to any of Mos-
cow's Warsaw Pact allies.
Sadat's tnree days in Romania took place
against a backdrop of improving bilateral rela-
tions. In addition to a communique expressing
mutual satisfaction with the visit, presidents
Ceausescu and Sadat signed a "solemn declara-
tion" to the effect that all states are equal in
international relations, and another declaration
establishing a joint committee for future coop-
eration.
Ceausescu was particularly pleased to receive
Sadat. He saw the visit as an opportunity to undo
some of the bad publicity Romania has received
in the Mideast for retaining diplomatic and eco-
nomic ties with Israel. Sadat's willingness to
recognize the existence of Israel and to settle the
Middle East problem through negotiations meshes
with Ceausescu's own even-handed policy in the
area.
The Egyptian President, according to some
reports, had hoped to look into the possibility of
obtaining spare parts for military equipment sup-
plied by the Soviets. With the sharp decline in
Soviet military deliveries, the shortage of spare
parts has been causing Cairo problems. Buchamst
could also help by supplying technological aid for
Egypt's fledgling small-arms industry, although it
could not contribute much in the way of sophisti-
cated weaponry?Cairo's area of greatest need.
The Egyptian minister of wa- production was a
member of Sadat's entourage, adding to specula-
tion that military-related matters were discussed.
Bucharest granted Egypt a $100-m i:iion loan
for use in industrial and agricultural projects re-
lated to Egypt's reconstruction program. The two
sides also agreed to establish a joint committee
for cooperation, to be headed by their respective
foreign ministers.
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Lest the cordiality of his stay in maverick
Romania be misread by the Kremlin, Sadat con-
cluded his Balkan sojourn by meeting with Mos-
cow's most loyal ally, Bulgarian party boss Todor
Zhivkov. Sofia agreed to extend long-term credits
to Egypt, and Sadat joined his Bulgarian host '25X1
pledging to work toward doubling bilateral trade'
over the next two years as part of a broad effort
to intensify economic cooperation.
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OECD ECONOMIC FORECASTS
Inflation is the greatest problem facing the
major industrialized countries, according to a
forecast scheduled to be published later this
month by the Organization for Economic Coop-
eration and Development. Price increases prob-
ably will exceed 10 percent?at annual rates?in
Western Europe and Japan and 8 percent in
Canada in th,.. second half of this year. In an
effort to ease inflationary pressures, all of the
major developed countries have been pursuing
restrictive monetary and fiscal policies, which are
already facing mounting criticism.
Member countries have indicated that they
are prepared to accept lower growth rates as they
attempt to control inflation. The forecast for the
major industrial countries as a whole is for a
0.5-percent growth rate this year, cr.-npared with
6.5 percent in 1973. As long as these countries
continue to pursue restrictive policies, the fore-
cast of a mild economic recovery during the
second half of this year and acceleration in the
first half of next year appears overly optimistic.
Despite the economic slowdown that is
occurring in all major developed countries, un-
employment has increased sharply only in West
Germany. Unemployment rates in Britain,
Canada, and Italy have actually declined.
Because unemployment has been mild, gov-
ernments have been able to continue tighter
monetary and fiscal policies to deal with inflation
and rising current account deficits. As a result,
workers' real income this year has declined almost
9 percent in Japan and 6 percent in the UK and
has increased by less than 2 percent in France and
West Germany.
These restrictive policies, however, are
already facing mounting criticism because of a
fear that a simultaneous slowdown in developed
countries could lead to a worldwide recession.
The UK, for example, feels that higher oil prices
have already sharply reduced overall demand and
that continuing restrictive programs on the part
of countries with strong balance-of-payments
positions will only increase unemployment and
encourage protectionist trade policies.
Unemployment wilt almost certainly rise in
coming months because, as the slcwdown con-
tinues, firms will be reluctant to retain excess
workers. Although some governments hope to
offset declining consumer expenditures by boost-
ing exports and maintaining a high level of domes-
tic investment, this seems overly optimistic. The
slowdown in world economic growth will dampen
exports, while restictive domestic policies should
depress investment spending.
EC: DIALOGUE WITH THE ARABS
2
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The EC Nine are moving ahead with plans
for wide-ranging cooperation with the Arab
states. The French, who took over the EC pres-
idency from the West Germans on July 1, will be
taking the lead, spurred by optimistic assessments
of Arab interest.
The Nine formally approved the demarche
last month after debate in a number of meetings
over the extent to which Washington should be
consulted and kept informed. A three-man delega-
tion visited Cairo on June 18 to present the
Nine's views on the proposed dialogue with the
Arab states.
In a memorandum given to Arab League
headquarters and to the foleign ministries of the
20 members of the League, the Nine:
? Affirm the importance of the Arab wish,
expressed last December, for EC-Arab coop-
eration in all fields.
? Express hope for mutually beneficial
cooperation in such fields as industry, agricul-
ture, transport, science, and finance.
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o Propose a meeting between the EC presi-
dent and representatives of the Arab gov-
ernments.
? Affirm their readiness subsequently to
study?without delay?ways and means of co-
operation.
The French expect the Arab states to send a
delegation of foreign ministers to Paris to initiate
the dialogue with the EC presidency. The Paris
meeting could take place in late July.
Even the most optimistic observers doubt
that the joint study commissions of the experts
could begin serious work before the end of
Rarnadan in late October. In any case, the Nine
have agreed that the Arab embargo against the
Netherlands should be lifted first. The suggested
full-scale meeting of the nine EC foreign ministers
and twenty Arab foreign ministers is unlikely to
take place before 1975.
The Arab League bureaucracy, at least, is
showing considerable interest. According to a key
Quai official, Arab League Secretary General
Riyad has assembled a knowledgeable staff with
broad experience in international organization.
The Arabs have said they would like to dis-
cuss European assistance in establishing an indus-
trial base in the Arab world, a flow of European
technology, a "balanced" system of trade ex-
change, and stzibility in the value of Arab capital
investments to guard against the effects of future
monetary shocks.
The EC-Arab dialogue will providc an early
test of the US-EC consultation procedures that
were worked out this spring. Once specific areas
for cooperation are chosen, the EC Commission
will be involved in the dialogue, providing an
additional channel for keeping the US informed.
The Arabs are expected to try to take advan-
tage of the Europeans' eagerness for a dialogue to
advance the political interests of the Arab states.
2bAl
After a recent meeting with the French foreign
minister, for example, Tunisian Foreign Minister
Chatti told the press that "it is not a question for
us of a simple dialogue between petroleum sup-
pliers and factory sellers." The Arabs, he said, will
want Europe to speak clearly on questions that
affect the peace of the world.
The Europeans, in contrast, have been pub-
licly playing down the political aspects of their
developing relations with the Arab states, al-
though privately the siv- a
able importance.
a.
SI il
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IRAN-FRANCE: ECONOMIC COOPERATION
Last week's Iranian-French economic coop-
eration agreement marks the high point in the
Shah's search for Western help for his ambitious
industrialization drive. The pact identifies $4-5
billion in possible French projects in Iran in-
cluding nuclear power plants, petrochemical com-
plexes, natural gas facilities, tankers, a steel plant,
and a subway. Smaller but similar arrangements
were concluded earlier with West Germany and
Italy giving the Shah a broad package of projects
from which he can choose.
France emerged with several pluses. Polit-
ically, the deal helps restore relations that cooled
when former president Pompidou failed to attend
Iran's 2,500th anniversary celebration in October
1971. Paris received some assurance on the supply
of oil and will he aided in its balance-of-payments
problems by expanded sales to Iran as well as by
the $1 billion that the Shah agreed to supply over
three years as advance payment for Freilch
The Shah can easily afford this largesse and
probably welcomes the international exposure
providea by aiding one of Western Europe':;
industrial countries. His ambitious goal is to place
In Gn an industrial footing with Western Europe
by the end of the century.
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TURKEY: POPPY BAN LIFTED
Prime Minster Ecevit's coalition cabinet
voted on July 1 to rescind the ban on cultivation
of the opium poppy, which had been imposed by
a military-backed government three years ago.
Turkey was formerly the main source of illegal
heroin for the US market.
Poppy cultivation will now be permitted
again in the six provinces and a portion of a
seventh that comprise the principal Turkish
poppy growing area. Cultivation licenses will be
limited to a maximum of one and a quarter acres.
In 1971, the value of opium gum in four of these
provinces totaled almost $4 million, about 70
percent of total production for that yeas.
A government spokesman justified the cabi-
net's decision by citing the economic plight of the
former poppy farmers and the needs of the in-
ternational pharmaceutical industry. He said an
effective control system would be imposed to
prevent illegal trafficking in opium or the culti-
vation of c.,pium poppies in areas other than those
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designated. Experts in both the US and Turkey,
however, doubt that this can be done because of
weaknesses in the Turkish narcotics control
system.
In lifting the ban, Ankara disregarded warn-
ings that the US Congress might cut off aid.
Ankara also disregarded the counsel of senior
Turkish mili'.ary officers who feared the effect
that resumed poppy growing would have on rela-
tions with the US, especially military aid.
Prime Minister Ecevit was motivated by
domestic pressures in favor of lifting the ban.
Both parties that form the governing coalition
had promised such action during the election
campaign last October, and since then most other
major party leaders have also come out against
the ban. With new elections a distinct possibility
before long, the support of peasants in the poppy-
growing areas is important in the delicate balance
that presently exists amona parcies in
Turkey.
?
Z.NrietKRiaiA ntarifintiriVrififfirlil! raga!
. _
Turkisa poppy farm
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FEDAYEEN: BORDER RAIDS SUSPENDED
Leaders of the relatively moderate Fatah
organization announced on June 30 their decision
to freeze all operations from Lebanon and to
suspend the infiltration of terrorists into Israel
from southern Lebanon. They also promised
"closer cooperation" with the Lebanese govern-
ment. The spokesman for the guerrillas stated,
however, that operations within Israel would con-
tinue and would even be increased.
The fedayeen spokesman claimed that the
move was made "to deny Israel any pretext for
further attacks on Lebanon or occupation of
Lebanese territory." Pressure from Syria and
perhaps Egypt probably was the major factor in
the decision. Beirut very appealed to
Damascus and possibly to Cairo to urge the feda-
yeen to halt raids across the Lebanese border. The
Lebanese government has received offers of
troops and military aid from Arab states to
defend against Israel's retaliatory attacks. This has
prompted Israel to warn that it would react
strongly to the introduction into Lebanon of air
defense elements from other Arab states.
The image of the guerrillas has deteriorated
in Lebanon following a bloody clash on June 28
between two opposing factions. This probably
also figured in the decision to adopt a more
conciliatory position, although the pledge is
similar to previous promises the guerrillas have
made to the Lebanese government. Because of the
lack of discipline in the movement, such promises
have had little value and were, in fact, completely
ignored by the radical factions of the fedayeen.
The moderate leadership of the Palestine Libera-
tion Organization does not appear to have any
better control over its extremist elements now
than in the past.
Israelis Show Restraint
The Israelis, too, have moderated their tough
anti-terrorist reprisal tactics for the time being
and seem to have adopted a wait-and-see attitude.
The strident pronouncements by various lsrvli
officials and press commentators during the week
appear to have been primarily for effect, in view
25X1
of Prime Minister Rabin's statement to the press
on June 28 that the Israelis should prepare for a
long-drawn-out war against Arab guerrillas instead
of retaliating for each strike. The government did
refrain from specific raids against fedayeen camps
in Lebanon in reprisal for the guerrilla raid on
June 25 on the Israeli coastal resort of Nahariya.
In London, where he attended an inter-
national sociaiist conference, Rabin told the press
Israelis string barricade
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that Israel would concentrate on three ways of
trying to stop the terrorists:
O Sealing off the approximately 60-
mile-long border with Lebanon.
* Finding and stopping the guerrillas 132-
fore they each Israel.
? Pressing Lebanon to crack down on the
fedayeen and prevent them from launching
raids.
Israel clearly intends to retain the option of
retaliatory strikes. Last week, Chief of Staff Gur
told reporters that Israel has not abandoned plans
for crossborder operations against the fedayeen.
He warned that Israel has "new" types of opera-
tions that will be used as necessary.
In the wake of the three days of heavy
retaliatory air raids on fedayeen bases in Lebanon
a week ago, Tel Aviv also moved to brighten its
somewhat tarnished image abroad. Deputy Prime
Minister and Foreign Minister Allon recently
briefed ambassadors from Latin American and
European Common Market countries on Israel's
anti-terrorist policy. He explained that the retalia-
tory raids were onfy a part of the anti-guerrilla
campaign, which also included strengthening the
country's passive security measures and seeking a
dialogue with moderate Palestinians, albeit within
the context of talks with the Jordanian govern-
ment.
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SYRIA-USSR
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Military Aid Brisk
Damascus continues to be the focal point of
Moscow's military aid diplomacy in the Middle
East and has received arms shipments valued at
almost $200 million since the beginning of the
year. This volume accounted for about one half
of the USSR's arms shipments to the Third World
during this period.
Jet aircraft deliveries?which included 37
MIG-21s and 21 SU-7s, as well as the 35 MIG-
23s?made up the largest share of the total. Syria
also has received 300 medium tanks, large num-
bers of armored personnel carriers, a low-altitude
surface-to-air missile system similar to the SA-7,
Frog-7 rockets, and three patrol boats.
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Most of the Soviet military equipment de-
livered this year was ordered under the $500-mil-
lion accord signed during the October war. Syria
concluded another major arms agreement during
President Asad's visit to Moscow in April. Details
of this accord are not yet available, but it prob-
ably covers additional equipment needed for con-
tinued expansion and modernization of Syria's air
defenses and ground forces. In early June, Syria
also contracted to buy five MI-8 helicopters from
the USSR.1
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PORTUGUESE AFRICA: GROVVING UNEASE
General Spinola's provisional government is
encountering increasing difficulty maintaining its
authority in the African territories as progress
toward agreements with the black insurgent
movements remains stalled. Political and military
uneasiness is becoming more prcnounced, es-
pecially in Mozambique and Angola, and Lisbon's
problems are becoming more complex as time
passes.
Labor unrest continues to be a major prob-
lem, particularly in Mozambique. New governors-
general were installed in both of the southern
African territories two weeks ago. If they fail to
take action that seems to offer promise of revers-
ing the serious economic downturns of recent
months, public ar.xiety?particularly among white
settlers?will increase.
The governors must also deal with the situa-
tion?new to both Mozambique and Angola?
created by the precipitate growth of political
organizations that either favor or oppose the in-
surgents. in Mozambique, the political scene has
been marred recently by oc..asional violence
involving members of competing groups. On June
23, a leading spokesman for the Mozambique
Democrats?an organization of prominent liberal
white lawyers and journalists who support the
rebel Front for the Liberation of Mozambique?
narrowly survived an assassirrtion attempt that
was probably made by whites hostile to the
Front. The Democrats have made clear their sup-
port for the Front's opposition to Spinola's ref-
erendum policy.
In Angola, such acts of violence have not yet
occurred, although there have been minor clashes
between black and white groups. Political organi-
zations have emerged more slowly in Angola than
in Mozambique, prima,' iiecause the insurgents
there are ineffectual anu most Angolans do not
know whom to support or oppose. One group
that has emerged, the "Secret Organization of
Angola," is threatening reprisals against whites
who attempt to leave the territory.
25X1
In the military sphere, Lisbon's policy
switch since the coup has undercut the Portu-
guese soldier's willingness to continue fighting in
any of the territories. Outright fraternization
between Portuguese troops and rebels has been
taking place in Portuguese Guinea?an outgrowth
of an informal cease-fire that has existed since the
two sides opened political negotiations in May.
Although the talks were suspended last month
and no date for their resumption has been an-
nounced, it seems unlikely that serious fighting
will start up again in the territory.
The rebels in Mozambique, on the other
hand, are behaving q,:ite differently. They have
continued to attack transportation routes in the
north near the Malawi border and have main-
tained their southward infiltration into ai eas with
large white settler populations. These infiltrators
have avoided military clashes, however, and
Ps>miese Africa
(\,
Cop?
? ?
Vordo
!!!londs
Portugutder<
Guinea
Cobinde-)r:'
?_-
Angola
it1130111. A
,Irotambique
556115 ' I
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appear intent on establishing themselves in favor-
able positions should they feel constrained to
increase military pressure. Talks between Lisbon
and the insurgent Front for the Libcration of
Mozambique are scheduled zo get under way in
earnest on July 15 in Lusaka, Zambia.
In Angola, the level of insurgency has been
very low for more than two years and is not likely
to increase significantly in the near future. One of
the three rebel groups operating in the territory
has agreed to a cease-fire and reportedly is hold-
ing secret talks with Portuguese officials about
assuming an open political role, which is Lisbon's
goal in all its negotiations with rebel groups. The
two remainin. arou s have not et
future policy.
25X1
CYPRUS-GREECE: TEST OF WILLS
President Makarios is pressing his campaign
against the Greek-officered Cypriot National
Guard, which provides Athens with an important
instrument of influence on the island. Antici-
pating increasingly tense relations and a possible
major confrontation with Greek leader loanni-lis,
Archbishop Makarios
Makarios is moving at the same time to strengthen
his position in other ways.
The Cypriot government announced on July
1 a reduction of the term of service for guards-
men from 2 years to 14 months, a change that
will, when implemented, cut the 12,000-man
force about in half. Makarios reportedly intends
to follow up this week with a letter to Greek
President Gizikis requesting that the present
contingent of some 800 Greek officers now in the
Guard be cut back to no more than 50, and that
these serve only as instructors. The Greek officers
would thus lose the command role they have held
since the Guard was established ten years ago.
Makarios has told his advisers that, in the letter,
he will claim he now has proof to back up his
charges about collusion between Greek Guard
officers and the Cypriot terrorist organization
that favors the union of Cyprus with Greece.
loannidis' nationalistic junta is hardly likely
to accede to Makarios' request. Last month,
Athens rejected moves by the Cypriot leader to
gain effective control over the selection of Greek
Cypriot cadets for the Guard and to secure the
dismissal of 57 anti-Makarios cadets now in train-
ing. Makarios told his advisers that if the Greek
government ignores his latest request, he is pre-
pared to take his case to the UN and to call
directly for US and Soviet assistance.
Although Makarios professes to believe that
Athens will not try to overthrow him, he is
clearly aware that his moves against the Guard are
increasing loannidis' hostility. In an effort to
reduce the new risks he is running, the Cypriot
President reported!y plans to purge unreliable
elements from the police service and to add 200
men to its tactical reserve unit, which is the only
force directly responsive to his command. This
week, in another apparent attempt to strengthen
his position, Makarios' government announced
the dismissal of a substantial number of school
teach,:rs. Although no reason was given except
the "public interest," the teachers were appar-
ently considered disloyal to the President.
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ETHIOPIA: ARRESTING THE OLD GUARD
By arresting some of the highest ranking
members of the nobility this week, those ele-
ments of the military that advocate political and
social change have reasserted their control over
events and have ended any immediate threat from
their conservative opponents. Those detained in-
clude many of Emperor Haile Selassie's closest
associates, but the moderates who led the move
want Haile Selassie to remain as emperor and are
still reluctant to assume the burdens of a military
regime.
Military units in Addis Ababa began the ar-
rests on June 29, and by July 3 had taken into
custody about 15 of the more prominent mem-
bers of Ethiopia's once powerful elite. Many
lower ranking officials are reported to be under
house arrest. Ras Asrate Kassa, perhaps the
Emperor's closest political adviser, was one of the
first to be detained. His submission without resist-
ance symbolized the apparent realization by most
of the noblemen that they had lost the ability to
control events.
The arrests, which so far have provoked no
strong reaction, have been limited to the capital
area. The military apparently has no plans to
detain members of the provincial elite, who still
have their own power bases.
The younger officers and enlisted men who
instigated the military revolt last February have
been concerned for some time that the aristo-
crats, led by Ras Asrate, were attempting to
impede or even reverse the changes set in motion
by the revolt. They believed that the conserva-
tives were largely responsible for the cabinet's
slow progress in investigating corrupt officials and
in implementing the promised new policies
designed to create a more: modern ad democratic
society. The military was especially concerned
over the conservatives' recent success in increasing
their influence at the expense of the loosely
organized moderate forces.
The military was provoked into action when
eight members of parliament attempted on June
25)0
26 to bring about the releise of 25 former of-
ficials arrested by the army in April on corruption
charges. This demand was the last straw for the
troops in Addis Ababa, who were already angry
over the inactivity of a special inquiry commis-
sion set up to deal with corruption. The troops
also resented government foot-dragging on de-
mands for back pay by Congo and Korean war
veterans.
The army units on June 28 took control of
Addis Ababa. A coordinating committee repre-
senting all branches of the armed forces and the
police was established to direct activities in the
capital, and a list of those to be arrested /as
quickly prepared. The moderates on the commit-
tee managed to keep in check the more radical
military officers and enlisted men who want to
abolish the monarchy and set up a military gov-
ernment.
The military continues to proclz;in its sup-
port of the present government headed by Prime
Minister Endalkatchew. In fact, the coordinating
committee announced that it had ordered the
detention of the noblemen because they were
attempting to obstruct the smooth functioning of
the cabinet. The military, however, clearly in-
tends to piay a more direct role in speeding the
restructuring of Ethiopian Fristitu Lions. Although
critical of the slow pace of change, the military is
still trying to work through a government that has
been unable to establish its own authority during
four months in office, and the resignation or
reshuffle of some of the ministers might yet be
demanded.
The cabinet has held emergency sessions, but
for the most part has been impotent during the
present crisis. Endalkatchew has appointed a four-
man ministerial committee to establish a more
direct line of communication with the troops, and
the committee has already met several times with
military representatives.
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Weaknesses within thE military are still ap-
parent. The tenuous unity demonstrated by the
security forces in Addis Ababa may dissolve once
the wave of arrests is over. The coordinating com-
mittee, like similar ad hoc committees formed in
the past several months, has had some quick suc-
cesses, but it has yet to prove it can provide
durable, cohesive leadership and long-range
planning. Many units have communicated their
support for the arrests, and representatives from
army units and security services outside Addis
AL -,a have arrived in the capital to consult with
the committee. Key commands remain jealous of
their cvvn P.uthority, however, and decisions will
probably continue to be made through the
cumbersome cons' iltative process for some
time.
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CAMBODIA: A GOOD MILITARY SHOWING
The Cambodian army continues to fare well
in heavy fighting northwest of Phnom Penh. In
reopening Route 5 this week between the capital
and the recently recaptured town of Kompong
Luong, government troops reportedly inflicted
heavy losses on several Khmer Communist units.
Other government forces at the nearby base at
Lovek repulsed renewed insurgent ground attacks.
If the government can maintain its positions
on this front, it will have taken a major step
toward restoring the flow of agricultural goods
down the Tonle Sap River to Phnom Penh. The
Communists still have substantial numbers of
troops in the northwest, however, and probably
will again go on the attack there once they have
overcome their coordination problems and supply
shortages.
Government units have also made some
progress on the Route 4 front southwest of
Kompong Speu City, where they have relieved a
long-isolated garrison and cut an important Com-
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mt.nist supply route running across the highway.
Farther down the highway, however, insnrgent
units are keeping steady pressure on another gov-
ernment garrison and at midweek moved within
mortar range of the air base at Ream. Subsequent
shellings damaged four aircraft, but the airfield
remained open.
rommunist gunners along the Mekong River
southeast of Phnom Penh scored their bijgest
success of the year on June 29 when they smik a
freighter from a Mekong River resupply convoy
en route to the capital from South Vietnam; the
rest of the 19-ship convoy made it saf.:ly to
Phnom Penh. Although the shelling of river con-
voys has increased in the past few weeks, seasonal
flooding will soon begin forcing the insur ents
back from their favef i+P ambush citps
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CAMBODIA ? )2
5
Successful government clef
Lovek
Kumponr, Luo
Government
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Kompeng
Speu
Kompong Thom
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55611'
.nvAir
74 GI+,
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LAOS: A POLITICAL BOMBSHELL
After three months on the defensive, the
divided and demoralized non-Communist side in
the Lao coalition has recently begun to pull itself
together and show some signs of political momen-
tum. This could be disrupted, however, if Prime
Minister Souvanna goes ahead with a move he is
considering to convert the coalition government's
Joint National Political Council into a legislative
assembly. This action would entail the formal
abolition of the National Assembly and would
significantly enhance th 3 authority and prestige
of the advisory and consultative council domi-
nated by Pathet Lao leader Sou phanouvong. 25X1
Sou-
vanna sJyfaced this proposal?which he claimed
originated with the King?before a recent infor-
mal gathering of non-Communist cabinet minis-
ters. Souvanna rep, rtedly told the ministers that
the King wanted to explore the idea of dissolving
the presently dormant assembly and expanding
the Political Council membership from 42 to 60,
thus making it equivalent in size to the former
assembly. The 18 additional members would be
appointed by the King and, like the council's
original 42 members, would be evenly divided
between the two sides.
The Prime Minister indicated that he already
had the blessings of Pathet Lao Deputy Premier
Phoumi Vongvichit for the proposal and that he
intends to seek cabinet approval before the King
goes abroad in September.
Souvanna's motivations in offering to trans-
form the Political Council into a legislature, some-
thing the Pathet Lao themselves have always had
uppermost in mind, are not entirely clear. The
Prime Minister's move seems particularly con-
fusing when weighed against the background of
his recent public statements attempting to down-
grade the power and authority of the council.
By floating his proposal, Souvanna may be
attempting to placate Communist officials who
have become increasingly frustrated by the re-
sistance of non-Communist cabinet ministers to
several of their key policy proposals. Through
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National Assembly buildit g
New home for Council
skillful use of delaying tactics and other parlia-
mentary maneuvers, the non-Communists have
managed to block cabinet approval of compre-
hensive Pathet Lao national political and eco-
nomic programs as well as Communist demands
for recognition of the Viet Cong's Provisional
Revolutionary Government.
As a measure of growing Pathet Lao frus-
tration, Phoumi Vongvichit recently threatened
that the Communists would withdraw from the
coalition if the cabinet refused to take favorable
action on the recognition question. Although
such a move by the Communists seems most
unlikely, Souvanna is knovvri to be deeply dis-
turbed over the divisive and deleterious effect the
recognition issue and other controversial Commu-
rist proposals are having on the coalition.
The Prime Minister may have considerable
ditl iculty selling his proposal for a new legislative
assembly to the non-Communist side. Although
the present assembly is no longer functioning, its
legally elected representatives still retain political
influence among their provincial constituencies
and provide the non-Communists with much-
needed grass roots support. Cabinet ministers in
attendance at the meeting where Souvanna un-
veiled his proposal displayed little enthusiasm for
it, and influential non-Communist hard liners like
Defense Minister Sisouk na Champassak and
Finance Minister Nlgon Sananikone will
certainly attempt to prevent its Dassac7
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JAPAN: ELECTION COMING UP
Japan, the only nation in East Asia where
elections still mean something, will go to the polls
on Sunday, July 7, to elect half the membership
of the Diet's upper house, the House of Coun-
cillors. Prime Minister Tanaka's Liberal Demo-
cratic Party is likely to keep its majority, which
should strengthen his personal position as well.
While the lower house, where the Liberal
Democrats command a solid majority, is clearly
dominant in the bicameral Diet. a majority in the
upper house will ensure Liberal Democratic con-
trol of the entire Japanesc legislative process. The
ruling party will probably come out of the elec-
tion with about the same number of seats as at
present-135 out of 252.
Foreign policy and national security have
not been important campaign issues. The prin-
cipal opposition issue has been the nation's eco-
nomic difficulties, particularly the high cost of
living and big-business profiteering during the oil
crisis last winter. The opposition has been unable
to exploit this issue effectively, in part because it
offers no credible alternative policy, and in part
because the inflationary spiral has slowed some-
what in recent months while workers have re-
ceived large wage boosts.
The Liberal Democrat; have been mod-
erately successful in putting (he left on the defen-
sive with diversionary issues such as proposing
various educational, electoral, and parliamentary
reforms. The most important reason for the
..MENNENEEr
Tanaka campaigning
Liberal Democrats' bright prospect on July 7 is
the failure of the four opposition parties to coop-
erate against it, particularly in the selection dnd
support of local candidates. Efforts at opposition
cooperation have foundered on three main fac-
tors: ideological differences; practical concerns
over possible damage to local party organizations;
and tho belief of the well organized Communists
that they are better off on their own.
The outlook for the Communists is indeed
much better than for the Socialists or for either
of the centrist parties?the Democratic Socialists
and the Buddhist-oriented Komeito. The Commu-
nists are expected to continue their upward par-
liamentary surge of recent years, probably at the
expense of the Socialists and Democratic Social-
ists; Komeito may hold its own.
Tanaka himself will probably be the big
winner on Sunday. The Prime Minister has spent
an unprecedented amount of money in this cam-
paign?astimates run as high as $90 million?in
order to do two things: recruit as many successful
candidates as possible to his party faction; run up
the largest possible popular vote for the party
generally. In the first instance, he is trying to
ensure re-election as pan.; president?and prime
minister?at the party convention next summer.
In the second, he seeks to reverse a persistent
downward trend in the conservatives' share of the
popular vote; it was 47 percent in the 1972 gen-
eral election.
In any case, it is becoming evident that
Tanaka, once looked upon as a stop-gap premier,
may be around for quite a while, perhaps until
1978 when his next party presidential term
expires.
Not unexpectedly, Tanaka's sometimes ham-
handed campaign effort, especially the buying of
candidates in rival factions, has generated strong
resentment among other top conservative leaders.
Most disturbed are Finance Minister Fukuda and
Deputy Prime Minister Miki, both of whom see
their fading ambitions for the prime ministry be-
ing obliterated. There are few weapons available
to either at this point, however, or iu the several
other Tanaka rivals presently in the cabinet or the
party hierarchy.
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CHILE: JUNTA PRESIDENCY STRENGTHENED
A governmental reorganization decree issued
last week stopped short of formally designating
iunta president Pinochet as president of the
republic, but it vested broad executive powers in
the junta presidency and named the incumbent
"supreme chief of the nation."
Pinochet's elevation appears to have been
designed primarily to streamline a cumbersome
decision-making system. Issuance of the detailed
"statute of the governing junta" not only reflects
the determination of the armed forces to retain
power until their goals are achieved, but also
shows their concern with establishing a moral and
legal basis for military rule.
Under the statute, the four junta members,
including Pinochet, remain in command of their
respective militaiy or police se i ;ices. The statiite
sets out elaborate formulas for the temporary and
permanent filling of vacancies on the junta and
for the assignment of seniority to new members.
A key provision stipulates that permanent re-
placements?who are to be named by the remain-
ing junta msmbers?become last in line cf succes-
sion to the presidency.
The reorganization formalizes Pinochet's
gradual rise to de facto primacy among the junta
Pinochet
members, but does not suddenly bring one-man
rule to Chile. The decree carefully hedges Pino-
chet's new prerogatives. Legislative power, for
example, remains Lae "exclusive domain" of the
junta, as does the right to act on the budget,
taxes, wages, and other specified matters. The
junta president is to exercise various powers with
the "cooperat..i,': "ncord," or "advice" of the
junta, and the junia's decisions must be
unanimous.
How much real power eventually will accrue
to the junta presidency probably will depend in
large part on the personalities of current and
future junta members. Pinochet seems to be
acutely sensitive to the importance of maintaining
armed forces unity, and he will feel out the new
levers of power cautiously. Sudden shifts in the
military government's policies or style are thus
unlikely.
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VENEZUELA: ONE HUNDRED DAYS PLUS
After little more than three months in of-
fice, President Carlos Andres Perez is well on the
way to becoming his country's strongest and most
popular leader since Romulo Betancourt's admin-
istration ended more than a decade ago.
Congress, controlled by the President's
Democratic Action Party, has apprcvee a bill
granting Perez sweeping emerg-xcy powers to
cany out the broadly populist and nationalistic
economic program that he proposed in an address
to the nation in April. In addition to plans to
nationalize the US-dominated iron ore industry,
of greatest domestic interest was a series of pro-
grams aimed at a more equitable distribi.tion of
the nation's income through such popular meas-
ures as new minimum wage levels, across-the-
board wage increases, unemployment insurance,
prudent management of windfall revenues om
petroleum, remission of farm debts, and revital-
ization of the depressed agricultural sectors. All
of these were major themes in the Democratic
Action Party's election campaign.
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A major economic problem facing the new
administration is spiraling inflation, which has
resulted in recent substantial price increases for
food in spite of price controis, and in severe
shortages of some substitute commodities. In an
effort to control speculators, the administration is
continuing its policy of closing down briefly
those businesses that are found to be violating
price controls. In a press conference on June 27
in which Perez reaffirmed his intention to con-
tinue his economic program despite opposition
from conservative business leaders, he also prom-
ised that his administration would not yield in its
efforts to guarantee to the lower income groups
assured access tc the "necessities of life."
Although the conservative business sector
has been critical of Perez' populist economic
measures, there is no evidence that they wish a
confrontation. Representatives of the business-
oriented Federation of Chambers of Commerce
Ere negotiating with government officials to
modify some of the pi?onosa:s that impinge on
their business practices. Perez warned them on
June 27, however, that they must take a more
flexible stand to permit a better distribution of
the national wealth or the country could ex-
perience a period of leftist or rightist violence.
With his bold moves, Perez has solidified his
leadership, won wide popular support, and out-
maneuvered political opponents who had charged
that he was a favorite candidate of business and
the foreign oil companies. Stunned and off
balance, his opponents have hastened to state
publicly that they agree thoroughly with the sub-
stance of the President's proposals. Much of the
pre-electoral opposition is now backing him; the
rest is hopelessly disorganized.
Leaders of the opposition Social Christian
party of former president Caldera admit privately
the: Perez' political strength is so substantial that
congress will pass almost any legislation he wants.
Some Social Christian regional offices in the
countryside are reportedly either abandoned or
inactive. Others copy the party's central commit-
tee line and back some of the Perez measures
while condemning his call for special decree
powers, but these efforts are dispirited and largely
ignored by the general populace. The Marxist
Movement Toward Socialism and the leftist
Electoral Movement of the People, parties that
were considered possible foci of opposition to the
new administration, have rAmost disappeared in
areas where, before the election, they seemed
strong.
Taking advantage of Perez' dominance of the
country, Venezuelan officials are engaged in
intensive discussions with US iron and petroleum
company representatives regarding the govern-
ment's plans to nationalize their concessions. The
US representatives admit that tough bargaining is
ahead but are increasingly confident they will be
able to work out satisfactory arrangements with
the Perez government.
Although preoccupied primarily with eco-
nomic and social programs, Perez is giving in-
creasing attention to foreign policy initiatives,
carrying forward the momentum ,begun by his
predecessor, and developing the country's chosen
role as a leader in hemispheric affairs. Perez has
formally proposed that a summit meeting of all
Latin chiefs of state be held next year to consider
matters of common interest including the "com-
plete liberation of the Latin American people."
He has already announced plans to put half the
country's surplus oil revenues into an external
investment fund that will be used to finance proj-
ects in other Latin American countries through
multilateral organizations.
Further, Caracas is now playing h?Jst to the
150-nation Law of the Sea Conference, and Perez
himself is expected to play a major role in
winning support for the country's claim to a
;?,0-nautical-mile territorial sea.
The unusually cordial reception given
".;uyana's Foreign Mister Ramp!..:al last week?
which included a long meeting with President
Perez and promises of economic assistance?and
reports from Caracas that Colombia and Vene-
zuela are nearing agreement on a long-standing
border dispute indicate that one of the major
goals of the new administration is the settlement
of boundar dis utes with
I- Ii,.
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