WEEKLY REPORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080004-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 30
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 4
• Publication Date: January 24, 1975
• Content Type: REPORT

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Weekly Review
Top Secret
Top Secret
January 24, 1975
COPY No
650
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The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
deveropments of the week through noon on Thursday. I t
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 requiring more comprehensive treatment and therefore
published separately as Special Reports are listed in the
contents.
4 Eastern Europe Reacts to Trade Bill
4 US-USSR: Little Change in Trade
6 Security Confarences Resume
7 Portugal: Controversial Labor Law
9 UK: Wilson Comes to Washington 25X6
10 Cyprus: Violent Demonstrations
CONTENTS (January 24, 1975)
MIDDLE EAST
AFRICA
EAST ASIA
PACIFIC
12 Middle East: Testing the Water
13 Arab States: Faysal on the Road
15 North Yemen: Prime Minister ousted
16 Zaire: Nationalization Measures
17 Cambodia: A Crack in the Blockade
18 Vietnam: The Winter Campaign
24 Tanker Fleets of Oil Producers
26 Trade Talks Move Forward
27 Central America: Leaders Meet
28 Brazil: The Censorship Issue
Comments and queries on the contents of this
publication are welcome. They may be directed to
the editor of the Weekly Review.l
WESTERN
HEMISPHERE
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JLtoseow Reaffirm Detewe
Moscow continues to offer public and pri-
vate assurances that collapse of the US-Soviet
trade agreement does not signal a turn from
detente. At the same time, Soviet criticism of the
US, particularly in the media, is becoming increas-
ingly truculent.
In a conversation with a US embassy official
on January 20, L. M. Maksudov, chief of the
Forei, , svimistry's information division, spoke of
the Soviets' great disappointment with the lan-
guage c,f the US trade bill, but in a tone more
regretful than hostile. He characterized the lan-
guage of the bill-especially in referring to "non-
market economies"-as contrary to normal inter-
national conduct. Maksudov, whose division
transmits policy guidance to Soviet embassies,
may have been drawing directly from the official
line in contrasting the setback on trade with the
rapport established between President Ford and
General Secretary Brezhnev at Vladivostok. Some
echoes of this message may have appeared in
Rome, where the Soviet ambassador has told
Ambassador Volpe that Moscow's commitment to
detente would remain unchanged.
The Soviets may have enlisted their allies in
the of fort to reassure the US on detente. On
January 18, a Polish Central Committee member
sought out a US official to rebut as "nonsense"
Western speculation about a return to the Cold
War. He said that neither the Soviets nor the Poles
want to turn back from detente. In addition,
Soviet UN delegates have recently approached
their British and West German counterparts to
assess the reaction to Moscow's renunciation of
the trade agreement. The Soviets reportedly were
concerned that the West Europeans would erro-
neously interpret their action as marking a change
in the Soviet attitude toward detente in Europe.
The Soviet central press continues to affirm
Moscow's commitment to detente and to give
heavy coverage to recent public statements by
President Ford and Secretary Kissinger that
detente with the Soviet Union will be continued
and strengthened. The press has also resumed
frequent and positive coverage of the Vladivostok
arms-control understandings in an evident effort
to offset the "step backwards" in trade relations.
Moscow's evident interest in preserving and
extending the gains of its policy of improved
relations with the US has not, however, kept it
from reacting sharply to a number of irritants.
Despite prompt US apologies for a shooting inci-
dent at the Ukrainian UN mission last weekend,
for example, the official Soviet protest delivered
on January 22 was extremely sharp. The note,
which was broadcast in its entirety to the domes-
tic Soviet audience, said that unfulfilled US assur-
ances and promises of preventive action consti-
tute "virtual connivance with criminal elements"
by US authorities. Such acts, the note warned,
"cannot fail to do damage to relations."
The level of critical coverage of the US re-
mains at the unusually high levels of the past
month. The Soviets are concentrating their propa-
ganda on US domestic economic problems, Wash-
ington's policy in the Middle East, alleged abuses
by the US intelligence community, and continued
American support of South Vietnam.
Meanwhile, Brezhnev's absence from view-it
is now a month since his last public appearance-
has fed the growing number of rumors about his
physical and political health. Soviet sources have
offered a variety of explanations for his absence.
There have also been differences over the impact
of his illness on his work schedule. Some reports
say Brezhnev has been temporarily relieved of his
official duties, while others suggest that he will
soon return to work.
In the face of these rumors and speculations,
however, there is no evidence of concern on the
part of other Soviet leaders. Prime Minister Kosy-
gin, for example, is still on vacation in the Cauca-
sus. Moscow party boss Grishin made a trip to
Warsaw to take part in celebrations marking its
liberation during World War II, and Defense Min-
ister' Grechko visited Soviet forces in East Ger-
many and Poland. Trade union chief Shelepin,
Secretary for Agriculture Kulakov, and Minister
of Agriculture Polyansky took part in previously
scheduled routine conferences in the capital, and 25X1
press reporting indicates that republic-based mern-
bers of the Politburo are also following their usual
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East Europeans have generally followed the
Soviet lead in blaming "anti-detente forces" in
Washington for restrictions in the 1974 trade bill
that caused Moscow to renounce the 1972 US-
USSR trade agreement. The Kremlin's more loyal
allies call it a temporary setback, however, and
they point to the strategic arms limitation talks,
the conference on European security, and imple-
mentation of bilateral agreements as evidence that
detente is a continuing process. Despite this up-
beat note, some differences in national ap-
proaches have emerged.
The first authoritative reaction came from
Prague, where Foreign Minister Chnoupek met
with the US ambassador last week to inform him
that restrictions in the trade bill specifically
aimed at Prague-and affecting Czechoslovak
gold-had produced "a very bad reaction."
Chnoupek's remarks could signal that in the short
term most Warsaw Pact capitals will look at this
aspect of the US relationship for ways of showing
their dissatisfaction.
Reaction by Albania, Poland, Yugoslavia,
and Romania reflects the particular national
circumstances of each.
Albania factually reported Secretary Kis-
singer's announcement of the Soviet decision, and
then predictably condemned the "revisionist
rulers" in the Kremlin for their willingness "to
sell thousands and tens of thousands of their
citizens for US credits and goods." By contrast,
Polish media have barely noted the Soviet re-
jection of the trade agreement. Warsaw's cov-
erage-the most favorable to the US in Eastern
Europe-has stressed the positive, including Secre-
tary Kissinger's statement that the administration
will urge Congress to reconsider the trade bill.
Bucharest's failure to give even factual cov-
erage suggests it is having difficulty finding a safe
middle ground. The Romanians are now deeply
involved in negotiating new trade agreements with
both the US and the USSR.
The Yugoslavs were slow to comment,
perhaps because Moscow's action immediately
preceded announcements in Belgrade and Wash-
ington that President Ford has accepted an
invitation to visit Yugoslavia. Influential news-
papers in Belgrade have recently stated that any
other decision by Moscow would have meant
capitulation. Yugoslav journalists have, however,
carefully placed the blame on "those quarters" in
Washington that have blocked moves by the US
administration to expand economic cooperation
with Moscow and the communist coun-
tries.
Moscow's abrogation of the 1972 US-
Soviet trade agreement will have little immediate
impact on trade and technological transfer. Over
the long term, US-Soviet economic relations will
depend on overall progress in detente and on the
extent to which recent US legislative restrictions
are modified.
Under the 1972 agreement, Moscow ex-
pected to get Most Favored Nation treatment and
official US encouragement for the expansion of
trade. The Trade Act of 1974, and the amend-
ments to the Export-Import Bank Act, offered
only conditional Most Favored Nation status, lim-
ited Eximbank credits to $300 million over four
years, and seemed to close the door on US par-
ticipation in the large Siberian and Far Eastern
energy projects. Most seriously, the legislation
made Most Favored Nation status and US govern-
ment credits subject to conditions that the USSR
would not publicly accept.
Soviet rejection of the agreement should not
substantially affect the volume of US-Soviet trade
this year. US exports are expected to be above
the 1974 level of $600 to $700 million because of
deliveries of capital goods ordered by the USSR
in 1972 and 1973 when Eximbank credits were
available.
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tions. The c'atlook for US participation in the
Yakutsk liquefied national gas project is further
dimmed because the Japanese government has
made its participation in the tripartite deal con-
tingent on capital participation by the US, prefer-
ably involving Eximbank. US participation in the
North Star !iquefied national gas project already
was doubtful because of growing Soviet demands;
lack of Eximbank support probably will force US
firms to back out or to propose internationalizing
the project. Negotiations for the aluminum com-
plex project, involving $1.4 billion in W,,stern
equipment, should not be seriously affected, since
Kaiser had made tentative plans for financing the
project without Eximbank. The Sakhalin Island
oil exploration project, largely a Soviet-Japanese
deal, will not be affected at this time because US
participation does not include substantial capital
involvement in the initial stages.
American ship unloading in the USSR
The new restrictions on Eximbank credits
are likely to result in a lower volume of orders for
US equipment. Major US banks have indicated
that they would continue to lend to the USSR,
but new loans will be more costly to Moscow
without the lower interest rates and longer credit
periods previously available with Eximbank par-
ticipation. Furthermore, US law limits the
amount of credit that banks can advance to any
single borrower, so that consortium loans might
be necessary. US private credit facilities will prob-
ably be discussed when the chairman of the So-
viet Foreign Trade Bank meets with US bankers
later this month or early next.
Eurodollar funds-now reportedly under-
utilized-could also be used to finance imports
from the US. In any case, the higher cost of
financing US purchases will put US firms at a
competiti''e disadvantage with a number of West
European and Japanese firms, whose governments
continue to grant low-interest credits in an at-
tempt to expand export markets.
Prospects for major cos perative projects will
be variously atfected as a result of the restric-
The two gas projects-Yakutsk and North
Star-will be hurt, but only the Yakutsk deal
should prove to be a real disappointment to the
Soviets. Most of the requirements for develop-
ment projects can be met from non-US sources.
Oil drilling and pipeline equipment and tech-
no:ogy are notable exceptions.
Before 1972 and the availability of Exim-
bank credits, Soviet purchases in the US were
restricted to high-priority equipment not available
elsewhere. US firms that can channel production
to overseas subsidiaries to take advantage of sub-
sidized credits available abroad would presumably
be least affected.
Moscow would prefer not to let economic
relations with the US deteriorate and is probably
looking for ways to remove the impediments to
further growth of US-Soviet trade. In the mean-
time, the Soviets will link their cutbacks in orders
to the US restrictions, and will hope thereby to
pressure American businessmen and political
leaders to seek modification of the 1974 trade
bill. Tass has already begun to quote US business-
men in Moscow who are said to sympathize with
the Soviet attitude toward the restrictions.
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SECURITY CONFERENCES RESUME
The Conference on Security and Coopera-
tion in Europe reconvened in Geneva on January
20. The force reduction negotiations will resume
next week in Vienna. Some observers have specu-
lated that the delegates in Geneva will be able to
complete their work by this spring. Whether they
can accomplish this, however, will depend on
whether East and West offer concessions that
they have been reluctant to make so far. In Vi-
enna, the two sides are deadlocked; the prospects
that they will be able to resolve their differences
on basic issues during this negotiating round ap-
pear dim.
In Geneva, the delegates from 35 states
must:
? finish drafting texts spelling out the
principles that govern international relations;
? adopt some form of "confidence-
building measures" designed to make certain
types of military activities appear less threat-
ening;
? finish their discussion of the relatively
uncontroversial subject of economic coopera-
tion;
? resolve the most sensitive issue: what
type of practical measures should be adopted
to facilitate the "freer movement of people
and ideas" between East and West.
In addition, the conferees will have to deter-
mine what type of follow-urn arrangements should
be established once the conference itself ends.
Several recent commentaries in the Soviet press
suggest that Moscow will press to conclude the
negotiations early so the summit-level meeting
that the Soviets want to cap the conference can
take place this summer.
Many of the West European and neutral par-
ticipants speculated earlier that the negotiating
phase could end this spring. Recent discussions
among the EC Nine suggest, however, that some
of the major West European participants, particu-
larly the West Germans, will be reluctant to force
the pace of the talks or to drop their demands for
practical measures to improve confidence and to
facilitate East-West contacts. At the same time,
some Europeans have shown some concern that
Moscow's recent action on the US-Soviet trade
accord might presage a lessened Soviet interest in
detente.
The security conference, however, is both a
prodiurt aru z symbol of detente, and both East
and Wei will probably attempt to conclude the
negotiations during this round of talks. Moscow
probably believes that the gains it has already
obtained-such as recognition of the existing bor-
ders in Europe-and the prospect of obtaining
language that will provide it with a rationale for
reneging on any concessions regarding the freer
movement of people and ideas, will enable the
Soviets to make minor concessions to move the
negotiations to a conclusion.
In Vienna, after more than a year of negoti-
ating, the two sides remain far apart on resolving
the basic issues of which states should reduce
their forces, when, and what type of forces
should be reduced. Unless one side or the other
changes its negotiating position, little progress is
likely to be made during the coming round of
talks.
For the Western allies, a matter of immedi-
ate concern will be to reply definitively to a
Soviet proposal made last November that the par-
ticipants freeze the level of men in their armed
forces for the duration of the negotiations. All
the Western allies agree that the Soviet proposal is
unacceptable, but several of them wish to make a
counterproposal that could have the effect of
changing the topic of the negotiations from force
reductions to a freeze. The Allies will continue
their discussion of how to reply on January 23.
The Soviets, who appear to be under no time
pressure in the force reduction talks, will prob-
ably attempt to seize the initiative again during
this round. They may further modify the
"
symbolic reduction proposal" they offered last
October by suggesting that only ground forces be
reduced during an initial stage of reductions.
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PORTUGAL.: CONTROVERSIAL LABOR LAW
The Portuguese cabinet this week narrowly
approved Communist-backed labor legislation
that provides for a single labor confederation.
Prime Minister Goncalves reportedly cast the tie-
breaking vote in favor of the statute. The bill had
been under consideration for more than six
months and appears to have caused divisions
within the ruling Armed Forces Movement as well
as in the government's three-party coalition.
The Communists view the law as a way of
improving their present domination of labor or-
ganizations. Control of labor would ensure con-
tinued Communist influence in Portuguese poli-
tics, even if the party should fail to do well in the
election. The other two parties in the coalition,
the Socialists and the center-left Popular Demo-
crats, are anxious to prevent the spread of Com-
munist influence and have threatened to leave the
coalition over the labor law issue.
Passage of the law was in doubt until the
Armed Forces Movement publicly endorsed it.
Reports circulating in Lisbon indicate that the
Movement was not as united on this issue as its
press releases suggested and that approval was
pushed through by a minority of more radical
officers. According to US embassy sources, the
Movement's 200-member assembly failed to reach
agreement after an unruly session. At this point,
leftist-oriented officers suggested that the deci-
sion be left to the Superior Council, where they
believed the chances for approval would be
greater. The vote in the Superior Council was
reported to have been 11 to 9 in favor of the bill.
The moderates within the Movement may
have become sensitive to the implied alliance be-
tween themselves and the Communists on this
issue. Possibly to dispel this notion, the Superior
Council issued a communique last weekend restat-
ing its determination to hold elections on sched-
ule. The Communists have come out in favor of
postponing elections and have been searching for
ways of blocking them.
Press coverage of the dispute has cast consid-
erable doubt on Communist claims that the law
had solid labor backing. Several unions have ex-
pressed their displeasure with the legislation and
the Catholic Church, which has kept silent on
political matters since April, issued a communi-
que favoring trade union liberty.
Socialist leaders will meet his weekend to
decide whether the party should stay in the gov-
ernment. Party leader and Foreign Minister Mario
Soares is opposed to withdrawal although he is
under considerable pressure within the party to
do so. Soares says that changes have been made in
the final draft of the labor law that will enable
the Socialists to operate freely, despite Commu-
nist control of the superstructure. There are also
reports of dissension within the Popular Demo-
cratic Party over its future plans, but the party
will atte: pt at all costs to avoid a public split
before the constituent assembly elections in
April.
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strong convictions. This reputation is probably
not wholly deserved, for the fractious nature of
the Labor Party forces its c.,-i:irman to provide
leadership through compromise instead of ex-
ample. A willingness to listen to all sides, skill in
parliamentary maneuvering, and deftness and wit
in persuasion mark Wilson as probably the only
man who can keep the party together in the face
of the staggering problems facing Britain today.
After a slow start, Callaghan has been a
fairly effective foreign secretary. At first, he de-
voted most of his energies to the EC renegotia-
tions, bat in recent months he has been inv lved
in all sorts of foreign policy questions, including
Cyprus and the intractable Rhodesia problem.
Because of his keen interest in and close involve-
ment with Cyprus last summer, Callaghan most
certainly will want to discuss this issue, including
the British role, during his talks here.
Prime Minister Wilson and two cabinet min-
isters, Foreign Secretary Callaghan and Chancellor
of the Duchy of Lancaster Lever, will be in Wash-
ington late next week for meetings with top-level
US officials. The discussions will probably focus
on the state of the world economy, oil-related
problems, and on such matters as the Middle East
and Cyprus. The leaders will probably also talk
about Wilson's trip to Moscow, scheduled for
mid-February.
A practitioner of politics rather than a doc-
trinaire socialist, Harold Wilson is r,?garded even
by colleagues es a compromiser, not a man of
Lever is a cabinet official but serves pri-
niarily as economic adviser to Wilson. Probably
the most moderate of the members of the cabi-
net, he seems to functin 'i best in situations where
orthodoxy and respectability are in order. He is
considered knowledgeable in industry and finance
and has had considerable experience in the
Treasury, the City of London, and other financial
centers of Europe. One of his current roles is to
meet with international oil company repre-
sentatives engaged in the exploration of North
Sea oil; they i,re highly skeptica! and fearful
about some of the Labor government's proposals
for taxation and participation in the North Sea
projects.
The Labor government has made good rela-
tions with the US a keystone of its foreign policy,
and this is likely to continue as long as US posi-
tions are not harmful to British interests. The
most likely areas of conflict are oil-related issues
and the Middle East. Britain's current-account
deficit last year of nearly $8 billion can largely be
explained by rising oil prices. Until North Sea nil
makes Britain self-sufficient, the UK will want to
maintain good relations with the Arabs to assure a
continuing supply of oil as well as markets for
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The British government's decision last week
to permit Turkish Cypriot refugees on its air base
at Akrotiri to be airlifted to Turkey sparked
demonstrations by angry Greek Cypriots that
caused extensive damage to British and US diplo-
matic offices in Nicosia. The demonstrations have
subsided, but Greek Cypriot resentment remains
high because the refugees are to be resettled on
former Greek Cypriot properties in the Turkish-
controlled northern sector of the island.
The demonstrations took a violent turn on
January 17 as British officials were making prep-
arations for the airlift of the 8-9,000 refugees. A
group of demonstrators clashed with British
security personnel at the edge of the base, result-
ing in injuries on both sides and the death of a
Greek Cypriot youth. The anti-British demon-
strations, stirred by extreme leftist members of
Vassos Lyssarides' party, soon took on anti-
American overtones as well. Part of the US em-
bassy as well as sections of the British consulate
and the British Council building were ransacked
and burned on January 18.
The government, which had vehemently
protested the evacuation of the refugees, did little
to stop the demonstrators. Greek Cypriot police
and National Guardsmen stood by and watched as
the US embassy was assaulted. A strong demarche
from the US government following the attack
apparently prompted Greek Cypriot authorities
to provide better protection. An attack against
the USIS library on January 20 was beaten back
by strong security measures, and the crowds were
calmed by the arrival on the scene of President
Makarios. The library suffered only slight damage
and was not entered. US embassy officials re-
ceived assurances that the government was deter-
mined to prevent another assault against US in-
stallations and that, if need be, Makario, would
again appear to disperse demonstrators.
In the meantime, the evacuation of the refu-
gees, which is taking place on Turkish aircraft and
will be completed next week, continues unim-
peded. Prior to its decision to allow the evacu,;-
tion, the British government had taken the posi-
tion that their fate was a political question to be
settled in the course of the intercommunal talks.
Under severe pressure from the Turkish govern-
ment, however, Whitehall reversed its position
and permitted the refugees to leave. Ankara had
insisted that the question was purely a humani-
tarian one between itself and London since the
refugees were on sovereign British territory.
Greek and Greek Cypriot officials charged
the British with betrayal and with undercutting
their bargaining position in the intercommunal
talks, which !ast week turned for the first time to
substantive political questions. They dismissed as
specious the British contention that the Turkish
side will now be under pressure to reciprocate on
the humanitarian concerns of Greek Cypriots.
far apart.
tor Clerides on January 20. Instead, the two men
focused on the reopening of Nicosia airport. Their
positions on that subject have been described as
While Turkish Cypriot negotiator Denktash
hinted prior to the session on January 17 that
some gesture might be forthcoming from the
Turkish side, he apparently did not make any
concrete proposals during the session or at his
subsequent meeting with Greek Cypriot negotia-
Demonstrations against UK
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In Egypt...
As expectations rise in Cairo over prospects
for a second-stage Israeli withdrawal in the Sinai
Peninsula, Egypt is coming in for renewed criti-
cism from other Arab capitals for its willingness
to satisfy its own negotiating demands without
waiting for similar progress on the other Arab
fronts. President Saadat has taken to the air with
a series of interviews designed both to fend off
this Arab criticism and to remind the Israelis that
a Sinai withdrawal will not bring an end to Arab
demands for the return of territory.
The Cairo press has reflected a high degree
of optimism that Israeli Foreign Minister Allon's
discussions in Washington last week would result
in a withdrawal proposal acceptable to Egypt.
The simultaneous visit to Washington by US
Ambassador Eilts was taken as an indication that
serious negotiations were in prospect. Despite
Egyptian government attempts to tone the media
down lest public expectations be raised too high,
the press has continued its optimistic tack.
Ambassador Eilts' midweek return to Cairo was
eagerly anticipated, and newspapers are predicting
a swing through the area by Secretary Kissinger in
early February.
Egypt's undisguised hope for negotiating
progress has brought heavy criticism from other
Arabs, led by the Palestinians, who accuse the
Egyptians of again moving ahead of the other
belligerents in negotiations. Palestinian- and Iraqi-
backed papers in Beirut have picked up a month-
old Tel Aviv news report indicating that Israel had
asked for an Egyptian commitment to a 12-year
suspension of belligerency in return for a pullback
in the Sina.. Commentators writing for these
papers are attacking Egypt for allegedly acqui-
escing in this demand.
The criticism has brought a counterattack
from the Cairo press, as well as the series of
interviews by President Sadat intended to deflect
the anti-Egyptian propaganda and reaffirm
Egypt's continued solidarity with the Arab cause.
Early last week, during a discussion with a group
of French legislators, Sadat linked the extension
of the UN Emergency Force mandate in the Sinai
with Israeli withdrawals on all th-ee fronts. He
stopped short, however, of specifically condition-
ing extension of the mandate, which expires on
April 24, on an Israeli pullback on the Golan and
the West Bank fronts.
Later in the week, Sadat told a Beirut news-
paper interviewer that he would not "accept any-
thing short of Israeli movement on the three
fronts within three months"-again an apparent
reference to the expiration of the UN mandate in
the Sinai. Although the remark has been widely
mistranslated as a demand for "withdrawal"
rather than merely "movement," Sadat probably
intended to be deliberately ambiguous about
whether he was demanding an actual Israeli pull-
back on the other fronts by April or was only
speaking of diplomatic action.
In any event, Sadat's statements are serving
to reassure the other Arabs-and to warn the
Israelis-that a Sinai withdrawal would not con-
stitute a final Egyptian-Israeli settlement. Sadat is
also reminding both parties that he will turn his
efforts to gaining progress on other fronts when
and if a Sinai agreement is concluded.
At the conclusion of his discussions with
President Ford and Secretary Kissinger, Foreign
Minister Allon was optimistic that progress was
being made toward a resumption of talks with
Egypt. Allon's optimism, however, was not en-
tirely shared by the Israeli press, which expressed
concern about Cairo's apparent silence on what it
is prepared to offer in return for another Israeli
withdrawal in the Sinai. Nor was it shared by
conservative Israeli politicians, who grumbled that
the foreign minister may be offering the Egyp-
tians too much for too little.
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Prime Minister Rabin apparently had to
defend Allon at a cabinet session on January 19,
the day before the foreign minister returned to
Tel Aviv. According to an account by a newsman
with good access to conservative political circles,
Defense Minister Peres and other like-minded
ministers objected to the positions taken by Allon
during his visits to Washington in December and
January. They argued that he had gone beyond
the framework established collectively by the
cabinet, which was intended to limit his mission
to expressing Tel Aviv's willingness to undertake a
partial withdrawal in the Sinai only in return for
substantial political concessions from Cairo. Peres
said the government had never, for instance,
reached a decision on an Israeli withdrawal of 30
to 50 kilometers in the Sinai, or on the participa-
tion of US units in a UN supervisory force.
If the press account is accurate, such criti-
cism of Allon would reflect the strong opposition
Rabin is sure to encounter from the powerful
conservative bloc in his government toward any
Israeli-Egyptian agreement in the Sinai that does
not include explicit political rnncaccinnc by
ARAB STATES: FAYSAL ON THE ROAD
King Faysal's trip to Syria, Jordan, and
Egypt last week resulted in new outlays of cash
by the Saudi ruler, but apparently no significant
new political developments. The i inal communi-
ques were fairly predictable in content and tone.
Faysal's visit to Damascus, symbolic of the
improved relations between the conservative
Saudis and the Syrians, was a qualified success for
both parties. President Asad took steps to ensure
Faysal a rousing welcome and to play down the
Damascus regime's Baathist origins; the Saudi
monarch's good opinion of Asad was reinforced
by the trip. The final communique announced the
Saudis' intention to provide Syria with $150 mil-
lion for "urgent necessities" and $200 million for
economic development projects.
The Saudis refused, however, to back
Damascus' position on Middle East negotiations,
dashing any hopes Asad may have had of lining
up Faysal to help stop Cairo from pursuing sep-
arate negotiations with the Israelis regarding
another pullback in the Sinai. Asad would clearly
prefer that negotiations on future Israeli with-
drawals in the Sinai and Golan Heights occur
simultaneously rather than sequentially. An
adviser to the King told a US diplomat that the
Saudi government regards Syria's position as
"unrealistic."
Husayn and Faysal
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Like the Syrians, the Jordanians made an doubtedly be chagrined that they came out be-
effort to ingratiate themselves with Faysal; large hind Syria and only slightly ahead of Jordan in
crowds were on the streets of, Amman, and Fa sal's dole.
Husayn uncharacteristically wore either military
uniforms or traditional garb. Faysal's visit re-
sulted in a Saudi grant to Jordan-in addition to
funds provided in the Khartoum and Rabat agree-
ments-of $57 million. Most of this-$47 mil-
lion-is intended to cover the Jordanian budget
deficit and to pay for development and construc-
tion projects in the Jordan Valley and along the
Saudi-Jordanian border. The other $10 million
was designated for military officers' housing. The
Shah of Iran, on his recent visit, extended a credit
for the same amount of money for the same
purpose, suggesting that King Faysal was bent on
not being outspent by his main rival for influence
in the Persian Gulf area.
The Amman communique reiterated con-
ventional Arab criticism of Israeli settlement
activities in occupied territories, and specifically
condemned Tel Aviv's apparent determination to
proceed with construction projects in Jerusalem.
The communique also contained-probably at
Saudi insistence-a reaffirmation by the two sides
of suppcrt for the Palestine Liberation Organiza-
tion and the "legitimate rights of Palestinians."
On the surface at least, Faysal's visit to
Egypt would seem to have been a sharp dis-
appointment to the Egyptians. In contrast to the
aid given Damascus and Amman, Cairo was the
recipient of orly $100 million-described as
intended to ensure Egypt's "supplies of essential
goods." Even the announcement of this grant was
not included in the "press statement" released
after Faysal's departure from Aswan, but was left
to Egyptian Prime Minister Hijazi.
The Saudis have already given substantial
amounts of d;sect cash aid and project assistance
to Cairo. The Egyptian stop was, in any case, only
a last-minute addition to Faysal's itinerary, and
aid was probably not intended to be high on the
agenda. Nevertheless, the Egyptians will un-
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IRAN-IRAQ: TALKS FAIL AGAIN
The third attempt within six months to
resolve major differences between Tehran and
Baghdad failed last week when talks in Istanbul
between the Iranian and Iraqi foreign ministers
broke up with neither side apparently offering
any concessions. Both foreign ministers publicly
acknowledged the lack of progress, but held open
the possibility of future meetings.
Baghdad believes its armed forces could soon
,,.At an end to the Kurdish rebellion if Iran would
withdraw its support of the rebels. To this end,
the Iraqis have been pressing Egypt's President
Sadat and Jordan's King Husayn to help secure
the withdrawal of Iranian forces from Iraq. In
exchange for Arab diplomatic help, Baghdad has
held out the possibility of moderating its foreign
policy and reducing Soviet influence in Iraq.
Earlier this month, the Iraqi foreign minister
also tried to drum up support in Saudi Arabia and
the Persian Gulf states, apparently without suc-
cess. Undeterred by these failures, the Iraqis are
planning a conference for early next month to
discuss "Iranian aggression."
One objective of the Shah's recent trip to
Egypt and Jordan was to undercut these Iraqi
diplomatic efforts and to increase Baghdad's Do-
NORTH YEMEN: PRIME MINISTER OUSTED
The head of the ruling command council,
Colonel Ibrahim al-Hamdi, last week abruptly dis-
missed Prime Minister Muhsin al-Ayni. On Janu-
ary 23, Hamdi asked Abd al-Aziz Abd al-Ghani, a
young economist with no political following, to
form a new cabinet.
Hamdi had been under pressure for several
months from powerful conservative Yemeni tribal
sheikhs-and probably from some Saudi Arabian
officials as well-to dismiss al-Ayni, who, his
enemies claim, has connections with the leftist
Baath Party of Iraq. The ostensible reason for the
dismissal of al-Ayni was his failure to institute
domestic reforms promised by the military when
they took power in June 1974. 25X1
The removal of al-Ayni followed the return
to Sana earlier this month-aboard a Saudi plane-
of Hasan al-Amri, a conservative former prime
minister and military officer. AI-Amri had been in
exile in Cairo since he was removed as premier
and banished from North Yemen in August 1971.
There is widespread speculation in Sana that he
will eventually be named to North Yemen's three-
mernber executive body, the Republican Council,
which is expected to be re-established in the next
few months.
Baathist views resigned last weeken
Hamdi, a moderate who led the military
take-over last June, reportedly still has the back-
ing of key army units and is expected to remain
the country's strong man by virtue of his role as
armed forces commander in chief. By choosing
Abd al-Ghani to try to form a new cabinet,
Hamdi was evidently trying to avoid giving the
post to a potential rival, while maintaining a
middle-of-the-road posture in North Yemeni
politics. 25X1
Rightist forces, such as tribal sheikhs and
religious leaders, wanted al-Amri or some other
conservative to head the cabinet. Hamdi resisted
their efforts in part to avoid the charge that he is
bringing North Yemen openly into the Saudi or-
bit. Abd al-Ghani will probably be acceptable to
leftists in the government and armed forces who
have been unhappy with the removal of al-Ayni.
Three North Yemeni cabinet members with
Page 15 WEEKLY REVIEW
Jan 24, 75
25X1
25X1
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ZAIRE: NATIONALIZATION MEASURES
President Mobutu seems determined to bring
sweeping economic and social changes to Zaire in
1975. He began the year by decreeing a series of
measures designed to tighten government control
over the economy and to make a number of
Zaire's social institutions more responsive to na-
tional needs. Under the measures, the government
will take over all large production, distribution,
construction, and transportation firms. Mobutu
will appoint special "delegates" to manage the
facilities, which apparently will be grouped under
"national commissions" that will oversee var,ous
sectors of the economy.
The take-overs are the second stage of a
program introduced early in 1974 when the gov-
ernment nationalized all large non-industrial
enterprises as well as petroleum storage and distri-
bution facilities. Unlike action last year, which
applied only to foreign-owned enterprises, the
new moves include Zairian-owned businesses. In
addition, government and party officials must
turn over to the state all of their properties in
Zaire and abroad, as well as all foreign bank
accounts. Moreover, they will no longer be as-
signed to manage previously nationalized busi-
nesses although they will be allowed to engage in
agriculture, the weakest sector of the economy.
To avoid discouraging badly needed foreign
investment, all foreign firms established under the
Investment Code of 1969--which grants generous
incentives to large-scale investors---are exempt
from take-over. The majority of US firms in Zaire
have been set up under the code. Foreign-owned
petroleum and copper exploration and produc-
tion facilities are also exempt. Although Zaire
nationalized the copper industry in 1967, it has
granted a number of concessions to small private
firms on a 50-percent equity basis.
Mobutu apparently believes the new mea-
sures are necessary to reduce Zaire's serious infla-
tion and unemployment as well as to curb corrup-
tion and conflict of interest among government
officials. Some measures, such as repatriation of
foreign assets and restrictions on luxury imports
and items that compete with Zairian goods, seem
designed to improve the government's shaky for-
eign exchange position, partly the result of infla-
tion and low copper prices.
In other moves, Mobutu ordered the army to
revise its priorities. Agriculture, political educa-
tion, and military training are to be emphasized-
in that order. The educational system is also to be
revamped. Although details are still unresolved,
immediate moves include one year of compulsory
civic service for all secondary school graduates,
arid the introduction of "courses in civics and
politics" in place of religious training.
It will probably be some time before the
government can implement the new measures,
many of which are vague or ambiguous at best. In
the meantime, the commercial sector will prob-
ably suffer some disruptions, although so far
Mobutu has apparently met little resistance to his
measures. Businessmen have adopted a wait-and-
see attitude, and officials are making strong
public gestures of support while probably hoping
in private that they will not have to enforce the
new measures. The military appears resigned to its
new role, but does not have the equipment or
logistic system to operate effectively. Students
are unlikely to jeopardize their college educations
by rebelling against civic service.
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CAMBODIA
A Crack in the Blockade
At midweek, a small and heavily escorted
ammun;tion convoy dashed up the Mekong River
from the South Vietnamese border to Phnom
Penh. The convoy encountered in-tense Commu-
nist shelling en route and was stopped several
times, once when an insurgent round knocked out
the angine on one tug. Halfway upriver, civilian
crews on some vessels refused to continue, and
navy personnel had to take over. Effective sup-
port from the air force and navy, government
amphibious landings at several points along the
Mekong, and the destruction of a barricade at a
vital river narrows kept the 60-mile run upstream
from being more hazardous than it was.
The progress of the test convoy was closely
followed by other jittery crews and river pilots
aboard civilian ca?,.;o vessels anchored at the Viet-
namese riverport of Tan Chau. Shipowners and
crews have become concerned over the frequent
delays in sailings and scare stories about Commu-
nist strength along the lower Mekong. They have
the final word on whether to risk the trip upriver.
' 111
Prek
P
noun ?
OHNOM PENH
r pock nton
e
AlrpoM`?_ p,J T tnnu:._r
SOUTH l?7 tf
Hard Times in Phnom Penh
The arrival of the convoy will boost morale
in Phnom Penh. Rice and fuel are now being
rationed to civilians in the r.apita' and the city
continues to be hit by sporadic rocket attacks.
Over 150 civilians have died since the attacks
began on New Year's Day; the heavy casualties
are partly the result of an influx of refugees from
outlying areas into the city proper. Communist
gunners this week also got the range of Pochen-
tong airport, just west of the capital, destroying
one aircraft and damaging another. The airport
remains open, however, and increased deliveries
of military equipment continue.
Ground action along the capital's northwest-
ern defenses picked up late in the week following
a period of relative quiet. The Cambodian army's
battered 7th Division is bearing the brunt of the
fresh attacks. Insurgent mortar crews have again
moved within range of the military fuel depot on
Route 5, and the navy headquarters near the city
has been the target of some shellings. Seesaw
battles also continue for several riverside and is-
land positions north and east of Phnom Penh.
Since widespread fighting began on January
1
tot
l
,
a
casualties from both sides have averag d
e
ah ,, i 1 nnn ~_.. ?
25X1 25X1
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VIETNAM: THE WINTER CAMPAIGN
The Communists' military campaign is now
in its seventh week. So far, the fighting has been
moderately heavy in the southern half of the
country, and there are signs that it will soon
spread to other areas. Communist forces have
already made some territorial gains, and they will
probably take additional ground before govern-
ment troops can stop them.
Combat has increased in the delta, but has
tapered off north of Saigon, suggesting some
Communist units are taking a brief respite to
consolidate their gains and to refit. There are
clear signs that the North Vietnamese will soon
resume their attacks north of the capital, and a
Communist buildup in the central part of the
country points to new fighting in that area.
ese appear to have bt?n hurt less than the Com-
munists. Most government losses were suffered by
the regional forces, while the Communists' main
forces have borne the brunt of enemy combat
losses. The Communists should, hov;cver, be able
to replace most of their losses fairly quickly.
They had few reserves on hand at the start of the
current campaign, but additional troops are now
arriving from North Vietnam.
Troop Infiltration
Hanoi is maintaining a moderately Heavy
flow of troops through the infiltration pipeline,
and much of the manpower is going to southern
North Vietnamese troops have captured all
of Phuoc Long Province, a district capital in Binh
Thy Province, and an important mountain top in
Tay Ninh Province. Communist inroads in the
delta include seizing a district capital in Chuong
Thien Province, overrunning numerous outposts,
and expanding their infiltration corridors and
base areas.
Uneven Match-ups
Most Communist gains have been in remote,
sparsely populated areas defended by South Viet-
namese local forces. Except for a few instances in
the delta, these troops have generally fought well
against Communist main force units. The match-
up in forces has favored the Communists, how-
ever. and the outcome of most battles was seldom
in doubt. In the struggle for the provincial capital
of Phuoc Long, for example, the Communist
committed parts of two divisions, together with
armor, artillery, and air defense units to over-
power a South Vietnamese force of less than a
regiment. Even so, it took the North Vietnamese
nearly a week to capture the capital.
Both sides have suffered fairly heavy casual-
ties in the recent fighting, but the South Vietnam-
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ment does not believe that it can successfully
defend either Kontum or An Loc, the capitals of
Kontum and Binh Long provinces respectively, if
the Communists mount heavy attacks on the
towns. In addition, the South Vietnamese will
probably have to give up territory in western
Pleiku, Darlac, and Quang Duc provinces. Some
additional outposts and perhaps a few district
towns will fall to the Communists north of Saigon
and in the delta, but the government has said that
it will fight hard to hold on to the provincial
capitals throughout the southern half of the coun-
try.
government positions are defended by small, iso- 25X1
lated garrisons that would be difficult to resupply
and reinforce if they came under siege. The Com-
munists, on the other land, have large combat
forces that they can concentrate against these
positions. Moreover, the North Vietnamese have
expanded their network of roads, have built large
base areas, and have moved in large quantities of
war materiel.
The South Vietnamese have beguii wide-
spread military operations to disrupt the Commu-
nists and blunt their offensive. Several of the
government's efforts have already achieved some
success. In the northern delta, for example, the
South Vietnamese have sent a division into action
against the infiltrating Communist 5th Division,
blocking it from moving deeper into the region.
In addition, government troops have carried out
operations against Communist units, supply
routes, and staging bases throughout the delta,
and these have caused heavy enemy losses.
The government also has taken the initiative
closer to Saigon. South Vietnamese forces have
pushed the Communists out of several villages
near Tay Ninh City, and they have used artillery
and air strikes to bombard enemy positions on Ba
Den Mountain. In Binh Tuy Province, government
troops have broken the siege of one district town,
and they have begun a drive to retake another lost
to the enemy early last month.
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the govern-
Next Round of Fighting
In the delta, the second phase of the North
Vietnamese winter campaign has already begun.
The heaviest new fighting has occurred in the
southern provinces of Chuong Thien, Kien Giang,
and Bac Lieu. There are reliable indications that
the North Vietnamese will soon carry out new
assaults north of Saigon. One report claims that
the Communist 9th Division, which has seen no
action since last fall, will move into Tay Ninh
Province from Binh Duong, but there is no hard
evidence to confirm such a move. In any case, the
9th is expe.;ted to take part in any new fighting in
this sector.
In the central highlands, the Communists
have begun shifting combat units, which points to
a step-up in combat. The North Vietnamese
968th Division is apparently moving into the
highlands from southern Laos, and some of its
troops have already arrived in western Pleiku
Province. In addition, existing combat units in the
province show signs of stirring. Several units from
the Communist 320th Division have recently
moved closer to South Vietnamese positions
southwest of the provincial capital and have
started to probe government defenses.
The South Vietnamese are most vulnerable
along the western frontiers of the country. The
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080004-5
Chinese engineer regiments in Laos are working
on this two-lane, all-weather portion of "--
network. 25X1
under construction in five areas on the Chinese
side of the border. The roads will provide better
access to Chinese border outposts and could
facilitate logistic support to the military forces of
the Burmese Communist Party. All of the roads
have been started since November 1973, and none
is yet finished. The longest extends over 35 miles,
running from the town of Meng-lien, a major
Chinese headquarters that supports the insur-
gency in northern Burma, to within two miles of
the Burmese border.
The Chinese started scaling down their sup-
port to the insurgency in early 1974, although
they continued work on the roads. They also
continued to train personnel from the Northeast
Command, the Burmese Communists' military
arm, and some Chinese soldiers still fight with the
command.
Although the Burmese army had some suc-
cess in its military operations against the insur-
gents in 1974, the Northeast Command retains its
principal bases and force structure and most of its
fighting strength. The command recently ex-
panded from three to four brigades and has been
adding new recruits.
Recent aerial photography shows a new
14-mile-long addition to the Chinese road system
in Laos. The segment extends due east of the Ou
River, the first such construction by the Chinese
on that side of the river. At least four of the six
Late last year, the Chinese signed an agree-
ment to provide the Laotians with $25 million in
aid. The bulk of the money was earmarked for
construction of a road from Nam Bac to the royal
capital of Luang Prabang, but the agreement also
provided for other unspecified -:onstruction
projects. Thus far, there is no evidence, photo-
graphic or otherv-ise, of new construction along
the Narn Bac to Luang Prabang route. It is un-
likely that any actual construction work on this
link has been accomplished because most of the
Chinese engineers are working on the new east-
ward segment.
25X1 25X1
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Currently, there are about 23,000 Chinese
engineers, infantry, and support troops in north-
ern Laos, whet.: the Chinese have maintained a
considerable military presence during the past
seven years. Their efforts have been almost totally
concentrated on building and protecting the road
system-now in excess of 300 miles. The Pathet
Lao have administered and maintained control of
areas adjacent to the roads.
Road
Chinese-huilt road
Want
Seng
Muonq
Khoua
Sani Neua/
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Jan 24, 75
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THAILAND: ELECTION TIME
Thailand will go to the polls on January 26
to elect a parliament and, indirectly, a govern-
ment. The election concludes a frequently tumul-
tuous 15-month-long transition from military to
parliamentary rule. Even though the Thai people
will have a direct hand for the first time in deter-
mining the make-up of their central government,
voter interest is not high. This is due in part to a
lack of campaign issues. Political attacks against
the government and its political party, which have
often enlivened previous campaigns, are missing
this time. The caretaker government of Sanya
Thammasak has no interest in perpetuating itself
and is eager to step down following the election.
In addition, many Thai, especially in rural areas,
are skeptical that representative government can
work in Thailand's hierarchical society and be-
lieve that the army generals will be back in power
within a year.
Although the voting will take place over the
weekend, it will probably be a week or so before
the results are known and a government can b..
formed. Complicating the process---aside from the
fact that the Thai have no experience in the
workings of parliamentary government-is the
likelihood that no single party will gain an abso-
lute majority.
Some 2,000 candidates representing 42-po-
litical parties are vying for 269 seats in the Na-
tional Assembly. According to a US embassy esti-
mate, six parties will garner the bulk of these
seats, with the Social Justice Party, backed by
army chief Krit Siwara, leading the pack. Krit is
also supporting two other parties that are ex-
pected to do well in the voting. Should these
forecasts prove accurate, Krit will be in a strong
position to influence the selection of the next
prime minister. Moreover, politicians will find it
difficult to form a coalition government without
at least Krit's tacit
arrPntancPF_
C 0t2
W7 Fi
r;' t111ai1 bfTQ9S4~ Itil! a W
Campaigning in Bangkok
Regardless of who becomes prime minister,
there is little chance that the new government will
radically alter Thai domestic or foreign policies.
Political party affiliations notwithstanding, the
majority of the candidates running fo, office are
wealthy businessmen, lawyers, or former govern-
ment officials. Thus, the next government seems
destined to be at least as conservative as its prede-
cessor, if not more so.
civilian rule.
How long Thailand's experiment with civil-
ian rule will last depenc's largely on how well the
new government can work with-and gain the
confidence of-the military, who have held the
reins of political power in Thailand for much of
the past 40 years. The army seems willing to give
the civilians a chance to prove themselves. The
army, through Krit's anticipated political influ-
ence in the new parliament, should be able to
protect its considerable interests. At least for the
short term, General Krit probably holds the key
25X1 25X1
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South Korea
PAK CALLS FOR REFERENDUM
President Pak Chong-hui's announcement
this week of a national referendum on his leader-
ship under the authoritarian 1972 South Korean
constitution has drawn sharp protests from op-
position groups. Pak hopes to demonstrate that
he has national approval for his tough line toward
domestic dis3ent. He contends that softness
would be especially dangerous at this time, in
light of the nation's new economic difficulties
and a continuing threat from the North.
Pak set no date for the referendum, but it
will probably be held in mid-February. Balloting
will reportedly be secret, but under the law no
public debate on the issues is permitted. Pak's
opponents are concerned over the difficulty of
presenting their case to the public and the possi-
bility that the referendum presages additional
suppressive measures. Some activists seem ready,
nonetheless, to mount an anti-referendum cam-
paign, and there is also talk of boycotting the
balloting.
Pak apparently sees the referendum as a
means of taking the political initiative away from
his critics, who have been preparing for another
round of anti-government actions this spring. Pak
hopes that a big win at the ballot box would tag
his opponents as nothing more than an anti-social
minority. He may indeed also intend to use the
results as a basis for tough new control measures,
possibly including n !w legal restraints on opposi-
tion political parties, if major protests develop in
the coming months.
tempts to ensure an overwhelming victory, politi-
Government agencies can probably guaran-
tee a favorable vote for Pak, but the benefits of
any referendum are questionable. The results will
not quiet his critics and, particularly if govern-
ment security forces become heavy-handed in at-
cal tensions ma be aggravated.
Domestic dissent last year I 25X1
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Each of the major oil- and gas-producing
nations has adopted wide-ranging programs to en-
large its fleet. Kuwait has ordered four very large
crude carriers totaling 1.3 million tons at a cost of
$250 million. In addition, the Kuwaitis have allo-
cated $275 million to organize a company to
transport liquefied gas and $260 million to
develop an oil-products tanker fleet of 13 small-
to-medium tankers.
Iraq has ordered 1.3 million tons in the
125,000 to 150,000 ton range and reportedly is
in the market for additional tonnage. Libya has
ordered 850,000 tons for delivery by 1976, while
Iran has ordered four very large crude carriers
totaling 900,000 tons. By the 1980s, Venezuela-
with foreign participation-plans to develop a
modern 2-million-ton fleet as well as support fa-
cilities to haul up to half of its estimated exports
of 2 million barrels a day. Ecuador is planning a
national fleet capable of transporting about
100,000 barrels a day by the end of the decade.
Indonesia and Nigeria have announced tentative
programs to develop oil-tanker fleets, and Saudi
Arabia also has some formative plans.
In addition to the development of national
fleets, the producing countries-especially in the
Persian Gulf-are entering into joint ver.tures with
other producers and with Western firms to own
and operate oil tankers. The establishment of
joint ventures is more important for liquefied gas,
petrochemicals, and refined products, for which
more than 150 joint projects are currently under
consideration by Middle East producers and West-
ern companies.
The organization of Arab Petroleum Export-
ing Countries organized the Arab Maritime Petro-
leum Transport Company in 1973 to expand their
tanker assets. The original capital subscription of
The oil- and gas-producing countries, led by
the Arab states, are utilizing some of their surplus
oil revenues to increase their national oil-tanker
fleets. Their combined tanker fleets had reached
some 2 million deadweight tons by the end of
1974, still a small share of the world's total
tanker fleet of over 200 million tons. By 1980,
the fleets of producing countries are projected to
reach about 27 million tons, or 7 percent of the
total world tanker fleet, aggravating the world
tanker glut. Moreover, the buildup of producer
tanker capacity further presages the decline in the
role of the major oil companies.
The Saudis are particularly active in forming
new private shipping companies with foreign
partners. One-a consortium of Saudi, Hong
Kong, and British companies-plans to purchase
two 200,000-ton tankers as well as tankers to
move liquefied natural gas to the US, Japan, Ar-
ger,tina, and Brazil. In addition, Saudi AraLia and
Japan have reached an agreement to establish two
shipping companies in Saudi Arabia, one of which
will operate oil tankers between the two coun-
tries. Two large tankers have been ordered from
Mitsui shipbuilding for this fleet. Other deals have
been concluded with Spanish and US interests,
and ventures involving petrochemical complexes
and associated tankers are being considered.
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$100 million has been increased to $500 million,
;end the company plans to acquire a 10-million-
ton fleet costing over $2 billion by 1980. It has
ordered five very large crude carriers in the
300,000 to 400,000 ton range at a cost of over
$300 million and is requesting bids on six new
tankers in the 50,000 to 100,000 ton range. Be-
cause most Arab oil producers are planning to
expand their refining capability, the company
also is considering a shift to smaller specialized
product tankers.
A shipbuilding and repair company has been
organized to complement the transport organiza-
tion. Two $200-million facilities, able to handle
the largest tankers currently in operation, are
planned in Bahrain and Malta. The parent coni-
parry has appointed a retired British naval officer
as manager of its fleet operations and is seeking
crews to man its new tankers-the first of which
should be operational this year. Most countries
presently rely on foreign nationals for crews and
management expertise, but an inter-Arab mer-
chant marine academy is to be established in
Egypt to train desperately needed manpower.
Some producing countries have enacted flag
preference legislation designed to assure full utili-
zation of their fleets. In some cases, this legisla-
tion is tied directly to the availability of crude oil
for export. Thus, for a consumer to obtain its
required oil, it mUSt first agree to move a certain
percentage on ships belonging to the producing
coon try.
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Multilateral trade discussions resume in
Geneva today, in the wake of the enactment of
the US Trade Act of 1974. In spite of the precipi-
tous rise in oil prices and emergence of wide-
spread "stagflation" since the Tokyo discussions
of 1973, many of the basic positions of the par-
ticipants remain unchanged. Certain countries will
doubtless voice concern about liberalizing trade in
the midst of recession, and differences over the
use of export controls will also emerge.
French and the more liberal aims of the British
and Germans. Paris views the EC as an integrated,
independent grouping that should be largely free
of external influence. It regards both the Com-
mon External Tariff and the Common Agri-
cultural Policy as linchpins of European unity and
will resist any changes that would weaken these.
As the French see it, the harmonization principle
could involve raising as well as lowering tariffs.
Rising concern is evident within the EC,
particularly in France and Italy, that new trade
concessions will increase domestic unemploy-
ment. In this connection, the European and Japa-
nese press characterize the US Trade Act as a
"double-edged sword" with protectionist provi-
sions that could be invoked if the economic
decline continues.
Assured access to goods in short supply has
become a major issue since the Tokyo conference.
Japan and the EC favor substantial limitations on
the use of export controls. Canada and Australia
regard control over raw material supplies as their
main bargaining chip and will probably use their
leverage in this area to obtain concessions in
others. The less-developed countries prize their
new-found market power and will try to maxi-
mize their benefits without conceding any free-
dom to restrict supplies.
The EC has two basic aims: preservation of
community institutions, and limiting new trade
barriers. The EC will push for "harmonization" of
tariffs on industrial goods (reducing high tariffs
by a greater percentage than low tariffs) and for
international agreements covering major agri-
cultural commodities. While it recognizes that it
may have to make concessions on some com-
modities, the EC intends to preserve the basic
principles of the Common Agricultural Policy.
The community position represents a com-
promise betwe?n the limited objectives of the
Bonn believes that tariffs should be cut ap-
preciably and that harmonization is not an end in
itself. West Germany is more willing than France
to negotiate on agriculture because it is dis-
enchanted with var;ous aspects of the Agricultural
Policy. While the Germans support the idea of
world commodity agreements, they oppose the
inclusion of food aid and internationally super-
vised storage facilities in suc, arrangements. Lon-
don shares Bonn's positions on tariffs and agricul-
ture. Though favorably disposed toward the talks,
the British feel that current economic uncertain-
ties could stifle progress at Geneva.
Less is known about the Japanese and Cana-
dian iegotiating positions since they, unlike the
US and the EC, do not have to develop a nego-
tiating mandate. Japan favors uniform percentage
reductions in tariffs on all industrial products and
supports the concept of agricultural commodity
agreements. The Canadians want to negotiate in-
dividual tariff reductions rather than apply an
overall formula. While Ottawa is closer to the US
than to the EC position on agriculture, preferring
freer market access for agricultural products, it
will probably not vigorously oppose the commu-
nity proposals.
The less-developed countries are expected to
insist on preferential application of any new trade
arrangements. They are concerned about market
access for their products and the effects of tariff
reductions on advantages conferred by trade pref-
erences. They are likely to push hard for improve-
ments in the generalized system of prefer-
ences.
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CENTRAL AMERICA: LEADERS MEET
The five Central American republics, caught
in a cross-fire triggered by Venezuela's call for
Latin solidarity against the US Trade Reform Act,
are seeking agreement among themselves on a
policy that will alienate neither the US nor Vene-
zuela, the area's new-found benefactor. Also, the
Central American leaders have reaffirmed their
commitment to resolve the conflicts that have
stalled regional unity.
On January 18, Guatemalan President Lau-
gerud was host to his counterparts from El Salva-
dor, Honduras, and Nicaragua. Costa Rican Presi-
dent Daniel Oduber, although unable to accept
Laugerud's last minute invitation, is expected to
participate in plans for increased regional cooper-
ation and for solidarity in protecting Central
American interests.
Following the gathering last weekend, the
four chiefs of state declared that the US Trade
Reform Act would generally benefit trade rela-
tions, but that provisions that discriminate against
some Latin American countries should be re-
solved through hemispheric dialogue rather than
confrontation. The Central American leaders
turned down the request from Ecuador and Vene-
zuela to boycott the coming OAS meeting in
Buenos Aires, but phrased their refusal in such a
President Laugerud
way as to appear sympathetic-especially with
Caracas. Just last month, Venezuelan President
Perez promised substantial aid to help the region,
which is almost entirely dependent on imported
oil.
The chiefs of state also pledged to cooperate
in the settlement of the Honduras - El Salvador
border dispute and in the reorganization of the
Central American Common Market. Despite a
number of organizational meetings last year, no
revitalization of the stagnant regional body is yet
in sight, and new disputes continue to surface.
The latest problems arose from Nicaragua's deci-
sion to impose new import and sales taxes on
foreign goods and from selective stimuli for do-
mestic industry decreed by El Salvador. Costa
Rica reacted immediately with a birl authorizing
"compensatory measures" against m-imbers that
infringe on its national interests. El Solvador has
also decided to limit fertilizer exports to Guate-
mala, and Guatemala has retaliated by restricting
timber supplies to its neighbor.
Through the gradual relaxation of tariffs
among member nations, and the adoption of uni-
form tariffs for imports from other nations, the
Common Market did realize impressive successes
through the late 1960s. But the common cur-
rency, uniform fiscal policy, and regional bank
are as far from realization now as when they were
projected over a decade ago. Disparate levels of
development and growing nationalism have been
major obstacles to the large-scale "rational" plan-
ning originally envisioned.
The most significant obstacle to regional in-
tegration efforts, however, is the nearly five-year-
old impasse between El Salvador and Honduras
that erupted in the 1969 "Soccer War." The two
countries have suspended diplomatic relations as
well as bilateral trade, and continue to interfere
with commerce in the rest of the area. When
Honduras formally withdrew from the Common
Market in 1972, drastic changes in the flow of
goods drove Costa Rica's trade deficit to $98
million and prompted it to initiate separate ex-
change rates for essential nrnd-+c and luxury
good-
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BRAZIL: THE CENSORSHIP ISSUE
The Geisel government appears to be strug-
gling with the issue of censorship-specifically,
whether it can abandon all outward aspects of the
practice or be forced to reimpose strict, overt
controls.
Earlier this month, the government removed
the censors who have been present in the offices
of the prestigious 0 Estado de Sao Paulo. The
unilateral move was accompanied by a request-
as yet apparently not honored-that 0 Estado
agree to abide by telephone instructions as to
what may not be printed. This practice, as well as
self-censorship based on previous government
directives, is in effect in other editorial offices. 0
Estado, however, has consistently rejected the
concept of self-regulation, thus obliging the
regime to maintain a direct presence at the
paper's headquarters.
The government's recent initiative may be
designed, in the final analysis, to create pressure
that would finally oblige 0 Estado to adopt self-
censorship. If, after the removal of the censors, 0
Estado still will not fall into line, its actions could
well provide the excuse for the imposition of even
stricter controls on it and, conceivably, on other
papers. Moreover, by writing on some forbidden
topic, such as torture or political dissidence, 0
Estado could, in effect, scoop the other papers
and incur their wrath, and reinforce any latent
government wish to return to full censorship.
Even if Geisel's effort is aimed at ending
f': rmal censorship, the government will not
toierate a return to no-holds-barred journalism.
At best, there will continue to be limits-self-
imposed or not-on what subjects the press can
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