WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080002-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 28
• Document Creation Date: December 27, 2016
• Document Release Date: May 10, 2010
• Sequence Number: 2
• Publication Date: January 10, 1975
• Content Type: REPORT

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Too Secret
meekly Review
Top Secret
January 10, 1975
Copy N2 649
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The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It
frequently includes material coordinated with or prepared by
the Office of Economic Research, the Office of Strategic
Research, and the Directorate of Science and Technology.
Topics requirng more comprehensive treatment and therefore
published separately as Special Reports are listed in the
contents.
CONTENTS (January 10, 197.5)
MIDDLE EAST
AFRICA
1 The Soviet Union
3 Venezuela Protests US Trade Law
4 Mexico: The OPEC Question
5 Egypt: Moving Against Protesters
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6 Portugal: USSR; Socialists; Economy
8 EC Prepares for Trade Talks
11 US-USSR: Defense Costs Compared
14 USSR: Naval Aviation Improvements
16
Arab States: Meeting in Cairo
17
Syria-Lebanon: Promising Support
18
Israel: More Guided-Missile Boats
19
Ethiopia: Concessions on Eritrea
19
Angola: Getting Together
EAST ASIA
PACIFIC
21
Cambodia: Fighting Around Phnom Penh
22
Vietnam: Saigon Suffers Setback
23
China: Keeping Missiles Mobile
WESTERN
HEMISPHERE
24
Argentina: Elevating Lopez Rega
24
Latin America: Seeking New Alliances
25
Bolivia: Looking Westward
Comments and queries on the contents of this 25X1
publication are welcome. TI y may
the editor of the Weekly F ?vlew.
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The Soviet Union
BREZHNEV'S POLITICAL HEALTH
Soviet authorities are making a concerted
effort to dispel rumors circulating in Moscow
about political differences within the Soviet lead-
ership. On January 8, Tass strongly denied an
article in Le Monde speculating along these lines.
Tass also reported that Brezhnev, who has been
periodically hospitalized over the past two weeks,
attended the lying-in-state of his mother. The
report did not specifically note that he attended
the funeral, although his car was seen at the
cemetery.
The rumors followed a period in which some
of Brezhnev's programs and initiatives struck
snags, and there was much speculation about the
nature of the General Secretary's illness. There is
,to sign, however, that the essential elements of
his policies or authority are under attack. Among
the policy snags was the postponement of Brezh-
nev's highly touted visit to Egypt. His health
problems clearly played a part in the decisic,,: to
put off the trip, but it is also likely that Moscow
had been unable to gain Cairo's agreement on
political questions, particularly those related to
the Soviet role in Middle East peace negotiations.
In addition to his problems with the Egyp-
tians, difficulties surfaced last month regarding
Brezhnev's twin programs of consumer welfare
and detente-particularly, economic relations
with the US. A plenary meeting of the party
Central Committee opened and closed on Decem-
ber 16, leaving an unusual one-day gap before the
USSR Supreme Soviet session convened on
December 18. A two-day plenum may have been
planned and then, for unknown reasors, cut
short. Brezhnev spoke on domestic and toreign
policy at the plenum.
The Central Committee and the Supreme
Soviet approved the economic plan for 1975,
specifying that producer goods industries would
grow at a higher rate than would consumer goods
industries. This scheme reverses the rates of
growth set forth in the 1971-75 plan. Those rates
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were linked, at least in propaganda, with Brezh-
nev's promise to improve living standards, which
was called the "main task" of this and future
five-year plans.
Two days after the plenum, Moscow pub-
lished Foreign Minister Gromyko's letter of Octo-
ber 26 to Secretary Kissinger and a Tass state-
ment, both of which denied that the USSR had
agreed to foreign demands on emigration in
connection with US foreign trade legislation.
Soviet media have also turned from euphoric
treatment of the recent US-USSR summit to criti-
cism of US trade restrictions and to hints of
negative consequences for relations with the US.
Some of these developments were beyond
Brezhnev's control, but they do constitute set-
backs to policies closely associated with him. Fur-
thermore, the policies affected are among those
that have always been viewed skeptically by at
least some members of Soviet officialdom.
Thus far, Brezhnev's authority does not
appear to be impaired nor does there seem to
have been any shift in Soviet policy. Despite the
efforts to put down the rumors of trouble within
the leadership, however, there are many un-
knowns in the present equation. If Brezhnev is
unable to return to work soon and to demon-
strate that he retains the initiative in policy
matters, his political position would almost cer-
tainly be weakened.
The Soviet media have taken a harsher view
of the US as the after-glow of Vladivostok has
given way to more frequent and explicit criticism
on a wide range of issues. There is no evidence,
however, that the Soviet commitment to detente
has changed. Moscow is expressing pique and
frustration over specific foreign policy disappoint-
ments, particularly recent US trade legislation. In
addition, the Soviets have been unwilling to forgo
the propaganda opportunities offered by Western
economic and political difficulties. With Soviet
doubts about the Ford administration allayed by
the November summit and with the trade reform
bill now on the books, Moscow may believe it has
a freer hand to criticize the US. The leadership
may have an interest in taking a tougher line
toward the US to show any present or potential
domestic critics that it has not been unduly solic-
itous of the US.
The Soviets have yet to take an official pub-
lic stand on the US trade reform act that links
most-favored-nation status with Soviet emigration
and on Export-Import Bank legislation limiting
credits to the USSR, but press reaction has been
negative. Privately, USA Institute director
Arbatov has cl:,imed that Western publicity on
the emigration issue ha, aroused "strong emo-
tion in the leadership. Attributing the congres-
sional action to a minority of cold-war advocates
and Zionists, Soviet media have repeated reserva-
tions expressed by President Ford and Secretary
Kissinger about both bills.
Moscow has refrained from mentioning
specific plans for retaliation, but has endeavored
to portray the US as the ultimate loser, hinting
that the Soviets can always take their business
elsewhere. Some of this is bluff, and Deputy
Foreign Trade Minister Alkhimov has told an
American businessman that he is optimistic about
the future of US-Soviet economic ties.
Nevertheless, Soviet diappointment with the
provisions of the trade bill has carried over to its
treatment of the US on other issues. Soviet media
have fanned speculation that the US is preparing
for military action in the Middle East; they have
reacted with obvious relish to allegations of CIA
misdeeds; and they have commented at length on
the troubles of Western economies.
The Soviets have endeavored to keep these
harsh notes from jeopardizing more fundamenta25X1
interests. They have consistently hewed to thei,
standard line on the necessity for US-Soviet
detente and the importance of the arms limitation
goals agreed on at Vladivostok.
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Venezuela Protests US Trade Law
The US trade reform bill signed into legisla-
tion last week has provoked sharp opposition
from business and political leaders in Venezuela
and has brought the Perez administration into its
first major confrontation with the US since it
came to power nine month, -igo.
Both Caracas and Quito have called for a
special session of the Organization of American
States to discuss what Perez charges is a "clear act
of economic aggression and political pressure." In
a letter on January 4 to Ecuadorean President
Rodriguez, Perez pointedly expressed support for
the recent statement of Ecuador's foreign minis-
ter concerning his country's intention not to at-
tend the meeting of foreign ministers in Buenos
Aires in late March because of the trade act.
Later, in a news conference, Foreign Minister
Schacht told reporters that Venezuela is also
inclined not to attend the Buenos Aires meeting.
The call for OAS action by Venezuela and
Ecuador caps several weeks of angry reaction-
particularly in Venezuela-to those provisions of
the trade act that would deny US tariff prefer-
ences to members of cartels that, in effect, with-
hold supplies of vital raw materials from the
world market. Perez believes that such provisions
are aimed specifically at his country, not only
because of its membership in OPEC but also
because of its well-publicized efforts to work out
a new economic relationship between producers
and consumers that would improve the terms for
exporters of raw materials or commodities.
In his New Year's Day address to the nation,
Perez criticized the US for actions that "create a
climate of confrontation." Later, he raised the
intensity of the verbal attacks a few notches by
calling into question the sincerity of recent US
efforts to open a new dialogue with Latin Amer-
ica, charging the US with discriminating against
Venezuela. Perez apparently also intends to carry
the issue of the trade act to other forums besides
the OAS. OPEC finance, petroleum, and foreign
ministers will meet in Algiers on January 24 to
discuss world economic strategy, and Venezuelan
delegates i;itend to raise the trade act. In addi-
tion, Pres;dent Perez has asked Ecuador's support
in raising the issue of US economic aggression at
the next meeting of the UN's Inter-American
Economic and Social Council in February. The
Venezuelans may try to argue that the recently
enacted legislation violates the UN's Charter of
Economic Rights and Duties of States.
Venezuela's primary tactic is to seek a
united position of Latin American countries in
the OAS opposing the law as contrary to the
interests of all Latin American countries-not just
Venezuela and Ecuador, the two countries most
directly affected. At the same time, Perez is
trying to further his position as leader in the
hemisphere, a role that he disclaims for himself
but that-privately-many Venezuelans support.
Perez is an astute observer of public opinion and
has been successful in measuring the feelings of
Venezuelans on international and domestic issues.
His charge that the US is insensitive to his coun-
try's call for a new economic relationship
between producers and consumers of raw ma-
terials reflects the view of most of his coun-
trymen. He has received support across the politi-
cal spectrum in Venezuela for his efforts to bring
the country forward as a major power as well as
for recent steps toward eliminating foreign
control over the country's raw materials. These
latest moves will further enhance his popular
s'ipport.
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Perez is in an emotional frame of mind,
which is being reflected in his reaction to the
most-favored-nation trade agreement with the US
could be Perez' next target, if the new legislation
is applied to Venezuela.
In the meantime, the strong reaction to the
trade law is expected to gather further mo-
mentum as the Venezuelan congress, political
parties, and other institutions add their voices to
those of President Perez, Foreign Minister
Schacht, and other government officials, who ap-
1Vlexico: The OPEC Question
The question of whether Mexico should seek
membership in the Organization of Petroleum
Exporting Countries was resolved last week by
the firing of Horacic Flores de la Pena, the cabi-
net minister who handled government policy on
oil and other natural resources. Flores was re-
moved from his job as secretary of national
properties, apparently becaus' he had, among
other things, pushed too hard publicly for full
Mexican membership in OPEC at a time when
President Echeverria evidently thought it wiser to
adopt a go-slow approach.
Flores' stand on the OPEC issue and his
frequent misleading statements on oil export
policy were apparently not the only factors that
led to his swift departure. Echeverria reportedly
had grown increasingly impatient with Flores' pri-
vate impertinences and his imprudent public out-
bursts against "imperialistic" multinational com-
panies and other "forms of colonialism." Eche-
verria, a teetotaler, apparently was also distrustful
of Flores because of his worsening drinking
problem.
Flores' replacement, Francisco Javier Alejo,
set the record straight in his first public statement
in his new job, saying that Mexico should consult
with OPEC but not become a member. Indeed,
according to the US embassy, the decision to
shun OPEC membership does not mean that
Mexico will not collaborate with OPEC countries
where possible on matters of common interest
nor that Mexico will abandon its policy of selling
at OPEC prices. Rather, Mexico will continue to
set top prices for its oil, both to increase much-
needed revenues and to justify remain:ng outside
the organization.
Echeverria doubtless (.hose a cautious course
toward OPEC in part because of the anti-cartel
provision in the recently enacted US Trade Re-
form Act. Under this bill, OPEC membership
means exclusion from preferential trade treat-
ment. Although the trade bill has been harshly
criticized by the Mexican press, the government
nevertheless believes it offers some advantages.
Mexico, for example, wants to be designated a
beneficiary developing country eligible for the
generalized system of tariff preferences as pro-
vided in the bill. Even more important, it is look-
ing forward to the opportunity offered by the bill
to negotiate LIS tariff and non-tariff barriers,
which the Mexicans have long regarded as re-
straints on trade with the US. Mexico insists that
it must improve its trade position in order to
maintain a high rate of economic development.
Officials are optimistic that the US trade law will
offer new opportunities to increase Mexico's
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Egypt: Moiling Against Protesters
Government authorities have responded to
the labor demonstrations in Cairo last week with
a combination of punitive moves against sus-
pected agitators and measures to help ease legiti-
mate economic grievances. The crackdown will
remove from the scene many protesters prone to
violence, but the measures intended to satisfy
disgruntled consumers fall short of what is re-
quired.
On New Year's Day, laborers from Hulwan,
an industrial city south of the capital, tied up
downtown Cairo with a violent demonstration
against shortages of consumer goods, high prices,
and low w.,ges. Students joined the protesters,
swelling their ranks to over 2,000. For the next
several days stud !nts at Cairo's two universities
held campL:s rallies in sympathy with the laborers.
The government apparently first believed the
demonstration was spontaneous, but subsequent
indications have pointed to leftist influence. Ele-
ments from Egypt's small but recently resurgent
Communist Party, as well as radical leftist youth,
have for some time been attempting to stir up
trouble, particular ly among students. Government
authorities believe these activists had begun to
operate with relative impunity in the expectation
that the government would not interfere while
the visit of Soviet party chief Brezhnev was still
pending.
According to one official, the government
had not intended to move against leftist elements
until after Brezhnev's departure, but `.he post-
ponement of that visit and the demonstrations
last week led Cairo to crack down. At least 200
and possibly as many as 400 Communist Party
members and other leftist activists have been ar-
rested. The government also has issued stern
warnings against future disturbances.
Meanwhile, the government is attempting to
respond to popular grievances. The cabinet this
week announced a decision, actually reached be-
fore the demonstration, to allocate additional
funds for the immediate import of consumer
goods. The government has also promised to re-
view the draft of an unpopular labor reform bill.
Police fire tear gas on demonstrators
These measures will not satisfy basic con-
sumer demands as the country's modest re-
sources, limited port capacities, and inadequate
internal distribution system preclude any early
increase in consumer goods. Popular discontent is
thus likely 'o continue for some time. This could
stimulate further disturbances over political and
economic issues, despite government moves to
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PORTUGAL
RELATIONS WITH THE USSR
Portuguese Foreign Minister Soares' trip to
the USSR early this month is a further indication
of the interest Lisbon and Moscow share in estab-
lishing closer ties. It was the first visit by a high-
level Portuguese official since Communist leader
Cunhal made a ministerial visit to Moscow in
October, and the first time a Portuguese foreign
minister had gone there since the Bolshevik revo-
lution. Gromyko accepted an invitiation for a
reciprocal trip to Portugal, but no date was set.
At a dinner for the visiting foreign minister,
Gromyko said the Soviets wanted to expand and
strengthen bilateral relations and, predictably,
praised Portuguese decolonization in Africa. In a
statement released at the end of the visit, the
Portuguese endorsed the Soviet call for an early
end to the European Security Conference and for
holding its concluding stage at the summit level.
Nothing was said publicly on sensitive subjects
such as Portugal's domestic politics, its role in
NATO, or the US base in the Azores.
Although no new undertakings were an-
nounced during the visit, several bilateral agree-
ments had been reached before the trip. A trade
agreement concluded on Deceniber 1.9 included
most-favored-nation status for each country and
provided for the establishment of reciprocal trade
missions in Moscow and Lisbon. An agreement
signed December 20 stressed the Development of
direct shipping links and increasing shipments in
one another's carriers. An air agreement of De-
cember 11 had provided for direct flights between
the two countries.
These agreements do not go beyond those
th?,t the Soviets have with many other Western
countries. While Moscow wants to improve re-
lations with Portugal, it is still moving cautiously,
in part in order to avoid arousing suspicions in
other Western natior,s or among anti-Communist
domestic forces in Portugal. The Soviets have
stopped well short of making an explicit or im-
plicit commitment to the present Lisbon govern-
ment aid of giving it any significant economic
cssistance. The subject of economic aid was raised
by Cunhal in October without eliciting a positive
Soviet response, and the evidence suggests that
Soares also failed to make any great headway.
Gromyko meets with Foreign Minister Soares (right rear)
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When Foreign Minister Soares returned from
his visit to Communist and neutral states, he
faced some hard decisions concerning his own
political future. He must decide soon whether to
retain his cabinet post or resign and devote his
full energies to healing the deep divisions in the
Socialist Party that he heads. The party congress
last month only served to sharpen these divisions
and reveal the general disorganization within the
party.
The congress failed to resolve many key
points in the party's program, and debate on these
issues has been postponed until later this month.
The decisions that were made at the congress
reflect a marked shift to the left. The US embassy
reports that attempts by Social Democratic ele-
ments to get the congress to accept a more
moderate program were overwhelmingly rejected.
The short-term social and economic measures
adopted by the congress are more radical than
those advocated by any other major Portuguese
party, including the Communists.
The delegates devoted most of their time to
electing a slate of party leaders, but even this
question was not fully resolved. Two slates were
offered for election to the party's 151-member
national commission. One was led by Soares and
the other by Mr:nuel Serra, a strong proponent of
direct revolutionary action.
Soares' list won by a comfortable margin-
67 percent-but the price was high. Many mod-
erate colleagues of Soares volunteered to drop off
his list and be replaced by members of the party's
left wing in order to ensure victory. The leftist
orientation of the national commission is likely to
be strengthened when the 20 seats allotted to
Socialist youth are chosen at the Socialist Youth
Congress later this month.
The leadership battle resumed shortly after
the congress when the national commission-
minus the Socialist youth representatives-
convened to select the 13-member secretariat.
The Soares slate won again but by a slimmer
margin-55 percent-than in the vote to select the
national commission at the party congress.
Even these results are temporary. New elec-
tioris for the secretariat and a 39-member direc-
torate will be held after the Socialist youth repre-
sentatives join the national commission. Their
ddition is likely to trim Soares' majority further
or even destroy it. Soares probably will :survive as
secretary general, however, since both his name
and Serra's have always appeared on both slates.
Soares reportedly promised his supporters
after the congress that he would resign this month
from the government in order to devote full time
to the party's internal problems. In the past, he
has not shown much enthusiasm or ability for this
task, having become increasingly fond of the
prestige and influence associated with be?ng for-
eign minister.
The congress, meanwhile, has given the
commission, which is now more leftist-oriented
than the party's base, authority to complete those
portions of the party's program that were not
addressed at the congress. The draft text of the
program, for example, calls for the progressive
withdrawal of Portugal from all political and
military blocs. The possibility of establishing r
common electoral front with the Communist
Party will also be discussed. Soares has taken a
stand against both of these proposals, but 1-e will
be under intense pressure to radicalize the party's
program.
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The Portuguese apparently are leaning to-
ward a moderate economic policy based on a
retention of private enterprise. This course is in
line with the recommendations of Erik Lundberg,
a distinguished Swedish economist, who has just
completed a report for the government.
Lundberg estimates that, despite the politi-
cal upheaval, Portugal's economy grew 2 or 3
percent in 1974. He then points out, however,
that real problems have developed. Prices are up
over 30 percent compared with a year ago, un-
employment is increasing rapidly, investment has
decreased, and the balance of payments is now in
deficit. Lundberg says these problems will get
worse unless the government quickly changes its
economic policies. He recommends that top pri-
ority be given to achieving and maintaining full
employment, even though this will require ex-
pansionary measures that could add to inflation
and the payments problem.
Price increases would be slowed by means of
a price and income policy focusing on the stabi-
lization of wages. The payments deficit will be
allowed to continue, but it can be covered by
Portugal's large foreign-exchange reserves. These
reserves total about $6 billion, including gold
valued at the free market price. This amount
would pay for almost two years of imports at the
present rate.
Lundberg concludes that radical changes in
Portugal's economic structure should be avoided.
The government's share of the gross national
product, he believes, should be expanded some-
what from its present small size, but Portugal's
economy should continue to be based on free
enterprise. In fact, Lundberg emphasizes the need
to restore business confidence, which he recom-
mends be done by clearly limiting the govern-
ment's economic role.
Economists in the Finance Ministry re-
portedly hold views similar to Lundberg's, and his
report has given them and other moderates in
Lisbon ammunition to use against radicals in the
government. Two of his recommendations already
have been adopted: the Portuguese stock market
has been reopened; and the government will soon
announce an economic program designed in part
to reassure the private business community.
The direction, of Portugal's economy will not
be set until after the election this spring. Lund-
berg's report, however, appears to have lessened
the chances that Portu al will move
directed economy.
EC PREPARES FOR TRADE TALKS
In the coming weeks, EC officials will be
working to resolve their differences on an initial
negotiating position for the multilateral trade
negotiations that begin in earnest in Geneva next
month. The EC Council will address the problem
at the end of the month, but more than one
meeting may be necessary to reach agreement on
all major points. The EC Commission has been
working all along on a common position for the
talks, but the council had withheld negotiating
authority until the US passed its own authorizing
legislation.
The trade negotiations, which-like the
Kennedy Round of the mid-1960s-are aimed at
reducing obstacles to trade, have been under
preparation since the talks were agreed to in
Tokyo more than a year ago. Deteriorating world
economic conditions since that time have
prompted most EC members to re-emphasize the
need for starting trade negotiations, if only to
head off protectionist tendencies that could
develop in severely affected states. France and
Italy, however, have cautioned that community
,:oncessions at the talks should be weighed against
the impact on the present poor condition of
Eu, opean economies and in particular on the em-
ployment situation.
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The issues on which the community remains
most divided are the method of achieving tariff
reductions and how to handle negotiations on
agriculture. At the heart of the debate, however,
will be the question of how much independence
to grant the community's negotiators. The com-
mission and most of the members would like the
EC to go to Geneva with a mandate sufficiently
broad to allow considerable negotiating flex-
ihility. The French want to require the nego-
tiators to return frequently to the council for
instructions.
EC ministers disagreed in December over a
formula for tariff reductions. The EC holds that
its tariff structure is generally lower than those of
the US, Canada, Australia, and Japan. Ali mem-
bers agree that the EC should reject reducing the
tariffs of all participants in the talks by equal
percentages-which would leave some EC tariffs
near zero. France insists that "harmonizatio."" of
tariff levels should be the primz~ y goal and that
ta. iff reductions are incidental to this. Both the
UK and Germany feel that the paramount goal is
tariff reduction and that harmonization should
simply be the vehicle.
Agriculture
All community members agree th;-t agri-
cultural negotiations should be treated apart from
talks on industrial goods and that the basic prin-
ciples of the EC's common agricultural policy are
not subject to negotiation. The Nine agree that
their best negotiating !;trategy lies in proposals for
world-wide commodity arrangements. The com-
mission has proposed agreements for r ereals, rice,
sugar, and milk products. The commission has
also proposed as yet ill-defined "international
disciplines" for these agricultural products that
do not lend themselves to commodity
agreements.
France supports the negotiation of com-
modity arrangements but opposes the "dis-
ciplines" because these might bring into question
the protective mechanisms of the common agri-
cultural policy. Both the British and the Germans
are skeptical about the commission's detailed
proposals for commodity arrangements. London
feels that they may be too limited in scope. The
Germans want to be sure that Bonn is not made
to foot the bill for costly stockpiling arrange-
ments that commodity agreements might entail.
Other topics on which the council will give
guidelines include:
Non-Tariff Barriers--The community is com-
mitted to the reduction of non-tariff barriers,
although it has yet to decide on the relative
priority of the barriers to he negotiated.
Export Restrictions-The commission has
proposed a code of conduct to regulate export
restrictions; since the oil embargo, the Nine have
been concerned with a guaranteed supply of raw
materials.
Safeguards-The EC feels that existing rules
protect a nation's right to defend itself against
massive ;mport surges but will agree to discuss
more order ly ways of implementation.
Eastern Europe-The community has agreed
to recognize the difference between state trading
and market economies in the negotiations. In
exchange for concessions, the community will
seek better access to markets and clarification of
marketing procedures.
Developing Countries-The EC is in general
agreement on the need to consider the implica-
tions of trade liberalization for developing states.
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? 25X1
Interest in the relative size and strength of
the US and Soviet military forces has heightened
in recent years with the rapidly growing size and
technological capability of Soviet forces. Differ-
ences in missions, composition, and characteris-
tics of the Soviet and US military establishments,
however, make it difficult to compare their rela-
tive size and strength. Nevertheless, the dollar
costs of Soviet defense forces and programs for
the years 1964 through 1974 can be estimated by
making rough approximations of what observed
Soviet defense activity would have cost to repro-
duce in the US in 1973, and these figures can be
compared with US outlays for those years in
1973 dollars.
The comparison relates solely to the costs of
the defense effort and not to relative military
elfectiveness or capabilities. Further, the dollar
costs of the Soviet program are presented in terms
comparable to the US effort. The dollar costs so
derived do not reflect the Soviet view of their
defense spending; this view would be based upon
a different set of costs-rubles-that Soviet de-
fense planners and leaders must consider.
US outlays were larger through the Vietnam
war period, but as that war wound down, US
spending eased. As a result, Soviet costs began to
exceed those of the US in 1971. For every year
since 1971, the dollar costs of Soviet defense
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^ 25X1
Dollar Cost of Soviet Programs as
a Percent of US Defense Expenditures*
Inov 98 08 70 72 74
1973 dollar values
(US=100 Percent)
180r investment cost
160f-
140
120
J 40r I
i t t t i t 1_~
74 1984 68 68 70 72 74
40~ t t i t i t
1964 8B 68 70 72
BOr
800E Strategic Defense
700
500
400
300
200
Boo
Nae: Spla Its this ereph if eianihcnnlly ddlerenl from when.
100
0
180r General Purpose Forces
160
120
1D0 US=10095
140
120
100 US=100%
100 US=1009o
80
1_1 40I t I I 1 1 1 1 I 1 1
74 1984 66 68 70 72 74
180E RDTBE
180
140
120
100 US=100%
1
74
Note: Percentages calculated from 1973 dollar values.
Department of Defense data has been adjusted for cempirable coverage.
5570771-75 CIA
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programs were greater t`iaii comparable US de-
fense outlays. In 1974, costs-over $93 billion in
1973 prices-were about 20-percent higher than
US outlays. If the costs of pensions and reserves
are removed from octh sides, 1974 dollar costs
for the Soviets exceeded the US total by about 25
percent.
Total defense outlays can be analyzed in two
ways: according to the costs of the various mili-
tary missions, such as strategic attack, strategic
defense, and general purpose forces; or according
to such costs as research, investment, and oper-
ating expenses.
Strategic Attack Forces
The estimated dollar costs of Soviet inter-
continental attack programs have exceeded US
outlays in every year since 1966-most US sys-
tems were operational by then-and were about
60-percent higher for 1974. If the Soviet periph-
eral attack forces are included (the US has no
counterpart for these forces), the gap is widened
to 120 percent.
Soviet ICBM programs cost about three
times as much as US ICBM programs in the
1964-1974 period. For 1974, the Soviet costs
were almost 4.5 times the US level, reflecting the
four new Soviet ICBM systems coming into oper-
ation. The dollar costs of US and Soviet subma-
rine-launched ballistic missile programs for the
period 1964-1974 were about the same, but by
1974 the Soviets were spending almost LO-percent
more than the US.
The USSR has maintained much larger stra-
tegic defense forces than the US. The cumulative
dollar costs of such Soviet programs over the
1964-1974 period were more than four times the
US level. The biggest differences were in surface-
to-air missiles and fighter interceptors. In 1974,
the dollar costs of Soviet strategic defense
programs accounted for almost eight times US
expenditures for strategic defense programs.
Spending by both countries on anti-ballistic mis-
sile programs was negligible.
During the 1964-1974 period, the USSR
spent steadily increasing amounts on general pur-
pose forces. By 1971, the dollar costs of Soviet
programs had surpassed those of the US; in 1974,
Soviet spending on general purpose forces was
20-percent larger than similar US expenditures.
Soviet ground forces have cost more than twice
those of the US, primarily because of the much
larger size of the Soviet army. The costs of naval
forces were about the same for both countries.
The costs in dollar terms of Soviet tactical air
forces have grown rapidly since 1969, but last
year were still only about half the US level.
Research, Investment, and Operation
The estimated dollar costs of Soviet weapons
acquisition-research, development, test, and eval-
uation plus investment-have exceeded compara-
ble outlays in the US for several years. US ex-
penditures for these purposes exceeded estimated
Soviet dollar costs by a little over 50 percent
from 1964 to 1970. Soviet dollar costs have been
higher since 1971; last year they were about
25-percent larger than US programs.
Missiles and aircraft have been the fastest
growing elements of Soviet procurement costs in
recent years. The costs of ships and boats ex-
ceeded US outlays by 50 percent over the
1964-1974 period; these costs were about one
third greater than those of the US in 1974. The
Soviets spent over three times as much as the US
on land armaments in the 1964-1974 period.
In both the USSR and the US, military per-
sonnel costs accounted for the largest part of the
operating budget. These costs in the Soviet
Union-at US 1973 pay scales-rose steadily over
the 1964-1974 period; cuts in US military forces
since 1968 have reduced comparable US expendi-
tures. In 1974, dollar costs for Soviet military
corresponding US costs.
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LV/\ 1
the Soviets are upg--id;ng their capabilities in
naval aviation.
Photography showed six
Backfire aircraft at the Black Sea naval air base at
Oktyabrskoye. This is the first time that Backfires
have been seen at an operational naval air base
and suggests that they are now being assigned to
naval aviation units. Although the bulk of Back-
fire production is expected to be assigned to Long
Range Aviation, Soviet naval aviation probably
will eventually receive from 100 to 150 of the
fast, maneuverable aircraft. The Backfire will be a
partial replacement for the 520 aging TU-16 and
TU-22 medium bombers now in naval service.
The navy will probably use the Backfire pri-
marily in a strike role. A few, however, could be
assigned maritime reconnaissance and strike-
support missions. The Backfire will carry two
air-to-surface missiles and has a combat radius of
some 3,000 miles. It would be capable of con-
ducting anti-ship operations at twice the range of
the TU-16.
Another new aircraft--designed for 'vertical
and short takeoff and landing (V/STOL)-is be-
25X1
25X1
this
V/STUL airc~is now in series production. The
plane is probably being developed primarily for
use with the new anti-submarine warfare aircraft
carriers of the Kiev class. The carriers-two of
which are currently under construction-will
probably carry a mix of helicopters and V/STOL
aircraft. The most likely use for the V/STOL
aircraft would be air defense and reconnaissance
missions in support of naval Forces.
The fixed-wing V/STOL plane can take off
vertically or after a short ground run, which
makes it ideal for shipboard operations. Such
aircraft can perform essentially the same missions
as conventional fighters or attack aircraft, but the
V/STOLs have more limited range and payload
capabilities because of their high fuel consump-
pro a y will
pay oa o mac ine guns bombs
or air-to-air missiles.
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The price of gold declined sharply last week
as the level of US demand fell short of market
expectations. In London, the price declined from
$195.25 an ounce on December 30 to $169.50 on
January 7, before rebounding to $179 an ounce
on January 9 in the face of next week's meetings
of the International Monetary Fund and Paris'
announcement that its official gold reserves
would be revalued. The lack of demand at the US
Treasury auction on January 6-only 750,000
ounces were sold-confirmed that traders had
overestimated the US market's potential, at least
in the short run.
Major gold producers have not yet reacted to
the sharp price decline. South Africa and the
Soviet Union could restrain supply sufficiently to
counter any further weakening in price. Pretoria
has left open its option to reduce sales, but it will
probably sell enough gold to cover foreign-
exchange needs. The USSR can afford to cut sales
Dollars per
troy ounce
190
in 1975 and is likely to do so should the market
weaken further.
The legal entry of US citizens into the gold
market and the US Treasury's policies with re-
spect to gold have been the dominant factors in
the market since mid-1974. Before US citizens
entered the market, prediction by European deal-
ers that the price of gold would hit $200 an
ounce had helped drive up prices by more than
$40 from mid-October to December 30. The
Treasury Department's announcement in early
December that it would sell up to 2 million
ounces caused only a temporary drop in price.
The price of gold in 1975 will hinge on a
number of factors, including the market's percep-
tion of US intentions, the results of IMF discus-
sions on gold scheduled to begin next week, and
possible changes in other countries' policies on
gold.
London Free Market Gold Price 1
r Based on the afternoon fix in London on the lest trading day in each week.
2Cold was fixed at an all-time record high of $195.25 on December 30.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
1974
Dilihr
trno
US January gold
Dec
Jan
1975
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From the left: Arab League Secretary Riad and Foreign Ministers Rifai of Jordan,
Khaddam of Syria, Falimi of Egypt, and PLO representative Kaddoumi
ARAB STATES: MEETING IN CAIRO
The foreign ministers of Egypt, Syria, and
Jordan and a representative of the Palestine Liber-
ation Organization made only minor progress dur-
ing two days of talks in Cairo late last week. The
four agreed to meet in Damascus next month in a
further attempt to iron out differences between
Jordan and the PLO.
In Cairo, the Jordanians and Palestinians
agreed in principle to hold bilateral consultations
and to refrain from any measures or statements
that do not contribute to the "development of
relations" between Jordan and the PLO. This
represents a modest concession by both sides. The
Jordanians have refused to meet officially with
the Palestinians since 1970, when the fedayeen
were driven out of Jordan. and radical fedayeen
elements have refused to give up their plotting
against King Husayn.
In spite of the agreement, the Palestinian
news agency almost immediately accused the
Jordanians of having "dodged basic questions"
du, ing the Cairo talks. Amman may delay any
bilateral meeting with the PLO until the Palestin-
ians cease their propaganda attacks and indicate
at least some willingness to compromise with
Jordan on political issues.
The agreement to continue consultations
among the four parties was couched in terms of
their responsibility to organize against the Israeli
military threat. The conference communique did
not suggest, however, that the Palestinians were
successful in portraying this threat as justification
for a return of fedayeen troops to Jordanian
territory. PLO delegates may have considered it
unwise to jeopardize Jordan's limited concession
on bilateral talks by making it an issue.
The communique avoided any reference to
Middle East peace negotiations. This was in keep-
ing with the wishes of Egyptian President Sadat,
who in late December had elicited a commitment
from Syria's President Asad to limit the meeting
to a discussion of relations between Jordan and
th3 PLO. Cairo had been apprehensive that Da-
would use the conference as a forum to
promote Syria's preference for a Geneva peace
conference over the step-bv-step approach fa-
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SYRIA-LEBANON: PROMISING SUPPORT
On January 7, Syrian President Asad con-
cluded a day of talks with Lebanese President
Franjiyah by publicly promising Syria's full and
unconditional support for Lebanon. Asad's visit,
the first ever by a Syrian head of state, is the
latest of s&.oral signs that the usually strained
relations between the two governments are im-
proving.
Asad stated that Damascus world regard an
attack on Lebanon as an attack on Syria itself and
pledged in a joint communique to meet any Leba-
nese requests for help. The statement did not
indicate, however, what specific military assist-
ance, if any, Syria will provide. While Franjiyah is
probably willing to accept conventional anti-
aircraft weapons, he is likely to be reluctant to
receive weapons like SA-6 anti-aircraft missiles
that might bring Syrian or other foreign troops to
Lebanon and might invite a strong Israeli re-
action.
Fti anjiyah's purpose in cooperating with the
Syrians i.; largely to still the criticism he is getting
from domestic opponents. With Israeli incursions
into southern Lebanon a daily affair, these critics
have not been satisfied by the government's usual
response-a complaint to the UN Security Council
and a promise to strengthen Lebanese forces in
southern Lebanon. Early this week, the leader of
Franjiyah
Page 17
southern Lebanon's important Shiite Muslim sect
publicly spoke of a "big probability" that Israel
would occupy southern Lebanon during the first
half of 1975.
The Lebanese have long been concerned that
the Israelis are looking for an excuse to occupy a
large part of southern Lebanon. The Israelis have
denied such an intent, but have insisted on their
right to "clear out" border areas in cases where
the Lebanese army fails to prevent fedayeen
cross-border raids on Israel.
Israeli Defense Minister Peres charged this
week that Palestinian guerrillas in Lebanon have
been reinforced by Palestinian troops from Syria
armed with anti-tank and anti.-jircraft missiles. He
warned that Israel would view any Syrian attempt
to establish a "foothold" in Lebanon as the "start
of a confrontation and an extension of aggres-
sion."
Other reporting confirms that the strength
of Syrian-controlled fedayeen elements in Leba-
non has grown in recent weeks, particularly
around Palestinian refugee camps. Contingents of
the largely Syrian-controlled Palestine Liberation
Army have been present for some time in the
camps and in Lebanon's remote Rashava District
near the border with Syria.
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Over the next few years, the Israeli navy
plans to increase its fleet of Reshef-class guided-
missile patrol boats from six to twelve vessels.
Construction of the first of the additional craft is
to begin at the Haifa shipyard in April; launching
will probably not occur before late next year or
early 1977.
Israel has already built five Reshef-class
boats, and the sixth is nearing completion. The
Reshefs were specifically designed to operate in
the Red Sea, and four are stationed there now.
Tel Aviv had originally planned to semi all six of
the original Reshefs to the Red Sea, but the
remaining two boats will appa;e.-ltly be assigned
to the Mediterranean.
The Reshef is based upon the smaller French
Saar-class guided-missile boat, but is more heavily
armed and has been modified to permit long-
range operations at sea. The Reshefs can carry as
many as eight Gabriel anti-ship missiles, of which
the Israelis are currently producing at least one
version with a range of 11 nautical miles. Another
version of the missile with twice this range has
been under development ; i Israel for several years
and may also be in service with the Israeli navy.
Israel has long been concerned about Egypt's
ability to close the Red Sea to ships carrying
Israeli cargoes. Israel had no Reshef boats in the
Red Sea during the last Middle East war and was
unable to challenge the Egyptian navy's blockade
of the Bab el Mandeb. The Reshefs now stationed
in the area will be able to operate in the Bab el
Mandeb, although they will be beyond the range
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ETHIOPIA: CONCESSIONS ON ERITREA
The ruling military council is taking steps to
carry out its recently announced decisicn to
pursue a peaceful solution to the insurgency in
Eritrea Province. On January 5, the council an-
nounced substantial concessions to Eritrean tribal
and religious notables. The local leaders, who
apparently have been in contact with the insur-
gents, had presented a list of demands to govern-
ment representatives in Asmara last week. Despite
the government's concessions, some elements of
the Eritrean Liberation Front have rebufed the
council's offer to negotiate a political settlement.
In its announcement, the council said it had
directed its forces in Eritrea to relax security
measures and to exercise maximum restraint in
carrying out their duties. The provincial leaders
had demanded that the government confine
troops to barracks and stop all military opera-
tions in the province. The council also agreed to
review the cases of all Eritrean political prisoners
and held out the prospect of granting them
amnesty or reducing their sentences; the council
excluded prisoners charged with murder or other
serious criminal offenses. The local leaders had
asked for the release of all Eritrean political
prisoners.
In response to a demand by the notables
that Eritrean students be excluded from the gov-
ernment's nationwide rural development program,
the council said it would make "special arrange-
ments" for Eritrea. The council also met an
Eritrean demand that it publicize the meetings in
Asmara. Previously, the government-controlled
media had not reported the sessions.
The council sent Information Minister
Mikael Imru to Asmara to convey personally to
the local leaders its reply to their demands. In its
statement, the council said the local leaders were
authorized to contact "Eritrean insurgents" and
to convey to them the need for a peaceful solu-
tion to the conflict. This was the first time an
Ethiopian government has referred to Front
members as insurgents; previously they had been
labeled "bandits."
Last week, before making these concessions,
the council had agreed to hold direct negotiations
with the rebels, meeting a key demand of the
local leaders. The provincial notables, in return,
agreed to urge the insurgents to accept a cease-
fire. Local leaders are alleged to have already
begun talks with the insurgents regarding a pos-
sible truce and direct negotiations between them
and the council.
According to initial press reports, exiled
leaders of one of the Front's two major factions
issued a statement in Cairo on January 6 refusing
to negotiate with the council except to arrange
for the withdrawal of army troops from the
province. Leaders of this group reiterated their
demand for complete independence for Eritrea
and said their group was ready to increase its
combat operations. This group does not speak for
the entire Front: however, and the insurgents who
reportedly have been holding talks with the local
Eritrean leaders may not have approved the Cairo
ANGOLA: GETTING TOGETHER
The leaders of Angola's three rival liberation
groups are to meet this weekend with officials in
Portugal to discuss formation of a transitional
government that Lisbon hopes will lead Angola to
independence this year. The nationalist leaders
now appear willing to set aside, if only for the
time being, their long-standing personal and polit-
ical differences in order to revive the flagging
decolonization effort in the territory.
Following two days of talks last weekend in
Mombasa, Kenya, the three leaders-Holden
Roberto of the National Front for the Liberation
of Angola, Agostinho Neto of the Popular Move-
ment for the Liberation of Angola, and Jonas
Savimbi of the National Union for the Total
Independence of Angola-issued a joint com-
munique in which they pledged to work together
for an independent, democratic, and multiracial
Angola. In a separate agreement, the two most
important nationalist chiefs, Roberto and Neto,
who have been archrivals for more than a decade,
promised to end all hostile political and military
actions against each other.
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During the years of insurgency in Angola,
armed clashes sometimes occurred between the
two groups. Since the coup in Lisbon last year,
the two men, supported by rival foreign patrons,
have waged an incessant propaganda battle against
each other. For the past year or so, Roberto has
assisted a faction within Neto's organization that
has unsuccessfully sought to oust Neto from
leadership of the Popular Movement.
The Mombasa communique gave no details
on how the three leaders are likely to deal with a
number of difficult issues that seem sure to pro-
voke hard bargaining at the session with the
Portuguese. In the short time devoted to the
talks, they could hardly have concerted their posi-
tions on such matters as ground rules for political
activity and how their groups will share military
and security responsibilities during a transitional
period. Nor, in all probability, did they give much
thought to the future of Angola's 500,000 fearful
whites- -a prime concern of Lisbon. The insur-
gents' basic position is that the territory's vhites
should cease considering themselves a separate
power bloc and should join one of the three
liberation groups.
The Mombasa agreement did suggest, how-
ever, that the rival leaders may at last be ready to
enter a transitional government, a development
the Portuguese have been trying to bring off for
some time. Until now, each of the three nation-
alists has refused to share power with the others
in the hope that he could maneuver himself into a
dominant position at the outset of a transitional
government. Such a position, each reasoned,
would go a long way toward securing his political
supremacy upon independence.
Despite the modest step forward represented
by the Mombasa accord, cooperation among the
rebel leaders could be short lived. The personal
ambitions and conflicting political ideologies of
Roberto and Neto, and the deeply rooted ethnic
antagonism between the groups they lead-repre-
senting two of Angola's largest and most powerful
tribal communities--are likely to impose severe
strains on a transitional government. How serious
the rebel leaders are about avoiding these strains
should become more evident during their coming
ne
ti
ti
go
a
ons with uese.
25X1 25X1
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Fighting E.,ck Around Phnom Penh...
The war remains within earshot of Phnom
Penh as government forces slowly push the
Khmer Communists back from the city's outer
defenses. Despite some shaky moments early in
the week, the Cambodian army's 7th Division,
with the help of heavy air support, has now
blunied a major Communist drive against the cap-
ital's northwestern defenses. Nearby government
units along Route 5 are holding their ground,
including the oil depot at Prek Pnou. The facility
is within range of ins' :nt gunners, however, as
are some parts of the capital itself.
COiIMIUNIST GAINS ALONG THE LOWER
III EKONG HAVE BEEN SUBSTANTIAL,
AND THE THR1;.'1T TO SHIPPING HAS
I.OPCED THE DELAY OF A RESUPPLY
CON 1/0 Y. ALTHOUGH THE SUPPLY SITU-
AT ION IN THE CAPITAL IS NOT YET
CRITICAL, CIVILIAN AND iVILITARY
MORALE A1A Y SUFFER IF A CONVOY
DOLS NOT STEAM NORTH SOON.
most of the riverbank south of the navy base at
Neak Luong and at least nine miles of Route 1
paralleling the river north of Neak Luong. Early
this week, the threat to shipping forced the gov-
ernment to delay the resupply convoy scheduled
to make the run upriver from South Vietnam.
A temporary closure of the Mekong will
work no immediate hardship on either the armed
forces or Phnom Penh's civilian population. Rice
and most fuel stocks in the capital are sufficient
to meet all needs for over a month, and enough
ammunition has been stockpiled to sustain a
heavy level of fighting for almost six weeks. Past
experience, however, shows that civilian and
military morale is affected when stocks sink low,
and the government will probably have to order a
convoy north soon. Until ground units are able to
retake some of the lost riverside positions, the air
force and navy will have to bear so! : respon-
West of Phnom Penh, a Communist effort ~n
drive through government positions near Route 4
has foundered. Army units late last week cleared
Communist troops from several roadside villages
within ten miles of Pochentong airport, and since
then armored units supported by air and artillery
strikes have inflicted heavy casualJes on insurgent
forces caught in the open terrain on both sides of
the highway. At week's end, some insurgent units
were withdrawing from this area although the
airport remained the target of sporadic and inef-
fective rocket attacks.
...But Not Along the Mekong
The fighting around Phnom Penh has effec-
tively diverted government attention from the
lower Mekong River where Communist gains have
been substantial. Insurgent forces now control
'CnC?irunis} ~Luong
~.~J? nainc
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Jan 10, 75
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v- Vlit,
GA~a7 n } -~ -. r r 7 x ~rr ~ i. a ,r
~~~w~Kpi5' r s ~ tier ri pi r
,y'.[i
ti Mn' k
7T?s-
.~+ ar i maa+a-"' t~ h ' .xr"~' )R ta, ~ >t ..
pe~M.t G A II m+.4~ M
Nui Ba Den
VIETNAM: SAIGON SUFFERS SETBACKS (Black Virgin Mountain)
Communist forces completed the take-over during the dry season. The initial assaults were
of Phuoc Long Province by seizing the provincial conducted by Communist local forces supported
capital of Phuoc Binh early this week. The Com- by heavy artillery. When these attacks proved
munists have long controlled most of the remote unsuccessful, the North Vietnamese committ:d
areas of the province and captured the three out- main-force units supported by both artillery and
lying district capitals during the past few weeks. armor. The large number of rounds fired against
The province capital withstood six days of tank- Phuoc Binh and the three district towns suggests
led ground assaults supported by heavy bombard- that future government targets will experience a
ments from mortars, rockets, and artillery before heavy pounding prior to infantry assaults.
the 1,200 or so defenders were forced to abandon
their positions.
Shortly after Phuoc Binh was captured, the
When the Communist dry-season campaign South Vietnamese also lost their communications
began in early December, South Vietnamese com- and observation site atop Nui Ba Den-Black Vir-
manders in Military Region 3 decided that they gin Mountain. The elimination of this government
would not commit their regular forces to defend position just outside of Tay Ninh City does not
remote outposts or isolated towns such as Phuoc give the Communists much of an additional mili-
Binh. The Montagnard territorial forces defending tary edge in the Tay Ninh area since the slopes of
Phuoc Binh put up a stubborn defense, however, the 3,000-foot mountain have long been in their
inflicting heavy casualties on Communist troops hands. It does, however, represent something of a
and armor. After three days of inten-e fighting, psychological reverse for the government because
the government sent a token force to the belea- the mountain is considered sacred i)y the dorni-
guered town to reinforce the defenders and boost nant Cao Dai religious sect in Tay Ninh. 25X1
morale. To take some of the pressure off the
defenders, the South Vietnamese also increased These latest Communist attacks may have
air strikes in the area in hopes of destroying been intended to gauge the willingness and the
North Vietnamese gun emplacements and armor. ability of South Vietnamese forces to hold a
Air resupply initially was successful, but North target against heavy North Vietnamese assaults.
Vietnamese anti-aircraft defenses intensified and following the
forced the aircraft to drop supplies from such capture ot Phuoc Binh, additional heavy Commu-
high altitudes that most fell outside .he town's nist assaults are planned in Tay Ninh, Binh
defenses. Duong, Hau Nghia, and Bien Hoa provinces. The
object would be to push government forces back
The attacks on Phuoc Binh may set the closer to Sai on.
pattern for future North Vietnamese operations
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CHINA: KEEPING MISSILES MOBILE
China continues to work on the semi-mobile
deployment of its stratec,c missile systems
tield launch site at China-shan, 60 nauL;cal miles
northwest of WLI-han it central China.
No missile equipment was identified at the
new site, and the system to be used there cannot
be determined. From Ching-shan, China's
1,500-nm. CSS-2 could strike Japan, the USSR,
Taiwan, the Philippines, Soi?theast Asia, and east-
ern India. The 600-nm. CSS 1 could strike only
Taiwan from the new site, bL inat system and
China's 345-nm. short-range missiles are also can-
didates because both have been deployed for use
as theater support systems within China in the
event of an invasion.
Construction of the site at Ching-shan
started early last year, and it is one of several
identified field sites built within the last few
years. The Chinese have not begun work on any
identified permanent missile sites since 1971,
however, suggesting that they are now empha-
sizing semi-mobile deployment-the sporadic oc-
cupation of simple field sites by missile units
operating from a central garrison. Known garri-
sons have been detected as many as 40 miles from
the launch sites they serve. This mode of opera-
tion protects China's modest missile force from
destruction in a pre-emptive attack by making the
sites difficult not only to detect but, once de-
tected, to determine at a given time whether or
not they are occupied.
The Chinese use all three of their operational
missile systems in this mode. Most missile sites
detected by the US to date, however, are of the
permanent type. Only about ten field positions
have been identified, although the Chinese prob-
ably have built many more. China's force of nu-
clear-armed ballist;,: missiles is believed to consist
of 20 to 30 CSS-1 units, 30 to 35 CSS-2 units,
anc as many as 10 short-range units. China's
semi-mobile missile operations and its attempts to
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ARGENTINA: ELEVATING LOPEZ REGA
Recent changes in President Peron's staff
strengthen the power of Lopez Rega, the contro-
versia! minister of social welfare, creating almost
certain alarm among military leaders, and within
the opposition parties, and even the Peronist
movement.
The ambitious minister, who serves as
mentor to the President, will head a newly re-
structured presidential secretariat that will "co-
ordinate" all of the President's audiences with
ministers and state secretaries. In addition, the
head of the presidential military household and
several of his key aides have been replaced by
officers who Lopez Rega presumes will be less
eager to undercut his influence with Mrs. Peron.
Cabinet ministers who have voiced resent-
ment over Lopez Rega's interference and over-
shadcwing position will see his new post as in-
creasing his power to isolate the President and
control governmental decision making. The mili-
tary high command also can be expected to react
negatively and possibly to step up pressure for
Lopez Rega's removal. There are growing signs
that army leaders want him eased out. They ap-
parently are uncertain about how to proceed,
however, particularly since any move against
Lopez Rega might cause Mrs. Peron to resign. The
military fears that such a development would
usher in a period of instability that might neces-
sitate their active intervention. The generals want
to avoid another period of unconstitutional rule,
and they have undertaken contacts with Peronist
labor chiefs, presumably to discuss possible
courses of action in the event of a political crisis.
Even before these changes, the papal nuncio
in Buenos Aires had told the US ambassador that
Mrs. Peron was no longer turning to him for
spiritual advice and that "she now is completely
under the domination of Lopez Rega." Certainly
many Argentines believe that Lopez Rega has too
much influence over the President. If he con-
tinues to assert himself, greater efforts are likely
to be made to force his ouster even at the risk of
Mrs. Peron's resignation.
LATIN AMERICA: SEEKING NEW ALLIANCES
Disarray in inter-American affairs and Latin
American skepticism about US sincerity in hemi-
spheric relations are increasing the attraction to
the Latin American countries of forms of union
or association that exclude the US.
The upbeat mood that was created last year
by US offers of a new dialogue will be difficult to
recapture at pending inter-American conferences.
Some of the more nationalist governments have
strayed so far from a spirit of cooperation that
they are proposing formal charges against the US
for alleged economic aggression. This maneuver,
led by Venezuela and Ecuador, will probably not
prosper now that US leaders are trying to correct
the discriminatory legislation that triggered the
reaction. Still, several governments are sympa-
thetic with Ecuador's suggestion of a boycott of
the meeting of the hemisphere's foreign ministers
set for Buenos Aires in March, and there is some
chance that this meeting will fail to come off as
planned. Even friendly Uruguay has criticized the
non-productiveness of this kind of forum and has
questioned the value of having both a foreign
ministers meeting and an OAS General Assembly
this spring.
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Despite broad disappointment in the OAS,
many Latin Americans have come to feel that the
non-institutional, informal m%;etings with the US
secretary of state are even less promising. They
would prefer to have US commitments occur
within a structural framework, and they will
probably make a strong effort to loosen up the
many rigidities and cumbersome procedures of
the OAS to make this a more useful, dynamic
organization.
Achieving consensus on how the US and
Latin America can form a working partnership
may, however, be impossible during this period of
friction. The US is still under heavy criticism
about the continuing sanctions against Cuba, and
bilateral difficulties seem likely to arise with some
governments over US restrictions against exports
to Cuba. Intelligence activities are still in the
Latin American news and will probably become
an even more important topic after the publica-
tion of the Spanish version of a new "expose" by
a former US intelligence agent. Various broad
issues under discussion in hemispheric working
groups remain unresolved, largely because the
Latin Americans believe the US is reluctant to
promise them assistance that might be politically
BOLIVIA: LOOKING WESTWARD
The Bolivian government is reaping political
and economic gains from the continuing tension
between its western neighbors, Chile and Peru.
Two months ago, President Banzer imposed addi-
tional dictatorial controls on the grounds that he
had to prepare for a potential Andean conflict
that could involve Bolivia's national security.
Since then, he has obtained major economic
concessions from Chile, and his cordial meeting
with President Velasco in Lima last month may
lead to closer diplomatic ties with Peru.
While Banzer stands little chance of securing
his long-sought goal of access to the sea through
either country, he has persuaded the Chilean
junta to revise the 1937 treaty regulating transit
or 9conomically unwelcome to US private indus-
try. Particular bilateral frictions involve a wide
range of disagreements over such matters as arms
procurement, voluntary export restraints, immi-
gration, and trade.
Overall, Latin Americans feel the US is be-
coming increasingly distant, and they are ex-
ploring ways to pursue their interests without
expecting generosity from Washington. Coop-
erative efforts outside the traditional vehicles
such as the OAS therefore are having greater
appeal. Venezuela and Mexico, for example, have
begun to receive a more positive response than
first met their call for an economic system em-
bracing Latin America and excluding the US.
A number of Latin American summits have
taken place recently and more are scheduled
during the course of this year. They will be aimed
at unifying Latin America and stepping up
pressure on the US and the rest of the developed
world to change policies that the underdeveloped
consider discriminatory,
of Bolivian goods through the ports of Arica and
Antofagasta. The Chileans have lowered fees for
their port services below the break-even point and
have constructed two oil storage tanks for the
Bolivians at Arica.
This warming trend, combined with Bolivia's
new economic muscles of oil and natural gas,
could reorient Banzer and his successors away
from a traditional dependence on Brazil and Ar-
gentina. Although trade relations are still close,
the Bolivians have recently displayed a coolness
and independence of spirit toward both of their
eastern neighbors in current economic neao~"
tions.
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