WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080023-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 32
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 23
• Publication Date: May 9, 1975
• Content Type: REPORT

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? Top Secret
meekly Review
Top Secret
a
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Copy N2 658
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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 fre-
quently includes material coordinated with or prepared by the
Office of Economic Research, the Office of Strategic
Research, the Office of Geographic and Cartographic
Research, and the Di,-ectorate of Sc,_.ice and Technology.
Topics requiring more comprehensive treatment and
therefore published separately as Special Reports are lier?ed
In the conter,`s.
1 Vietnam: Solidifying Power
2 Laos: Coalition in Jeopardy
4 USSR-Indochina
4 USSR-Fedayeen
6 Spain: Terrorism and Dissent
or uga : interparty Rivalry
9 EC Looks to Latin America
11 Yugoslavs improve riir Defense
11 France: Arms Sale 3cnanza
13 Polish Administrative Reforms
13 USSR: Car Plant Expansion
CONTENTS (Alai, 9, 1975)
MIDDLE EAa F
AFRICA
15 Persian Gulf: Getting Together
16 Middle East - EC: Dialogue Picks Up
17 Angola: More Violence
18 7airp? PnU/Pr Racy
WESTERN
HEMISPHERE
20 Venezuela: Oil Reversion
21 Caribbean: Multinational Fleet
22 Panama Seeks Treaty Support
24 Cuban Subversion Still an Issue
EAST ASIA
PACIFIC
Comments and queries on the contents of this
publication are welcome. They may be directed to
the editor of the Weekly Revie
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Da Nang after the fall
Vietnam: Solidifying Power
The comr unists have acted quick;y to
squash any resistance by former South Viet-
namese troops, and they appear to be achieving
an orderly transition of power in Saigon as well
as in the countryside. Soon after the capital fell
on April 30, the new "revolutionary administra-
tion" issued tough directives concerning secu-
rity, weapons collectir -o, and pubiic property.
A curfew was put into effect immediately,
civil servants were told to return to their jobs,
and former government officials and the mili-
tary were ordered to turn in their weapons and
equipment and to register. The communists have
since extended the deadline for completing this
to the end of May. The directives promise
lenient treatment and rewards for those who
cooperate but threaten "severe punishment" for
those who do not.
There is no evidence of large-scale
organized resistance to the communists, but
pockets still exist in scattered areas. Most South
Vietnamese seem to realize that continued op-
position will lead to harsh reprisals by the North
Vietnamese forces.
The communists are detaininc senior mili-
tary officers and releasing those of lower rank
and most enlisted personnel. Communist media
indicate that some captured officers are being
indoctrinated in "re-education camps" before
they are released for employment in new jobs.
One report notes that some former military
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personnel are assisting the communists by
repairing US-made weapons, such as tanks and
artillery pieces.
The communists have taken a number of
steps to -e!tore some sense of normalcy to
Saigo,i. Many civil servants and municipal
employees have returned to work, and commu-
nist media claim that all public utilities are now
in operation. Radio and television broadcasts
were resumed shortly after the communist take-
over, and a new daily newspaper, the Saigon
Liberation Daily, has been published since May
4. The new administration has also announced
that it has reopened Tan Son Nhut airfield, but
only North Vietnamese transports have used it
so far. The communists are using existing South
Vietnamese labor unions as a mechanism for
gaining control over organized labor in Saigon.
Last weekend, the communists announced
the formation of an 11-man "military manage-
meirt committee" to oversee the occupation and
administration of Saigon. It is headed by Geri-
eral Tran Vag' Zra, who has been in command of
North Vietnamese and Viet Cong forces in the
se'.:thern part of the country, and who can now
call on these large military forces to support his
efforts.
First Wordy to the Neighbors
The communists have also take- a tough
stance in the diplomatic arena, pressing several
.iearby Southeast Asian countries to return US-
supplied eircraft and ships used by fleeing South
Vietnamese. The communists have sent formal
notes to Thailand, Singapore, Malaysia, and the
Philippines ?9emanraing the return of this equip-
ment. Hanoi has particularly focused on the
Thai. A Nhan Dan editorial warned, "The Viet-
namese people can postpone considering oth'r
problems created by the Thai military dicta-
torial regime, but will never give up considera-
tion of the present issue." Privately, Hanoi is
linking the return of the equipment to the
"normalization of Thai-Vietramese relations."
Hanoi's demands have created a dilemma
fir Bangkok, which is eager to establish
Siplomatic relations with the communists. Some
1-I'lai leaders want to respond positively to the
communist request for the return of the aircraft,
but others are disturbed by the prospect of
providing North Vietnam with weapons that
could someday be used agair;?.: '1 hailand. Since
the LIS has claimed ownership ur the equipment,
the Thai government is c,?ncerncd that returning
the aircraft to the communists would seriously
damage US-Thai relations. For the present, the
Thai government will probably try to stall for
tii :e by bringing up such long-standing issues as
the repatriation of Vietnamese from Thailand,
but in the end, Bangkok may agree to tu: n over
at 'east a token number of aircraft
ac-
conimodate Hanoi.
0.65: Coalition in
Recent communist victories in South Viet-
nam and Cambodia have had a devastating
emotional and psychological impact on the non-
communist leadership in Laos. The non-com-
munists are coming to believe that a Pathet Lao
"victory" in Laos is inevitable and that it is
futile to resist on either the political or the
military front. This defeatist attitude could lead
to a rapid unraveling of the 13-month-old coali-
tion government and the passage of political
power to the Pathet Lao by default.
Jeopardy
Senior non-communist political and mili-
tary leaders are convinced that the Pathet Lao,
emboldened by communist battlefield successes
elsewhere in Indochina and encouraged by
Hanoi, have adopted a much more aggressive
posture in Laos. As evidence, they point to the
recent Pathet Lao cease-fire violations in the
Sala Phou Khoun area of northern Laos. On the
political front, they cite intensified Pathet Lao
efforts to whip up popular support-most re-
cently manifested by the large-scale May Day
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demonstrations in Vientiane-for the ouster of
key rightist and other non-communist leaders
who oppose communist coalition policy objec-
tives. They also point to Pathet Lao efforts to
foment civil unrest in non-communist - con-
trolled urban areas.
A growing number of prominent and
influential nor ommunist cabinet ministers and
general officers have been seriously intimidated
by these Pathet Lao - inspired demonstrations
and. to an even greater extent, by rumors that
Lau communist headquarters in Sam Neua has
ordered the "elimination" of key rightist
leaders. The assassination in Vientiane on May 6
of several low-ranking rightists, including close
relatives of prominent southern rightist power-
brokers Defense Minister Sisouk and Prince
Boun Oum na Champassak, has greatly
exacerbated these fears-although there is still
no evidence that the Pathet Lao were actually
involved.
Many leading non-communist coalition
officials and military leaders, including General
Vang Pao, are seriously considering resigning
from office acid perhaps leaving the country
altogether. They have lost all confidence in
Prime Minister Souvanna Phouma and believe he
has sold out their interests to the Pathet Lao.
Souvanna, in turn, has requested the resignation
of General Kouprasith and several other high-
ranking non-communist officers and ordered the
firing of Vang Pao and the Vientiane region
military commander.
Perhaps most important, the non-commu-
nists are firmly convinced that they cannot
depend on the US to preserve coalition stability
and Lao neutrality, citing as proof the refusal of
the American Congress to provide emergency
assistance to the Saigon and Phnom Penh
regimes in their moment of nraatest need.
While the current fighting at Sala Phou
Khoun represents the most serious and sustained
cease-fire violation since the February 1973
military standdown went into effect, there is
still no hard evidence that either the Pathet Lao
or their North Vietnamese backers have con-
sciously decided to scuttle the coalition in favor
of a military solution. Communist Deputy Prime
Minister Phoumi Vongvichit recently assured the
Lao diplomatic corps that, while military
incidents such as the figl-.ting at Sala Phou
Khoun were inevitable, war would not be
resumed in Laos.
Indeed, a case can be made that the com-
munists are satisfied with the coalition
government's evolution, which they see as
moving inexorably in their favor. The Pathet
Lao have maintained a firm hold on the political
initiative since the coalition's formation, and
virtually all of the;r major policy proposals have
been adopted. Moreover, in Prime Minister
Souvanna the communists have a coalition
leader who has yielded to their views on most of
the important issues confronting the govern-
ment. Additionally, it would appear to make
little sense for the Pathet Lao to have taken the
unprecedented step of inviting King Savang to
spend a week in Sam Neua if they were on the
verge of renewing major hostilities.
It is possible, however, that the commu-
nists may now be embarked on a course
designed to bring about a quick defeat of the
non-communists and a scrapping of the coalition
arrangemoi t. The Pathet Lao and the North
Vietnamese have obviously been encouraged by
communist success elsr''"era in Indochina
Given the demoralization and disarray among
the non-communists, the communists may now
consider that the time is ripe to strike for total
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USSR-INDOCHINA
Supporting Vietnam...
The Soviet press continues to hail the vic-
tory of the "liberation forces" in Vietnam,
while stressing the importance of Moscow's sup-
port. Hanoi is certain to have been impressed by
how quickly Moscow responded to North Viet-
expulsion from Phnom Penh of the seven re-
maining Soviet citizens. Moscow was eager to
establish close ties witn the Khmer communists
and will regard the Cambodian action as a blow
to its hopes of challenging Chinese influence in
Cambodia. In all their commentary, the Soviets
are still treating the US lightly. They -,y be
concerned that a rapid US withdrawal from the
entire Southeast Asian region will leave a
vacuum that China would be better able to fill
than the USSR. A Soviet press official, in fact,
went so far as to suggest that the USSR sees
some future role for the US in Indochina and
would be prepared to help the US establish a
relationship with North Vietnam F_
...And Challenging China
Regarding Cambodia, there has been no
public or private mention by Moscow of the
USSR-FEDAYEEN: TOUGH TALKS
Yasir Arafat was in Moscow last week for
some tough barg~inii,; as the Soviets pressed
him for greater flexibility regarding when and
how the Palestinians go to a conference in
Geneva. The Soviets may have made some head-
way, but judging by their treatment of the visit,
Moscow apparently did not get as much as it
wanted.
Arafat may have made at least one accom-
modation to Moscow by including in the joint
communique wording that would be interpreted
as agreeing in principle to Palestinian participa-
tion at the conference. Although the Palestinian
leaders have for some time been willing to go to
Geneva if they received an acceptable invitation,
they have avoided any public commitment.
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There was little sign, in the communique or
and tormat of Palestinian participation-
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The Soviets probably also pressed Arafat to
make some gesture towaro recognition of Israel
that would prevent Israel from boycotting the
conference if the Palestinians are invited.
Although the Soviets may have promised
Arafat eventua full backing to get him to go to
Geneva, they kept him ai arm's length during his
stay. Moscow continued to avoid recognition of
the PLO as sole Palestinian spokesman, and
there was no indication of progress toward
opening the PLO office in Moscow as agreed to
last August. An Arab press report said Arafat
had spoken with Brezhnev after the May Day
parade, but the meeting-their first-was not
publicized by the Soviets.
The Soviets apparently encouraged their
Czechosl vak allies to give the Palestinians
stro;ig support during the delegation's subse-
quent stop in Prague. 7 he Czechoslovaks ex-
plicitly called for PLO participation in Geneva.
The Soviets have used such tactics before to
assuage the Palestinians, while maintaining their
jwn distance.
Soviet efforts to get around the Palestinian
roadblock to Geneva mey have created new
problems between Moscow and Sy-.-is and its
PalestiniLn allies. The leader of the Syrian-con-
trolled fedayeen group refused to go to Moscow,
publicly criticizing the USSR for offering guar-
antees to Israel and questioning whether any-
thing could be accomplished at Geneva. This
new show of Arab differences will undoubtedly
prove frustrating to Moscow and complicate
Arafat's ability
Geneva, F
Arafat and Gromyko during recent Moscow talks
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SPAIN: TERRORISM. ND DISSENT
The government's crackdown on terrorism
and dissent is damaging the liberal image Prime
Minister Arias wants to project and may increasf
anti-regime sentiments.
The cabinet on April 25 imposed a three-
month "state of exception" in two of the four
Basque provinces. This decree permits the police
to conduct searches without warrants and to
detain suspects indefinitely without regard to
the normal requirement of bringing charges
within 72 hours. The action was prompted by
the slaying of a policeman in Vizcaya, allegedly
by the Basque terrorist group, Basque Father-
land and Liberty, and a shootout near the
French border between Spanish police and a
band of Basque terrorists. Another policeman
was killed in Guernica this week, and police
have intensified their search for Basque ter-
rorists. Thus far, 55 suspects have been
detained.
The conservative press, some military of-
ficers, and leaders of the veterans' organizations
have reacted favorably. Ordinary Basques
deplore the rise in ter, ~srn ' ut also resent their
area being singled out for repressive measures.
May Day and the succeeding weekend
brought another series of anti-regime acts that
may presage a rise in violence. The most serious
was the explosion of a booby-trapped car
outsida the Madrid stadium where General
Franco was attending a May Day rally. It is not
r'2ar whether the bombing was an assassination
attempt, but it served as an anti-regime protest.
There was another automobile explosion near
Bilbao, and several fire bombings of business
and government establishments occurred in
Barcelona and Pamplona.
The police unwittingly enhanced the
reputation of the Spanish Socialist Workers
Party and its labor union by breaking up a
ceremony at the grave of the party's founder
and arresting 60 participants. This will lay to
rest the canard being circulated by the commu-
nist-sponsored Democratic Junta that the party
had been benefiting from government tolerance
while other opposition groups were being ar-
rested.
Labor unrest has also flared again, with the
worst violence at the Renault automobile plant
in Valladolid as police evicted striking workers.
At the end of April, the new labor minister
reportedly asked the cabinet to approve a new
draft of a long-promised decree law granting a
modified right to strike, but no action has oc-
curred. The government could ease labor tension
by holding elections soon for plant representa-
tives in the official syndicates.
Meanwhile, the church issued a pastoral
letter last month calling for civil rights for all
Spaniards, including the right to strike, and
urging special consideration for the rights of
such regional groups as the Basques and the
Catalans. At a recent symposium in Salamanca,
the leader of the Spanish hierarchy, Cardinal
Enrique y Tarancon, said the church must avoid
close identification with the Franco government
and promote changes in society. In the face of
such signs of discontent, the government is
likely to continue its crackdown on dis-
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Armed Forces Movement, prompting specula-
tion that the Socialists might he held respon-
sible. Some 50,000 Socialist demonstrators
marched through the streets of Lisbon and past
the Prime Minister's office shouting "Socialism
yes, dictatorship no."
Cunhal (I) any; pS oar
PORTUGAL: INTERPARTY RIVALRY
Antagonism between the Portuguese So-
cialist and Communist parties erupted last week
in a potentially explosive epilogue to the Social-
ists' recent impressive election victory. After a
face-to-face meeting, however, leaders of the
two coalition parties announced they had agreed
to submerge their differences for the good of
the revolution.
Bitter interparty rivalry surfaced at the
May Day celebration when the Communist-cori-
trolled labor organization, Intersindical, refused
to invite the moderate leftist Popular Demo-
cratic Party end then tried to prevent the Social-
ists from Petering the stadium where the rally
was being held. The Popular Democrats, who
finished second in the constituent assemb;y elec-
tions on April 25, were excluded because they
allegedly do not represent the workers. They
held a separate meeting outside the stadium.
Efforts by Intersindical leaders to prevent
Socialist representatives led by Mario Soaras
from taking their places at the rally created an
uproar, which interrupted a speech by Prime
Minister Goncalves. The two parties Inter issued
public statements blaming each other for the
disruptions.
On the following day, Soares was sum-
moned to a meeting with leaders of the ruling
Early this week, President Costa Gomes
held separate meetings with Soares and with
Communist Party Secretary General Alvaro
Cunhai. Subsequently, delegations from the two
parties met and issued a communique stating
that they had agreed to cooperate to defend the
April 25 revolution-specifically the nationaliza-
tion and agrarian reform measures. Representa-
tives of the two parties plan to hold further
meetings to review prospects for cooperation.
Discord between the Socialists and the
Communists has always been close to the sur-
face. This latest flarer_ip, however, was doubtless
t: iggered by the Socialists' impressive election
showing, which is viewed as a repudiation of the
Communists by the voters. While each party
publicly claims that the other is essential to the
revolution, the Socialists for some time have
been concerned about a commui,:st take-over
and have warned repeatedly of this danger. The
communists, on the other hand, have done
everything to justify Socialist suspicions, wield-
ing their influence with radical military leaders
with great effectiveness, as illustrated by the
Movement's adoption of the communist posi-
tion on a number of key issues.
Since the election, the Socialists have
wavered between a policy of conciliation toward
the Movement and the communists and one of
open confrontation. While Soares himself may
lean toward the milder approach, some of his
more militant followers appear to want to trans-
late the Soc;alist election victory into clear
political gains 's rapidly i, possible.
The communists, on the other hand, are
reassessing the party's orientation in light of its
disappointing election showing among the
workers. Younger Communist leaders reportedly
blame the outcome on the party's tight dis-
cipline and Cunhal's close ident'iication with
the Soviet Union. These younger leaders are said
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to lean toward closer ties with the less dogmatic
and more Europe-oriented French and Italian
Communist parties.
There are indications that the present
agreement to cooperate was made largely to
accommodate the Armed Forces Movement,
which has expressed considerable impatience
with interparty rivalries and even suggested crea-
tion of a new party more nearly representing
Movement views. Serious differences between
the two parties will continue to exist, but the
exact nature of interparty relations will be
heavily influenced by the Movement itself,
which closely controls the access to power and,
hence the relative it f
ties.
EC LOOKS TO LATIN AMERICA
Negotiations between the EC and Mexico
on a five-year non-prefe ential trade agreement
went smo.)thly last week. Signature on a final
accord to enter into force next January is ex-
pected early this summer. The agreement, which
is intended to serve as a model for other -.tin
American countries, will help Mexico increase
its benefits under the EC's scheme of tariff
preferences for all developing countries, in part
thrcugh the work of a joint committee to en-
courage cooperation and trade diversification.
The talks with Mexico signal the beginning
of a new initiative by the EC to improve rela-
tions with Latin Americar, states and to guar-
antee Western Europe access to raw materials.
The EC will use the proposed agreement with
Mexico as a model in renegotiating existing non-
preferential accords with Brazil, Argentina, and
Uruguay.
While EC trade with Mexico is rising, over-
all trade between the Nine and Latin America
has decreased substantJally over the past year, in
part because of the unilateral ban imposed on
beef imports by the EC last June. The decision
last week to ease these restrictions reflects the
community's desire to improve its image as 25X1
trading partner.
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Latin Americans have also expressed con-
cern that trade preferences recently granted by
the EC to 46 developing states-mostly in
Africa-under the Lome Convention will resu;t
in even greater exclusion from L.C m?rk~!ts.
Latin Americans are seeking equal access `o
community markets as a means of reducing
trade depenJence on the US and improving their
balance-of-payments position.
Representatives of the EC and Latin Arne
ican states will meet next month to discuss the
discriminatory effect of the Lome accord on
Latin American trade. Several American states
are expected to lobby for financial aid and an
extension of preferectial arrangements to Latin
America.
The Mexicans were seeking a more compre-
hensive economic cooperation agreement, but at
present the community's jurisdiction is limited
to trade matters. Both sides se,:m content with a
clause enabling their agreemeot to be expanded
gradually as the community achieves greater
authority in other areas. The Commission is now
requesting authority from the EC Nine to frame
an economic cooperation pact with Canada and
would prefer to delay intra-EC debate over simi-
lar arrangements on behalf of developing coun-
tries.
The meeting is viewed by several Latin
American states, Brazil in particular, as a step
toward improving political as well as economic
relations with Western Europe. EC Vice
President Soames conveyed a similar interest
during his visit to Mexico last month, althou'jh
trade matters will probably dominate dis-
cussions during his scheduled tour of five or six
Latin American std+es in September.
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YUGOSLAVS IMPROVE AIR DEFENSE
Soviet SA-6 and SA-7 surface-to-air missiles
recently acquired by Yugoslavia will give its
armed forces a more balanced and effective air
defense capability. US attaches in Belgrade iden-
tified eight SA-6 transporter-erector launchers
with missiles on April 27 during an army re-
hearsal for Yugoslavia's Victory Day parade, and
earlier in April saw the shoulder-fired SA-7 mis-
equipment available and to diversif
Bile. This is the first time either missile has been
identified in Yugoslavia. SA-3 equipment was
observed there f first time
The Soviets are supplying these missiles
probably under a credit agreement that re-
portedly was concluded in December 1973.
Their delivery shows Moscow's willingness to
continue helping Tito modernize Yugoslavia's
armed forces, notwithstanding the troubled po-
litical relations between Moscow and Belgrade
during the past year.
The SA-6 and the SA-7 missiles have ranges
of about 12 and 2 miles, respectively. The SA-7
is used by troops against low-flying subsonic
aircraft and helicopters, dad the SA-3 and the
SA-6 are designed to defend against aircraft fly-
ing at low-to-medium altitudes. The SA-6 also
provides Yugoslavia with a mobile air defense
capability. These SAMs have been seen with
several other East European armies and were
used extensively by Egypt and Syria during the
1973 Middle East War. Since then Yugoslav mili-
tary planners have considered the improvement
-J Yugoslavia's air defense a high-priority goal.
r.:.ously, the Yugoslavs had only the SA-2,
which provides for area defense against aircraft
flying at medium-to-high altitudes.
The delivery of the new Soviet equipment
does not mean that Tito's modernization effort
is complete. In recent weeks, Belgrade has
played host to military delegations from France,
Britain, and the US, and the Yugoslav chief of
staff will visit Sweden this month. The Yugo-
slavs are apparently hoping to obtain the best
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The French arms industry is booming.25X1
Ex
t
d
por
or
ers reached a record high in 1974,
and armament and aeronautic manufacturers are
optimistic that exports will continue to grow
over the next several years. French manufac-
turers took orders last year for at least $2.5
billion in arms from the Third World nations
alone, not including sales to the US and other
NATO countries. Only the US sells more arms
than France and the USSR, which are about on
a par with each other.
The French government works hard for
these sales bcz!ause of their positive effect on
France's balance of payments and on domestic
employment. Money to modernize the French
armed forces is limited these days, so the a-ms
industry is especially dependent on export saes
to stay healthy.
France can produce virtually all types of
modern military equipment. Since 1966, it has
exported to some 30 countries nearly 700
modern jet fighters, about 300 light and
medium tanks, more than 1,100 armored per-
sonnel carriers, and some 70 self-propelled artil-
lery pieces. The French sell a wide range of arms
in Western Europe and the US, but in recent
years they have turned more to the Third World.
Since the Middle East war in 1973, they have
been especially successful in selling arms to the
Arabs, who placed orders worth nearly $2 bil-
lion last year.
Using aggressive sales tactics, Dassault has
kept its family of Mirage fighter planes at the
forefront of export sales. Dassault is now clear-
ing up a backlog of orders for some 230 Mirage
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Ills and 5s and is turning them out at a rate of
11 a month. At this pace, the production run
will last until about December 1976. As sale, of
the Mirage I I I and 5 are winding down, interest
in the F1 is rising. Deliveries of Fls to Spain and
South Africa have begun, and initial deliveries to
Greece are scheduled in the next few months.
Arab purchasers probably will begin getting Fls
sometime next year.
In 1974, Kuwait ordered at least 16-and
possibly as many as 36-F1s. Major new sales of
the F1 appear certain, following France's agree-
ment in January to provide Egypt with new
Libya is currently negotiating for 39 Fls, and
Iraq has mentioned an interest in at least 50
Mirage jets. Dassault already has export orders
for at least 75, and perhaps as many as 130 Fls.
It currently is producing only about four Fls a
month, although this output could be doubled
or even tripled once the Mirage III and 5 are
phased out.
The French are in an excellent position to
sell tanks. The army recently completed supply-
ing its units with AMX-30 tanks, and, except for
small numbers of replacements and spare parts,
all AMX-30 tanks now being produced could be
exported. France could probably turn out up to
35 a month. Important sales last year included
130 AM"-30 tanks to Greece, 100 to Saudi
Arabia, and 50 to Morocco.
The outlook for the sale of tactical missiles
is also bright. Earlier this year, the US decided
to purchase the Franco-German Roland low-alti-
tude air defense missile. Paris hopes that the
favorable impact from the US decision will en-
able it to make significant sales in other coun-
tries. The French also look to a possible NATO
decision to make this missile a standard piece of
armament for NATO countries because of its
selection by the US, France, and Germany. Ku-
wait reportedly ordered some 4,000 HOT wire-
guided heavy antitank missiles. Aerospatiale is
preparing to produce some 500 a month by 25X1
August 1977, and Faris hopes to find as good an
export market fo: this system as for other anti-
tank missiles produced in France-the SS-11,
SS-12, Entac, and Milan.
Sales of French naval equipment have not
kept pars with air and ground forces equipment.
Nevertheless, France does have some good pros-
pects, especially for fast missile patrol boats and
electronics equipment. Last year the Greek>
bought four La Combattante II patrol boats
AMX-30 tanks
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POLISH ADMINISTRATIVE REFORMS
Party chief Gierek will reportedly unveil to
a party Central Committee plenum next week
plans of the regime for a sweeping territorial-
ad m i n i strative reorganization.
the r.cuntry's present adminis-
trative structure-17 provinces and 5 cities with
province status-will be replaced with approxi-
mately FO smaller units. The nation's 392 coun-
ties v% Ill be abolished. The changes, the most
f~,r-reaching since Gierek came to power in
December 1970, will affect party and govern-
ment structures at the provincial and local
levels. The end result will be greater control
from Warsaw.
leadership's determination both to break the
power of close-knit local party and state
organizations and to improve economic perfor-
mance. The actions and inaction of local of-
ficials have allegedly hindered implementation
of the regime's programs. Foot-dragging L?y local
party and governmc1it authorities has been
endemic in postwar Poland, and Gierek has
worked hard to overcome the problem. In his
first years in power, he made large-scale per-
sonnel changes, and in 1973 he radically re-
structured the lowest level of administrative
units. He now apparently feels that those
changes were not sufficient.
Ti,c3 leadership's plans will inevitably draw
opposition from individuals directly affected,
but there is no indication that these critics will
threaten Gierek's position. The party chief is,
nonetheless, taking the precaution of billing the
reorganization as a move toward decentraliza-
tion and a means of bringing government closer
to the people.
Gierek has also apparently speeded up his
timetable for implementing the reforms. Initial
reports indicated that the new system would go
into effect this fall. More recent reporting, how-
ever, says that parliament will authorize the
changes in late May and wil! call for their
implementation on June 1. One journalist has
suggested that the new timetable indicates that
Page 13 WEEKLY REVIEW May 9, 75
the leadership's initial soundings had turned up
little opposition. Gierek could also want to
strike quickly in order to prevent a coalescence
of opposition and to minimize bureaucratic
inefficiency during the transition period. Gierek
a shrewd political infighter, appears able to
carry out the changes and as a result is expected
to go to the party's congress in December in an
even stronger position than he now
enjoys.
USSR: CAR PLANT EXPANSION
The USSR is expanding the VAZ car plant
at Tolyatti (Togliatti) to produce an "agricul-
tural car," an all-wheel-drive version of the
Zhiguli, the Soviet Fiat. The plant's production
area of 1.5 million square meters is being en-
larged by about 20 percent to allow production
of 150,000 or more cross-country vehicles a
year, rai_My total annual capacity at VAZ from
the current 660,000 units to an estimated
800,000 units.
Much of the equipment for the new facility
will probably be acquired from Western Europe;
some will be bought in the US. The Soviet:, are
negotiating with a US firm for machinery to
manufacture wheel and brake drums. Generators
for the power plants and heat treating furnaces
for the foundry and forge have already been
ordered from the US.
The decision to build an agricultural car
represents an abrupt turnabout in Soviet plans.
Until at least mid-1973, the Soviets were
planning to double the size of the VAZ plant
and to build standard Zhiguli passenger cars for
sale in world markets. In April 1973, Foreign
Trade Minister Patolichev stated that Fiat, the
Italian firm that helped build the original plant
and worked out plans to increase the capacity to
1.2 million cars a year, had agreed to assist with
the expansion. Negotiations with Fiat were
terminated a few months later without
explanation.
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Little is known about the decision to
shelve the original plan, but Moscow was prob-
ably discouraged by poor market prospects for
Soviet cars in non-communist countries. Car sur-
pluses were building up in Western Europe and
the US because of recession and inflation, and
gasoline was scarce and high priced.
As a result, the Soviets decided to concen.
trate on meeting urgent domestic needs for an
all-wheel-drive car usable on rural roads and
Soviet farms. Moscow wants to put more cars
into rural areas as incentives to farm workers.
The conventional passenger cars can not be used
on dirt roads during winter and in rainy seasons,
but an all-wheel-drive car can be driven over
extremely poor roads and in roadless areas.
Moscow may see a market for this vehicle in
developing countries as well.
The government appears to be reserving its
option to expand the plant according to its
original plan. Much of the area designated for
the larger expansion, as worked out by Fiat, is
being held in reserve. The new assembly building
is separate from the plant's main assembly lines,
leaving intact for future expansion adjacent
areas that had been designated for expansion
under the original plan.
The Soviets have said little about the ex-
pansion VAZ, but ..25X1
ago and is now more than half finished. Most of
the new area is under roof, but no equipment
has been installed-come is scheduled for deliv-
ery in mid-1975. Production is unlike) before
the last half of 1976.
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PERSIAN GULF: GETTING TOGETHER
The major states of the Persian Gulf con-
tinue to move toward closer regional coopera-
tion in the wake of the reconciliation accord
signed by Iran and Iraq in Mach. A series of
bilateral meetings in recent weeks among the
leaders of Iran, Iraq, and Saudi Arabia has raised
the possibility of an early summit at which a
principal topic would be a collective security
pact.
Iraqi leader Saddam Husayn Tikriti report-
edly proposed such a pact during his visit to Iran
late last month. The Iraqi proposal is said to
provide for common action to meet both
"local" and "external" threats to area states.
Baghdad's initiative suggests a continuing will-
ingness to adopt a more cooperative approach to
regional affairs-a trend the Shah is anxious to
encourage.
The Shah has long regarded the conserva-
tive Arab states in the Gulf as ripe for radical
subversion. Prior to the accord with Iraq, he
tried unsuccessfully to foster his own regional
security arrangement that excluded-indeed, was
largely aimed against-the leftist regime in Iraq.
The Shah's scheme foundered on traditional
Arab-Persian rivalry, on distrust of Iranian inten-
tions, and on the reluctance of conservative
Arab leaders to antagonize Baghdad by joining
non-Arab Iran in such an arrangement. The com-
prehensive agreement reached by the Shah and
Saddam Husayn in Algiers last March, the recent
I2adership change in Saudi Arabia, and the
sponsorship of a security pact by the Baghdad
regime itself have altered the situation consider-
ably. A Gulf-wide pact may now be possible,
provided the trilateral relationship among the
Shah, Saddam Husayn, r,nd Prince Fahd of
Saudi Arabia continues on a positive course.
Any such arrangement would probably in-
clude a mutual nonaggression pledge, an agree-
ment to consult on Gulf problems, and some
formula expressing the common interest of Gulf
states in excluding foreign powers from interfer.
ing in area affairs. Noninterference by foreign
powers has been a common theme in the public
statements of Iranian and Iraqi leaders sirce the
signature of the Algiers accord.
As a possible trade-off, Baghdad might
agree to limit the Soviet navy's access to Iraqi
ports in return for Iranian pressure on Bahrain
to terminate the small US naval presence there.
The Shah has justified the presence of the US
navy Middle East Force only as a counter to
Soviet naval activity in the Gulf. It would be
difficult for him to push the Iraqis to exclude
the Soviets-long an Iranian goal-without also
supporting exclusion of the US. The Shah would
consider he had gained by such a trade-off,
partly because it would leave the Iranian navy
the most powerful in the area.
Iraq's interest in a Gulf security arrange-
ment is less c;:z:r. Baghdad may see a broader
security pact as a means of obtaining a nonag-
gression agreement with Iran. Iraq, moreover, is
trying to project an image of a powerful, yet
responsible Arab state.
Saddam Husayn may also hope to trade
Iraqi cooperation on Gulf security for Iranian or
Saudi help in securing territorial concessions
from Kuwait. Baghdad continues to press
Kuwait to cede two islands flanking the
approaches to Iraq's port of Umm Qasr.
The attitude of Saudi Arabia, whose new
leaders recently played host to the Shah, would
be critical in determining how the smaller Arab
states around the Gulf-particularly Qatar and
Bahrain-react to any proposals concerning a
security pact. The leaders of Qatar and Bahri:)n
generally remain skeptical about both Iraqi and 25X1
Iranian intentions. The Amir of Qatar recently
told a US official that he had no illusions about
Baghdad ending its attempts to subvert Gulf
25X1
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MIDDLE EAST - EC: DIALOGUE PICKS UP
The often stalled "dialogue" between the
EC Nine and the Arab slates is back on track
again now that the /'.: ab League has accepted
the EC's formula for representation of the Pales-
tine Liberation Organization at the talks. The
Palestinians wi,l be included in a group of
"denationalized" Arab experts. Are organiza-
tional meeting of EC and Arab reDresentatives
has been arranged for June 10-1E at Arab
League headquarters in Cairo.
In addition to the Palestinian question,
preparations for the talks had been held up by
EC insistence that political issues be excluded
and that discussions follow the proposed agenda
of economic, technical, financial, and cultural
cooperation.
Although the League has accepted the
compromise on the Palestine Liberation Organ-
ization, it has not accepted the exclusion of
political topics from the dialogue. EC officials
are to meet with the League secretary general
next week to seek assurance from the Arabs that
they wil! not use the June meeting as a sounding
board ror contentious political statements. The
Arabs may well give such assurance, but they
almost certainly will not rule out raising polit-
ical matters at later sessions.
The EC hopes for a businesslike organiza-
tional session and has proposed that several sub-
committees be set up to deal with specific sub-
stantive matters. On May 24, the Arabs are
scheduled to meet to formulate their positions
for the initial session.
The dialogue has become an increasingly
significant and topical issue. It has figured
prominently in the -ash of recent high-level
visits between Arab and Israeli leaders and the
Europeans, with the Arabs and the Europeans
probing each other's intentions. Indicative of
the concern of the Europeans to improve rela-
tions in the Middle East and the Mediterranean
nations are the visits of the Italian and Dutch
foreign ministers to Egypt, the West German
foreign minister and economics minister to
Egypt, Saudi Arabia, and Libya, and French
President Giscard to Morocco. Paris also had a
visit by lsro?li Foreign Minister Allon last week.
During his visit, Allon raised no objections
to the EC-Arab dialogue, as long as there is a
concurrent EC-Israeli dialogue. An industrial
free-trade arrangement between the EC and
Israel will in fact be signed on May 11 and entc,?
into force on July 1, although some provisions
will be held in abeyance until Italian reserva-
tions about easing EC tariffs for certain Israeli
agricultural products are overcome.
Irish Foreign Minister FitzGerald during
May 19-25 will visit several Middle Eastern
countries in connection Nith Ireland's current
presidency of the EC Council and will report
back to the community on ilhc rclati..,n of Mid-
dle Eastern developments to the dialogue. His
report may also ,help in current discussions
among the Nine about a common :,position on
issues involved in a Middle East r:,eace settle-
ment. Despite French reservations, the Irish
ambassador to the US was instructed to ask
April meeting of the Arab League Council
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Washington if it would like to inform the Nine
about its future strategy in the Middle East in
order to establish the basis for possible EC rn-
ANGOLA: MORE VIOLENCE
Fighting flared in Luanda again last week
between forces of the Popular Movement for the
Liberation of Angola and followers of the
National Front for the Liberation of Angola, the
two principal nationalist groups in Angola's
transitional government. It was the second
major outbreak of violence there in less than
two months.. It lasted a week and raised new
fears of civil war or a coup attempt by one of
the liberation groups.
The National Front apparently believed the
Popular Movement was planning widespread
demonstrations and possibly a coup attempt on
May Day. Clashes between the two groups led to
widespread looting and rioting, first in one of
the city's predominantly African shanty sections
and later in adjacent, largely white, residential
areas. Altogether, some 1,000 persons may have
been killed; a simile" outbreak in March resulted
in over 200 deaths.
Although racial hostility wr.s not a prom-
inent factor in earlier disturbances, it was this
time and is now causing considerable tension in
the city. All three of Angola's liberation groups
blamed "white rp:,ctionaries" for much of the
violence. A number of whites did engage in
sniping and small-scale terrorism against blacks,
but apparently largely out of fear for 7ieir
safety. Portuguese forces, which in the past I:ave
hesitated to become involved, intervened in a
number of instances to protect whites and their
property. Early this week, "ie US consul gen-
eral, expecting further violence with racial over-
tones, evacuated all official American de-
pendents.
Security forces in the city, both black and
white, are few in number and poorly trained.
They rio not have the capability of restoring
order if serious clashes occur. Portuguese troops
respond only under extreme provocation in the
absence of authoritative directives from the
transitional government, which is hampered by
divided loyalties.
The representatives in the government of
the Popular Movement and the National Front
respond to such fighting in terms of how best to
advance the interests of their own organization.
Despite their public calls for a cessation of
hostilities, they drag their feet as long as their
group is not losing ground. Thus, the burden of
restoring order rests with the Portuguese and the
National Union for the Total Independence of
Angola, the smallest of the three nationalist
groups.
A new round of violence could come at
any time. Both the National Front and the
Popular Movement have been smuggling large
quantities of arms into the city, including heavy
mortars, artillery pieces, and rocket launchers,
which their mostly inexperienced personnel use
indiscriminately.
One possibility for averting full-scale war
between the nationalist groups would be an
agreement among their leaders to renegotiate
the original independence accord with Portugal
in such a way that the three n,;oups will not feel
the need to compete for political power. Portu-
guese officials in Luanda are actively promoting
a meeting of the top nationalist leaders to dis-
cuss this possibility. The Popular Movement,
which is losing political ground, might be willing
to strike a new deal that included no postpone-
ment of the national elections scheduled for late
October. The other groups, however, sense the
Popular Movement's weakness and probably
would not go along unless they are pressed hard
by the leaders of neighboring African states who
provide them with i tance.
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President Mobutu, who has now been in
power almost ten years, has given Zaire a degree
of political stability that cor.tras,s vividly with
the chaos that followed independence in 1960.
In recent years, Mobutu has concentrated on
increasing the political effectiveness of Zaire's
two major institutions-the single national party
and the army.
The Zairian leader has devoted particular
attention to the Popular Movement of the Rev-
olution. He had established the party in 1967 to
fill the void resulting from the moratorium on
political activity that he had imposed upon
taking power two years earlier. Initially, Mobutu
used the party mainly to provide patronage and
perquisites to help ensure a loyal bureaucracy,
but in 1970, it was designated the "supreme
institution" in Zaire's political structure. Since
then, representatives of the army, the national
police, Zaire's single labor union, and the court
system have been brought in.
Constitutional amendments adopted last
year formally subordinated the executive, legis-
lative, and judicial branches of government to
the party. For example, the constitution now
makes the president of the party, who is elected
by its political bureau, the president of the
country as well. His tenure is limited to two
five-year terms, but this does not apply to
Mobutu.
The party has not, however, become the
mass movement Mobutu had hoped. It has pro-
duced few leaders capable of organizing at the
g ass-roots level, even though by law all citizens
are automatically members of the party. Never-
theless, the party has become useful to Mobutu
as an instrument for indoctrinating political
leaders.
The army has presented special problems.
Its ability to carry out administrative and secu-
rity responsibilities throughout the country has
been uneven at best. As commander since 1961,
Mobutu is well aware of the army's short-
comings-a lack of discipline and an earned
reputation for bru+ality. He hLs deliberately but
discreetly dissociated rrimself from the image of
army strong man and concentrated instead on
his role as party leader. Still conscious, however,
that his power depends on the military, he has
given the army a voice in national affairs. At the
same time, he has reorganized the senior officer
corps several times to make ii dependent on
him.
Mobutu wants to draw the army more
actively into social and economic development
efforts, to raise its "political consciousness,"
and increase its discipline. Aside from the ob-
vious advantages of using otherwise unemployed
soldiers on economic projects, Mobutu probably
hopes to keep the troops too busy to engage in
the kind of intrigues and conflicts that the mili-
tary indulged in during the sixties. Early this
year, he ordered the army to give priority to
agricultural projects, arguing that a military
establishment that does not contribute to the
nation's economy is a luxury developing nations
cannot afford.
The army has already been officially inte-
grated into the party, and a group of 500 offi-
cers, who will be political commissars, is sched-
uled to attend a special political indoctrination
course later this month. Mobutu borrowed the
political commissar idea from the Chinese and
North Koreans, but their several hundred mili-
tary advisers in Zaire are not allowed to engage
in political proselytizing.
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Army leaders apparently are accepting
their new responsibilities willingly. Whatever
misgivings they may have had about politiciza-
tion seem to have been overcome by the fact
that they will lead the program. They also ex-
pect the army's defense mission to be enhanced
by sizable deliveries of military equipment from
Peking and Pyongyang. The army's logistic
weaknesses and lack of experience, however,
may be inhibiting factors in carrying out agri-
cultural responsibilities.
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VENEZUELA: OIL REVERSION
The timing of the move and the role ol' the
private oil companies after nationalization are
the only major problems that must be worked
out before Caracas takes over the foreign oil
industry in Venezuela.
There is no opposition within the congress
to the principle of nationalization, only to some
of the terms accompanying the government's
take-over of the $1.5-billion industry. Although
the governing Democratic Action Party, which
controls congress, could ram the bill through
both chambers, President Perez has placed g, aat
emphasis on achieving what he calls "a national
consensus." Because of his attitude, the Presi-
dent appears willing to compromise and tolerate
objections by opposition parties to key sections
of the bill, providing he is given complete flex-
ibility in working out arrangements with the oil
companies should he consider this to be in the
national interest.
Formal congressional debate will probably
begin around May 15, with a final vote likely in
early July. Perez might Select either Independ-
ence Day, July 5, or the anniversary of Bolivar's
birthday, July 24, on which to announce the
nationalization.
Perez
In the meantime, most congressional atten-
tion will center on Article 5, which has become
the focal point of political controversy. This
article would permit the private oil companies
to participate with the state in "association
agreements" after nationalization. Perez has
been adamant on this point and has personally
formulated the language to be used in the draft
bill. 25X1 25X1
Most of the small leftist political parties
oppose any role for the private companies fol-
lowing nationalization. Leaders of the major
opposition Social Christian party of former pres-
ident Rafael Caldera have eschewed doctrinaire
positions on the issue, a possible reflection of
the success of the -iovernment's efforts to gain
their support on the general terms of nation-
alization. Perez and Caldera have held private
discussions and reportedly have resolved
of their problems.
The general outlines involve
the submission by a "broker" party-the
Democratic Republican Union (URD)-of the
compromise proposal, specifying those sectors
of the petroleum industry in which private
capital may participate. Such a compromise
would satisfy Perez' strong desire for flexibility
and would permit the Social Christians to
support nationalization and contend that it took
a nationalistic stand on the bill. Perez' reward to
the URD might include financial assistance,
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which it badly needs, and possibly some govern-
ment jobs.
Most of the debate in the coming weeks
will be keyed to the domertic audience. The
rhetoric will be strongly nationalistic, and cer?
tainly anti-company in tone. Nevertheless, most
knowledgeable Venezuelans, including major
party leaders, now accept the need for foreign
assistance to operate the industry after nation-
alization. Indeed, some remarkably frank task
has been heard recently from normally com-
placent Venezuelan ofi,cials who admit that
Venezuela is not capable of taking over the
international marketing of its oil. They believe
that it will be ;essary to establish "areas of
assistance" in _uch activities as "international
marketing, selection and purchase of equipment
and mat' rials, and technological research."
Official talks between the Perez administra-
tion and the oil company representatives will be
resurned after the congressional debate con-
cludes in the next few weeks. At that time, the
government will announce the compensation
arrangements. For now, they are lying low and
hoping the current reasonable mood and the
persist.
CARIBBEAN: MULTINATIONAL FLEET
On April 16, representatives of 17 Carib-
bean and Central American countries completed
a preliminary, technical meeting on a Mexican
proposal to establish a Multinational Caribbean
Fleet. Cuba attended, but the US and the
British, Dutch, and French dependencies were
excluded. Supporters believe such a fleet would
foster regional cooperation and provide addi-
tional, and possibly cheaper, freight service. At
least eight governments represented at the
Mexico City meeting remain skeptical, and some
may decline to participate. A ministerial-level
meeting to resolve remaining problems and to
formalize agreement on the new service is cur-
rently scheduled for May 25-28 in San Jose,
Costa Rica.
As now envisioned, the fleet will be funded
with a 1:100-million stock offering, 60 percent
reserves for participating governments and 40
percent for private investors. The stock ear-
marked for the 17 governments will be offered
initially in blocks valued at $2.2 million each,
but governments can participate by investing as
little as $500,000. Any government shares left
unsubscribed, either because a country limits or
declines participation, will be offered to the
remaining members with an important restric-
tion-no single country can control more than
12-15 percent of the total stock issue. The
remaining 40 percent of the stock will be
offered to private investors, principally labor
unions and companies with headquarters in one
or more of the 17 countries. When a fund of
$20 million has been reached, the group will
begin purchasing and leasing ships, starting
regular service by the end of 1975.
Trinidad and Tobago remains the most
vocal of the detractors. Prime Minister Eric
Williams has denounced the fleet as a vehicle for
the "recolonization" of the Caribbean by
Mexico, Venezuela, and Colombia. Guatemala, 25X1
Honduras, Nicaragua, El Salvador, the
Dominican Republic, Jamaica, and Colombia
either share Williams' fear or object to the
venture for other reasons. Several countries wish
to protect their existing or planned national
fleets, at least three fear Cuban participation, and
others are convinced that the shipping service
will prove unmanageable and turn into an ex-
pensive debacle.
Cuuan participation could pose a problem.
US law calls for limited economic sanctions
ayeinst countries trading with Cuba or allowing
their ships to enter Cuban ports. If the member
countries attempt to guarantee freight for the
new line by legislation or other non-competitive
measures, they could find themselves the object
of retaliatory action by the other maritime
nations whose ships operate in the area.
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PANAMA SEEKS TREATY SUPPORT
Sensing that a critical point is at hand in
the canal treaty negotiations, Panamanian
leaders believe that the outcome might turn on
having world opinion on their side. Top govern-
ment officials are engaging in shuttle diplomacy
in quest of new support and plan to use the
current OAS General Assembly as a forum.
Foreign Minister Juan Tack has set the
pace for the campaign. During the last several
weeks, he has visited the capitals of Argentina,
Brazil, Colombia, Peru, Uruguay, and Vene-
zuela. He is now in Washington to present
Panama's case at the OAS meeting. Chief of
state General Omar Torrijos personally handled
the discussions in Costa Rica, El Salvador, and
Guatemala. Panam -nian missions eventually will
go to all the remaining Latin American countries
as as to any international meetings where
expressions of support might be garnered.
Tack and his colleagues are effectively
using the theme that ending the US "colonial"
presence in Panama is an objective that all Latin
American countries should share and that the
handling of the canal treaty negotiations will be
an important test of Washington's sincerity in its
desire for a new relationship with the region.
General Torrijos has always believed that
only by keeping up direct and indirect pressure
could he convince the US government that it
should give high priority to reaching a new rela-
tionship with Panama on the canal issue. During
the past two months, Panamanian officials have
said that the campaign for international support
has been given new impetus by the need to
counter mounting opposition in the US to any
change in the canal situation. The Panamanians
are chiefly concerned about what they consider
a campaign by some US legislators and residents
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of the Canal Zone to sabotage the negotiations.
In addition, the Panamanians fear that world
events may divert official US attention from the
canal question, or even worse, that they could
lead to a hardening of the US negotiating posi-
tion or even a decision to abandon the negotia-
tions on the grounds that the US public would
not now tolerate giving up control over the
canal.
BRAZIL: CONCESSIONS
The government's repeated use of a
particularly stringent decree-one which it
had previously .voided invoking-has
aroused fears that President Geisel's program
of liberalization is in danger.
While still firmly committed to completing
the treaty negotiations, Panamanian officials
now are seriously considering the implications
of a stalemate or breakdown and what they can
do to lessen the chances that either one will take
place. Lieutenant Cilonel Manuel Noriega, chief
of the G-2 section of the Natiooal Guard and a
close adviser to General Torrijos, has urged US
officials to continue to work toward a treaty
and not to be preoccupied by the problem of
Congressional ratification of the pact. Noriega
maintained that the prospects for avoiding a
confrontation between the two countries would
be much better if a new treaty were delayed or
even rejected by the Congress than if no treaty
were agreed to at all.
The pro-government Panamanian press is
also trying to temper earlier public optimism
about rapid completion of a new treaty. In
articles focusing on Tack's travels and dec-
larations, the Panamanian media have main-
tained that although major advances have L,aen
made in the negotiations, the talks may go on
for many more months, or even years, if that is
%phat it takes to fulfill the country's basic as-
pirations for sovereignty over the canal. Some
articles aver that in view of a potential impasse,
Panama mast prepare for a "fight for national
liberation." Government officials have not gone
that fat, but they do believe that it is essential
to build international support for their side in
case any confrontation should develop. This
belief is a major reason behind the Panamanians'
continuing effort to gain votes for a seat on
the
UN Security Council this
The President recently by-passed con-
ventional laws and courts and used Institu-
tion Act 5, which pertains to matters of
national security, to punish several local of-
ficiais for corgi uption. While these cases by
themselves drew relatively little attention,
Geisel's subsequent use of the act to inter-
vene in the local politics of a remote state
aroused a good deal of concern. The Presi-
dent went over the heads of politicians in
the capital of Acre State to impose a new
mayor, basing his decision on certain provi-
sions of the act.
These moves, which some view as a
concession to opponents of liberalization,
are probably meant to reassure the conserva-
tives that the administration retains a firm,
vigilant stance. Moreover, it can be seen as a
warning to politicians that there are. still
limits on their freedom of action. In using
the. institutional act, Geise' has gone beyond
his earlier efforts-largely verbal-to mollify
conservatives and caution politicians.
The President's most persistent day-
to-day preoccupation seems increasingly to
be one of devising ways to carry out his
liberalization program without becoming the 25X1
captive of either its supporters or its
enemies. The latest moves, however, are
likely to encourage the conservatives to 25X1
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CUBAN SUBVERSION STILL AN ISSUE
The OAS General Assembly convened May
8 in Washington with the issue of sanctions
against Cuba still unresolved. Some governments
have linked their willingness to end the sanc-
tions to a change in Cuba's position on subver-
sion in the hemisphere.
Meanwhile, Cuba is continuing to score
diplomatic and economic gains in Latin
America. Its support for revolutionaries in the
hemisphere is at the lowest point since Castro's
rise to power, reflecting Havana's desire to gain
respectability and its recognition that revolu-
tionary conditions are absent in countries whose
governments Castro opposes. Castro was ex-
pressing his awareness that Cuban efforts can
not be the catalyst for revolution when he told a
group of Mexican journalists in eavIy January,
"We cannot extend our private revolutionary
objectives to Latin America because I Think a
revolution belongs to the people of each nation
and no one can conduct it for them."
To promote normal government-to-gov-
ernment relations with the countries that sup-
ported the lifting of sanctions at the Quito
meeting of OAS foreign ministers last Novem-
ber, Havana is loosening ties with the few illegal
and guerrilla groups it still assists. Even in coun-
W
tries hostile to the Castro regime, Havana no
longer sponsors insurgent groups, nor are
Cubans sent abroad as advisers or participants in
revolutionary action. rinaocial, material, and
training support for Latin American revolution-
aries have been reduced to the lowest levels
sincr 1959. The guerrilla training that Cubans
still offer is aimed at maintaining small nuclei of
paramilitary specialists for future contingencies,
rather than as part of plans to infiltrate guer-
rillas for the purpose of armed subversion.
Eschervirg subversion in these countries is
a tactical decision, however, and the Cuban
leadership reserves the option in the future co
support wall organized armed groups that
demonstrate an ability to attract broad popuiar
support. The Cuban leadership apparently has
interpreted the overthrow of Chilean president
Allende as proof that there is no peaceful road
to socialism, and evidently feels that in the long
run a true social revolution in Latin America can
be achieved only through the use of violence.
A draft Cuban constitution released in
early April reflects this attitude. It specifically
acknowledges:
? The "right of peoples to reject
imperialists' violence with revolutionary
violence."
? The "legitimacy of wars of national
liberation as well as armed resistance to
aggression and conquest."
? Cuba's right and internationalist duty
to aid "the besieged and the peoples who
fight for their liberation."
For the sake of marginal subversive groups, how-
ever, Castro is unlikely to compromise the
formal ties he has worked so persistently to
acquire in Latin America or to endanger
prospective ties with governments that may
soon restore relations with Havana. He will be
mindful of Cuba's improving image throughout
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Siberian
Military District
Trans-Baikal
Military District
NJk9tyevskoye a S.W,
It
Ing10
CHINA-USSR: BORDER QUIET
The Sino-Soviet border has been relatively
quiet for some time.
]-the Soviets have re-
cently complained of Chinese provocations. We
have no direct evidence of any unusual Chinese
actions, but the Soviets increased their recon-
naissance of the border during January and
February. Since 1970, both sides have slowly
added to their forces near the border, but
neither could launch or maintain a major offen-
sive without reinforcements.
Soviet Capabilities
Thirty-four manned Soviet ground divi-
sions are stationed along the Sino-Soviet border
and in Mongolia. Most of these are opposite
Shan-yang
Military Region
Shen-ysnp
South I
Korey
northeast China. These divisions and their sup-
port units total about 365,000 men. The Soviet
tactical air force has some 1,150 combat aircraft
in the same general area. About 40 or 50 per-
cent of these divisiorL are considered to be fully
combat ready. The others would have to be
bolstered by reservists and vehicles before
becoming combat ready.
In the border area, the Soviets have an
estimated 10,000 tanks and 235 tactical missile
launchers, among them 36 for the SS-12 Scale-
board missiles. The SS-12, a mobile surface-to-
surface missile with a range of 500, nautical
miles, is the most advanced Soviet tactical mis-
sile. The size of the tactical air force along the
border has not been increased, but older aircraft
are being replaced. The MIG-23 Flogger has
25X1
25X1
Lan-thou
Military Region
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appeared in limited numbers, and at least six
M I G-25 Foxbat high-altitude reconnaissance
aircraft are now stationed at Nikolayevskoye.
The Soviet border force, with its greater
firepower, mobility, a-id air support, is clearly
superior to China's, but is still primarily a de-
fensive force. It is more than strong enough to
handle any Chinese threat to the USSR, but not
strong enough for a full-scale land invasion deep
into China.
Peking does not foresee a war with the
Soviets in the near future. China has neither the
manpower in place nor the logistic system to
sustain a major attack, but its forces are capable
of defending against a Soviet invasion as lone as
Chinese Capabilities
Peking has about 1,600,000 men-about
115 combat and combat-support divisions-in
the four military regions bordering the USSR
and Mongolia, in addition to large numbers of
paramilitary personnel. Some of China's small
force of nuclear missiles apparently is intended
as a deterrent or a limited response to any
Soviet use of tactical nuclear weapons.
About one third of China's ground forces
are in the northeastern and north central por-
tion of the country. The forces in the western
regions remain comparatively small, despite
efforts since 1970 to expand them. The Chinese
keep major units well back from the border;
Soviet forces are close in to defend the vital
Trans-Siberian rail line.
The Chinese have built numerous dug-in
positions at the first defensible terrain along
likely invasion routes from the USSR and
Mongolia. They have also added a number of
new border posts to improve their early warning
capability against ground attack.
China's defense strategy is based on the
knowledge that Chinese forces are inferior to
those of the Soviets in both quantity and qual-
ity of military equipment. For example, the
Chinese have about 4,000 tanks in the four
northern regions compared to some 1.0,000 in
the Soviet military districts opposite them. The
Chinese have about 2,000 air defense and
tactical aircraft, but most lack the eight and
all-weather capabilities of Soviet aircraft.
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JAPAN: WAGE OFFENSIVE BLUNTED
Responding to strong economic and polit-
ical pressure, Japanese labor is accepting much
smaller wage hikes than initially demanded.
Settlements in the first phase of this year's wage
offensive averaged 13 percent, compared with
demands of 30 percent or more. This is a major
victory in Tokyo's two-year battle against infla-
tion. Although the settlements open the way for
a more rapid shift to a national policy of eco-
nomic expansion, Tokyo still intends to move
cautiously.
The 33-percent wage hike last year was
largely swallowed up by increases in living costs.
Japanese workers consequently sought huge
increases-typically 30 percent-at the start of
the 1975 wage offensive. Their negotiating posi-
tion has been seriously undercut by rising un-
employment, a record bankruptcy rate among
small firms, and a severe profit squeeze in most
industries. With the backing of business, Tokyo
reinforced these market elements by setting an
informal 15-percent limit on hourly pay hikes in
1975.
Thus far, all major unions have gone along
with the government. In industries hard hit by
the recession, settlements have been well below
the guideline. Auto, steel, and shipbuilding
workers recently settled for pay increases of
about 15 percent instead of a requested 30
percent. The seamen's union also accepted a
15-percent gain, after demanding 48 percent. In
the severely depressed textile industry, major
unions were content with increases averaging 7
percent, and others went along with as little as 2
percent. Electrical appliance workers appear
ready to settle for an increase of 9 percent.
Settlements covering one third of the
industrial labor force have already been com-
pleted. Negotiations with government and
transport unions will take place this month, and
with retail clerks and other service workers in
the summer. Settlements are expected to range
from 10 to 14 percent.
Although negotiations have been intense,
unions generally are adhering to the no-strike
-PAIL
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tradition. Transport workers, the chief excep-
tion, probably will strike for two or three days,
as usual.
These settlements should take much of the
steam out of Japan's 'age-price spiral. Unit
labor costs are expected to rise only 10 percent,
compared with 28 percent in 1974. This cost
increase will raise wholesale prices over the next
12 months by roughly 4 percent, and consumer
prices a little more than that. For 1975, as a
whole, consumer prices will probably average
8-10 percent higher than in 1974.
In real terms, wages probably will be up
3-4 percent this year, half the long-term average.
The resulting gain in consumer demand will
provide a small impetus for economic growth in
the latter part of the year.
Even though wage gains are being pegged at
a reasonable level, Deputy Prime Minister
Fukuda continues to take a cautious stand on
stimulating the economy. Short-term plans call
only for a small acceleration of public works
spending and a gradual easing of credit restric-
tions. Under these circumstances, economic
recovery will be extremely slow, particularly
since excess capacity and large inventories con-
tinue to depress investment.
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