WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080033-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 26
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 33
• Publication Date: July 18, 1975
• Content Type: REPORT

 rsrvw
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Top Secret
Weekly Review
Top Secret
July 18, 1975 25X1
Copy N2 661
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3 MMIJ
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
.'The WEEKLY REVIEW, issued every Frldey Morning by the
Office.otCurrent, Intehigence, reports and-analyzes significant
developments of the week' through.noon on Thursday. It.fre
q;ently Includes. material coordinated with.or prepared by the
Offii;:e of Ecunom,c 'Research, the,. Office of ,Strategic
Research, , tie 'Office 'of Geographic and.:Cartographic
Research, and 'the; Directorate of Science-,arid Technology.
'Topics requiring ;more comprehensive treatment 'and
therefore published.separately as Special Reports..are listed
in the contents
CONTENTS (July 18, 1975)
EUROPE
25X1
MIDDLE
EAST AFRICA
1 Italy: Fanfani Under Fire
2 CSCE: Nearing Agreement
Portugal: Political Crisis Mounts
USSR-US: Criticism of Schlesinger
USSR-France: Chill in Relations
European Communists: Differences
Eastern Europe: Floods and Harvest
9 Middle East: Pressuring Israel 25X1
11 Angola: Another Round
13 Malagasy Republic: NASA Out
14 Israel-Fedayeen: Retribution
15 Comoro Islands:
Independence Declared
16 Argentina: Crisis Continuing
17 Peru: Nonaligned Conference
18 Panama: Impatience Over Delay
19 Philippines: Unfinished Business
20 Australia: Weathering the Storm
20 Laos: Little Progress
25X1
WESTERN
HEMISPHERE
EAST ASIA
PACIFIC
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of the Weekly Review,
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
ITALY: FANFANI UNDER FIRE
Italy's Christian Democratic Party is about
to begin an internal debate that could determine
whether the party can maintain its position as
Italy's dominant political force.
The Christian Democratic national council
meeting tomorrow will discuss how to halt the
erosion of the party's strength that was revealed
by the outcome of the regional, provincial, and
municipal elections last month. The Com-
munists came close to outpolling the Christian
Democrats for the first time. Sentiment in the
120-member council has been building against
party leader Fanfani, and a move to revise his
conservative political line is likely. Fanfani says
he will not give up his job unless he is voted out
by the council. There are signs that more than a
majority of the council members are inclined to
do just that.
Prime Minister Moro is one key Christian
Democrat who has yet to bic,'c publicly with
Fanfani. Moro is still the party's most pres-
tigious left-of-center leader, and his alliance with
Fanfani helped protect the latter from the
attacks of the left wing as the Christian Demo-
crats suffered successive defeats during the last
two years. Moro will probably soon withdraw
his support and that would ensure Fanfani's
departure.
The Socialist Party, meanwhile, is follow-
ing a line at the regional and local levels that
differs only in phrasing from Communist chief
Berlinguer's "historic compromise" concept.
Berlinguer has argued since la'-,e 1973 that the
solution to the country's problems lies in
cooperation among the "popular and demo-
cratic" forces, mainly Communists, Socialists,
and Christian Democrats. The Socialists are now
calling for "open governments" at the regional
and local levels, in which all parties except the
neo-fascists are invited to participate.
The invitation, however, seems mainly to
be a way of justifying the Socialists' apparent
preference for alliances with the Communists at
the local level. The moderate gains made by the
Socialists in the elections gave them the option
of linking up with the Communists or the
Christian Democrats in many areas. In one such
area, the northeastern region of Liguria, the
Socialists chose last week to join a Communist-
led government r-ther than a center-left coali-
tion with the Christian Democrats.
The Socialists' preference for a government
with the Communists in the larger and more
industrialized region of Piedmont, however, is
more likely to provoke trouble than the
Page 1 WEEKLY REVIEW Jul 18. 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Ligurian arrangement. Unlike Liguria, the two
parties do not quite have a majority in
Piedmont. The Socialists are inclined to set up a
minority government with the Communists in
Piedmont, despite the fact that a center-left
coalition with the Christian Democrats would
have a comfortable majority. Two members of
the Moro cabinet, whose home base is
Piedmont, are threatening to bring down the
government by resigning if the Socialists
abandon the center-left formula in that region.
In their post-election policies, the Com-
munists are sticking to the moderate line they
emphasized in the campaign. Communist labor
leaders, for example, were mainly responsible
for the decision last week by Italy's top labor
federation to seek maximum employment rather
than excessive wage demands in major contract
negotiations this fall. The federation's strategy
should encourage calmer and less prctracted
bargaining in the fall, unless some of the
militant constituent unions refuse to go along.
Deputy Prime Minister La Malfa, a frequent
critic of labor's policies, praised the Communist-
sponsored proposals as eminently sensible.
Participants at the European security con-
ference agreed on Monday to accept July 30 as
the opening date for a three-day summit in
Helsinki, provided that differences on all out-
standing issues are resolved by July 18. Nego-
tiators have been working furiously in Geneva
throughout the week to reach agreement on
more than a dozen issues, including military-
related confidence-building measures. Final
acceptance of the July 30 date is expected this
weekend.
On July 14, NATO members and the
Warsaw Pact states bowed to Malta's demand
that the final conference document include a
call for the eventual reduction of armed forces
in the Mediterranean region. Prime Minister
Mintoff of Malta, after dropping an earlier
demand for a phased withdrawal of the US and
Soviet fleets from the Mediterranean, forced
acceptance of a Mediterranean declaration by
refusing-for four days-to agree on a summit
date.
Agreement was also reached during the
week on several major issues, including follow-
on procedures for the conference, principles
governing relations among states, and a clause
protecting Allied rights in Germany and Berlin.
Little progress was made, however, in meeting
Turkey's demands for a clause exempting it
from certain aspects of military-related con-
fidence-building measures.
Agreement had not been reached by mid-
week on more than a dozen other less weighty
issues, including the order of speakers at
Helsinki, trade reciprocity, and a clause extend-
ing the benefits of CSCE throughout Europe-
especially to Berlin. The EC is also insisting that
Italian Premier Moro be allowed to sign the final
act twice-acting on behalf of the EC as well as
IDaly.
The Turkish demands are the only major
stumbling block to a final agreement. Influenced
by strong demarches from several NATO states,
Ankara is now showing more flexibility and has
muted its call for Turkish Cypriot representa-
tion at Helsinki. On confidence-building meas-
ures, Ankara appears willing to give advance
notification of manuevers within a 250-kilo-
meter zone along its borders if the conferees will
make concessions on separate notification if
amphibious and airborne troop movements. This
compromise would include language stating that
notification need not be given in areas adjacent
to borders with nor,-participating states-thus
exempting manuevers in eastern and southern
Turkey.
In Helsinki, meanwhile, preparations for
the summit are proceeding at a hectic pace. The
Finns are expecting 900 dcIegates, accompanied
by thousands of support personnel, to attend
the 35-nation summit and have beaun elaborate
security re arations
25X1
25X1
Page 2 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
PORTUGAL: POLITICAL CRISIS MOUNTS
A crisis atmosphere continued in Lisbon
this week as the Revolutionary Council was con-
fronted with the need to form a new cabinet
and with a rising storm of protest over its efforts
to bypass the political parties. The resolution of
these questions may be largely determined by
the outccme of a power struggle now reportedly
taking place among its leading members.
The cabinet crisis was precipitated when
the Socialist Party pulled out of the coalition
government last week because of the seizure of
the newspaper Republica. The Socialists were
followed by the center-left Popular Democratic
Party on July 16 when the Armed Forces Move-
ment failed to meet the party's demands for a
free press, a pledge not to dissolve the popularly
elected constituent assembly, and a promise of
prompt municipal and trade union elections.
The Popular Democrats also demanded an end
to the present divisions within the Movement
leadership and the urgent adoption of measures
to deal with the rapidly deteriorating economic
situation.
The withdrawal of the Popular Democrats
has effectively dissolved the coalition and paves
th::. way for the formation of a new government.
Prime Minister Goncalves has been charged with
naming a new cabinet, and a Movement spokes-
man has said it will not be composed exclusively
of military officers. There is speculation that
non-party civilian technical experts will join the
military in the new body.
Mean,rjhile, the Revolutionary Council is
being subjected to increasing pressure from all
sides. At a large demonstration in Aviero last
weekend, Catholics demander' the return of the
church radio, which is occupied by pro-com-
munist workers. In Rio Maior, just north of
Lisbon, local offices of the Communist, and a
fellow-traveling party, were sacked and burned
by local farmers. On July 16, a pro-communist
demonstration--o-+e of several held this week-
was joined by soldiers from a leftist military
unit.
The firm stand taken by the non-com-
munist parties against the proposed formation
of popular councils has been reinforced by
sizable demonstrations by the Socialist Party,
which is openly moving toward direct opposi-
tion to the Armed Forces Movement. The
Socialists have publicly denounced security
chief Otelo de Carvalhu over his role in. the
Republica affair and are demanding Goncalves'
resignation. Party leader Mario Snares has also
denouric,ad the popular councils concept as a
tactic by the military to establish a communist
dictatorship and has threatened "symbolic
paralysis" of the country if the voice of the
parties is not heeded.
25X1 25X1
There are increasing signs that these and
other vital issues-notably the threatening
economic collapse, the resumption of fighting in
Angola, and the growing impatience of the
Portuguese people and even members of the
Movement itself-may at last bring to a head the
disagreements and divisions among principal
members of the Revolutionary CounciI_F
In its public statements the Movement has
already begun to temporize on its plans to
bypass the parties. It has suggested that the
proposals on the popular councils do not con-
stitute an immutable law and, in any case, are to
be established over a long period. If the
moderates' move to oust Goncalves should fail,
however, another lurch to the left aDDears
like) .
Should
the Revolutionary Council not succeed in
re-establishing its authority soon, it is possible
Page 4 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 assified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
USSR-US: CRITICISM OF SCHLESINGER
The Soviet media have reacted sharply to
Defense Secretary Schlesinger's recent remarks
on US nuclear employment policy, con?
centrating on the political rather than the mili-
tary significance of his statements.
The most definitive response appeared in
Pravda on July 12 under the authoritative
"Observer" by-line. The article condemned the
Secretary's comments as "bellicose state-
ments...in sharp contradiction" to US-Soviet
security negotiations and to detente in general.
It said he was reverting to the "bankrupt"
strategies of the Cold War and flouting the
intent of the bilateral agreement on prevention
of nuclear war by raising the possibility that
nuclear weapons would be used in any crisis
situation. These points recall similar Soviet
criticism of the Secretary since early 1974 for
his comments on US targeting doctrine.
Soviet commentator; have attempted to
explain the recent statements in terms of an
internal debate in the US over foreign policy
following the withdrawal from Southeast Asia.
The Pravda article accused the Secretary of
being a spokesman for those hewing to the
"militarist dogmas of the past." It and other
Soviet commentaries have said that his remarks
were part of a Pentagon effort to win approval
for the US military budget.
The media have drawn liberally from US
critics of Schlesinger's comments in an effort to
show that they are counter to the mainstream of
US opinion. Nevertheless, the Soviets betrayed
some concern over the implications of his state-
ments for administration policy. Noting that the
Secretary is a prominent member of the US
government, one commentator asked why this
moment was chosen for a discussion which
"certainly doesn't facilitate the course Wash-
ington professes to follow."
While cicarly peeved, the Soviets have not
used the Secretary's statements to call publicly
for greater defense efforts of their own. One
correspondent mildly observed that the best
reply to opponents of detente is "concrete
deeds" to improve international understanding.
Moscow's support for a successful CSCE summit
and its campaign to play up the prospect of
moving from political to military detente sug-
gest a continuing desire to Durst,e better rela-
USSR-FRANCE: CHILL IN RELATIONS
French Foreign Ministry officials believe
that the USSR is disappointed with President
Giscard's foreign policy, but are optimistic that
his trip to Moscow in October will clear the air.
They are not worried about adverse effects on
bilateral relations.
The most recent manifc;;tation of a "chill"
in French Soviet relations is The vitriolic attack
by the Soviet news agency, Tass,, on French
Minister of the Interior Poniatowski earliFr this
month. Poniatowski was condemned for
asserting that the "Poiiomarev document"
recently published in a French newspaper wa.,
not a fraud, as claimed by the French Com-
munist Party, but a Soviet guideline for seizure
of power by communist parties. . 25X1
Moscow could hardly have ignored
Poniatowski's remarks, in view of strong Soviet.
protestations that the document was a forgery
trur,ped up by the Portuguese Socialists to
discredit the Soviets and the Portuguese Com-
munists. The French nevertheless assume that
the Soviet attack on Giscard's closest political
a;sociate was also a thinly veiled signal to the
French president on other issues
particularly concerrocd about the possibility of a
25X1
25X1
25X1
Page 5 WEEKLY REVIEW Jul 18, 75
eclassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 ssified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3,(1
secret agreement between Paris and Bonn that
would allow French Pluton tactical nuclear
missiles to be stationed in West Germany. The
Soviets fear that an agreement on Pluton could
enhance the prospects for an independent
European defense, which Moscow strongly
opposes. Moscow may have viewed its blast at
Poniatowski as an opportunity to weigh in with
Giscard prior to the French - West German
summit meeting at the end of this month.
Paris and Bonn continue to deny that there
are plans for stationing Plutons in West
Germany, although the French and West
German military planners are probably making
contingency plans to use the Pluton in the event
of hostilities.
Giscard has already shown he is aware of
Soviet concerns in this area. Last May, he
sympathized with Soviet fears of an
independent European defense arrangement and
suggested the problem not be addressed until
more political unification has been achieved. His
statement was widely criticized in France as a
concession to the Soviets.
French-Soviet relations have suffered
other, more minor irritants in the past two
months. According to French officials, the
irr'tants include Giscard's termination of V-E
Day celebrations in France and his visit to
Poland in mid-June. The Soviets were also
annoyed by the several strong attacks on the
USSR made by Chinese Vice Premier Teng
Hsiao-Ping during his visit to Paris in mid-May.
Pravda took French Prime Minister Chirac to
Pluton missile passes review stand during Bastille Day parade
Page 6 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
EUROPEAN COMMUNISTS: DIFFERENCES
Differences between the more inde-
pendent-minded parties and those loyal to Mos-
cow continue to hamper preparations for a con-
feience of European Communist parties.
A high-level official in the Yugoslav For-
ei~7n Ministry recently told the US ambassador
in Belgrade that another sharp division of
opinion had emerged when the working group
met in East Berlin in early July to draft
documents for the conference. The Yugoslav
said that delegations from the Yugoslav,
Romanian, Italian, Spanish, and French parties
opposed positions taken by the Soviets and their
Danish and East German supporters. The
absence of East European commentary on the
East Berlin sessi(-n also points to a failure to
make progress on the key issue-the refusal of
the independents to accept any binding doc-
ument.
If the French party-which has previously
supported Soviet goals-has now joined those
resisting Moscow's will, the tide may, for the
moment, be running against the Soviets and
their allies. The Italian Communist Party's
recent sharp attack on Czechoslovakia's suppres-
sion of liberals from the "Prague Spring" may
also signal a breakdown in the restraint needed
to achieve an amicable resolution of some issues
facing the working group.
Such discord evidently has already caused
he Soviets to abandon their original goal of
holding the European conference on the heels of
the European Security Conference summit.
Nevertheless, efforts to resolve the problems
continue. .A sub-group met in Berlin this week
to try to tind language that could bridge the
ideological gap.
According to a Yugoslav party representa-
tive, Moscow is staging a seles-tive show of
reasonableness in an Effort to convince some of
the independents taut Soviet concessions are
still possible. The Soviets want to attract he
maximum number of European parties to the
formal meeting in Berlin in an effort to get their
signatures on a joint document, no matter how
bland. With such a show of Communist "unity,"
the Soviets would be in a stronger position to
line up participants for aintern tional party
gathering. 25X1
EASTERN EUROPE: FLOODS AND HARVEST
Early this month, heavy rains and flooding
hit Eastern Europe and Yugoslavia at the start
of the harvest season, causing major losses of
grains and other crops. By contrast, the grain
crop in East Germany is in trouble because of
severe drought.
Eastern Europe had been headed for an
excellent harvest. In mid-June, grain output, in-
cluding that of Yugoslavia, was forecast at about
95 million tons, almost 6 percent greater than in
1974. Based on early weather damage repirts,
grain losses of i -)ughly 9 million tons are now
likely. Losses nay run higher if the rising
Danube causes more flooding in Romania.
Flood waters have receded in Czechoslo-
vakia, Hungary, and Yugoslavia. So far, the
number of fatalities is unknown; Romania
reported that 60 persons died. Although
thousands of persons were evacuated in rural
areas, major urban centers reportedly sustained
little damage, and the floods caused only minor
disruption to industry.
According to the minister of agriculture
total grain loss is expected to reach about 1.5
million tons-equal to more than 10 percent of
last year's harvest. In addition, significant losses
of sugar beets, potatoes, vegetables, fruit, and
livestock have occurred.
More than half of Romania's 3:) counties
suffered flood damage, with the greatest part in
the central and southern regions of the country
where some 60 percent of Romania's wheat and
corn is produced. Emergency directives call for
resowing damaged areas with summer crops
.Page 7 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
L J/~ I
Requests also have been made to world
y ~~ < food agencies. Bucharest, in fact, appears to be
tAA1 FQ,,,ND U.S.S.R looking mainly to the West-and not to its East
1 GERMANY European allies-to supply the bulk of materials
`_, needed for recovery.
WEST CZ
GERM ~; 1,, .~~ tt88Bt 'n addition to the US, Romania has
AUSTRIA Hu approached West Germany, France, the UK,
1w," Italy and Belgium for debt rescheduling, credits,
f _ ?~ ` Rnrk and assistance in easing EC import quotas, as
i -- 5,, well as outright grants. Romania's CEMA part-
Yusouiavio ners are unlikely to provide aid. Five years ago,
ITALY BULGARIA Peking was the most generous benefactor and
r i Moscow provided only belated token assistance.
ALRANIA TURKLTt
! Other Countries Less Damaged
GREECE 25X1
55 Gl17-75 Other than in Romania, damage from
----..--... ..:,?...~.?,,-'" storms and localized flooding was probably the
most severe in Yugoslavia. In Vojvodina and
where possible, or planting secondary crops, but Slavonia-Yugoslavia's bread basket, flanking
the damage may be too great and the time too the Danube and Drava rivers-emergency nar-
short. vesting has been delayed by rain and strong
winds. Early estimates project wheat losses at 1
Preliminary reports indicate about 150 in- million tons, about one fifth of the expected
dustrial plants were affected, but that few crop. Losses of other crops may also be high.
suffered major damage. Most plants are now
back in at least partial operation. Romania has
directed all industrial units to step up produc- The level of the Danube has fallen in
tion to compensate for lost output, with first Czechoslovakia and Hungary. Although flooding
priority to maintaining exports. caused some crop losses in Czechoslovakia, most
damage to grains will come from lodging. In
As in 1970, Bucharest may be exaggerating Hungary, the harvest had just begun when the
its claims of destruction in ho es of getting as rains came. About one quarter of a million acres
much assistance as ossible were reported flooded by July 8, mainly along25X1
the Danube and Tisza rivers. Over one half of
the flooded land was sown to corn.
25X1
In stark contrast to flooding elsewhere, a
Romania has appealed for emergency US two-month-old drought endangers the grain crop
disaster relief. At least 200,000 tons of feed in East Germany. The northern and central
grain is needed, much of which Bucharest hopes countries have suffered the most with only trace
to receive as an outright grant. Requests for amounts of rain falling in some areas. Weather
construction and industrial raw materials also data for the first 10 days of July indicate that
were made, although the need for them is less the major grain producing area in the south is
acute. In the longer term, Bucharest wants low- also drying up. Emergency harvesting has start
interest credits to finance necessary imports in 6 of 15 cou
and to expand exports.
25X1 25X1
25X1
Page 8 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
The Arabs this week underlined their im-
patience with what they believe are Israel's
stalling tactics in negotiations. An announce-
ment by Egypt denying further approval for the
presence of UN troops in the Sinai Peninsula
coincided with the start-at a conference of
Islamic foreign ministers in Jidda-of a campaign
to threaten Israel's expulsion from the UN.
Israel has taken the developments in stride, re-
affirming its refusal to act under pressure.
Egypt Forces the Pace
Obviously displeased with the slow pace of
negotiations on an interim agreement with
Israel, Egypt increased its pressure for more
rapid movement by declaring on July 15 that it
cannot now agree to renew the UN mandate in
the Sinai. The mandate expires on July 24.
Beyond this announcement-which was itself
qualified-the Egyptians have left their inten-
tions deliberately vague. In a letter to UN Secre-
tary General Waldheim and at a press confer-
ence, Foreign Minister Fahmi said that Egypt
does not oppose "the propel use" of the UN
force, implying that Cairo might not object if
the UN Security Council proceeded to renew
the mandate without express Egyptian consent.
action that would induce Egypt to permit con-
tinuation of the UN presence in Sinai. An A l-
Ahram editor who is close to Fahmi declared in
an editorial in mid-week that the Egyptians "do
not want appeals and calls for restraint; we want
firm and useful action" from the UN.
In justifying Egypt's case for withholding
approval at this time of a UN mandate exten-
sion, Fahmi has argued that Israel is using the
UN force to perpetuate its occupation of Arab
territory. All Security Council resolutions estab-
lishing and extending the UN mandate, Fahmi
contends, had envisioned the UN force as a
factor assisting in the search for peace, but in-
stead, Israel has exploited the quiet brought by
the UN troops in order to stall on negotiations.
The timing of the announcement is clearly
designed to signal the limits of Egypt's patience
and to put more steam into the negotiating
process. Fahmi has made it clear that Egypt still
welcomes US efforts to mediate an interim
agreement.
As an added means of pressure, the Egyp-
tians placed their armed forces on alert imme-
diately after the announcement and ma
point of informing the US of the move.
Later statements by Egyptian officials,
however, suggest that Cairo might not give even
its tacit consent unless Israel reaches agreement
on a disengagement before the mandate deadline
or the Security Council adopts a resolution that
does more than merely call for an Israeli with-
drawal.
Waldheim has
also announced it is his understanding that the
Egyptians want a resolution that will assist in
"implementing" previous Security Council deci-
sions on Israeli withdrawal.
Fahmi has hinted that Egypt might press
for imposition of economic or other sanctions
on Israel. He may be suggesting that sanctions-
which the Egyptians could interpret as tangible
pressure on Israel to "implement" a with-
drawal-constitute the only Security Council
said Egypt's present intention is to avoid large-
scale military movements except in response to
Israeli movements. Fahmi has announced that
"for the time being" Egypt will not change
force levels in the restricted zone east of the
Suez Canal.
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Tel Aviv's reaction to the Egyptian state-
ments has been low-key so far. Government
officials, in commenting to the press, stressed
that Israel still will not be pressured into an
agreement with Egypt under the threat of
deadlines.
moval of Israel from the General Assembly,
from UN specialized bodies, and from any con-
ference held under UN auspices.
Prime Minister Rabin's handling of the
issue in a speech to the Knesset was restrained,
and he reiterated his determination to continue
to seek another interim agreement with Egypt.
He warned, however, that Cairo must respect
the disengagement agreement now in effect-of
which the UN forces are an "integral" part-if it
expects Israel to honor its end of the bargain.
Rabin added that "whoever" wishes the nego-
tiations for another agreement with Egypt to
Sontinue "in an approprate atmosphere" should
refrain from any action that might increase ten-
sions. Israel has already asked for another six-
month extension of the UN forces mandate in
the Sinai.
Israeli press treatment reflected a strong
undercurrent of doubt in Israel that Cairo is in
fact prepared to carry out its threat not to ask
for a renewal of the UN forces mandate. Corn-
ment;,i:ors implied that the government should
ca!I the Egyptians' bluff.
Meanwhile, the ability of those Israelis who
oppose a more flexible negotiating position to
mobilize large segments of the population in
support of their stand was demonstrated again
this week. A crowd of approximately 15,000
gathered in Tel Aviv on July 15 to protest any
further Israeli territorial concessions in the Sinai
in the absence of a clear Egyptian commitment
to non-belligerency.
Syrian Moves
An Arab campaign to exclude Israel from
the UN appears to be gaining momentum. With
Syrian Foreign Minister Khaddam in the lead,
the Islamic foreign ministers' conference this
week adopted a resolution calling for the re-
A similar resolution is expected to be
offered at the Organization of African Unity
summit meeting to be held in Kampala from
July 28 to August 3. In recent years, the Afri-
cans have given strong backing to the Arabs in
return for Arab support ror the termination of
white minority rule in southern Africa. The
Palestine Liberation Organization has been
invited to address the summit and can be ex-
pected to use the meeting to solicit support for
the anti-Israeli campaign. The Syrians will not
be present so the Algerians will probably spon-
sor the resolution.
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
ANGOLA: ANOTHER ROUND
After almost a week of intense fighting in
Luanda, the Popular Movement for the Libera-
tion of Angola forced the rival National Front
for the Liberation of Angola to withdraw from
the city. The latest round of clashes may also
have destroyed the territory's fragile six-month-
old transitional government-a development that
could seriously disrupt Lisbon's decolonization
prc gram for Angola.
With the fighting in the capital going
against the Front, its senior representative in the
transitional government, Johnny Eduardo
Pinnock, and a number of other Front officials
fled to the organization's headquarters in Zaire.
In a subsequent press conference in Kinshasa,
Pinnock announced that he was resigning from
his position. He also claimed that the Popular
Movement is now controlled by "extremists"
who have pushed aside the group's long-time
leader, Agostinho Neto.
Pinnock's resignation, which carried an
assertion that the National Front is mobilizing
for full-scale war, was probably designed in large
part to prod the Portuguese into imposing a
truce through force of arms. Such a truce may
be the Front's only chance to pull itself
together. With the exception of a few small
garrisons scattered around the environs of
Luanda, the Front is now isolated in its tribal
base in northwestern Angola, separated from the
capital by territory controlled by the Popular
Movement. It is probably low on arms and sup-
plies and in no position to wage sustained war at
the present time.
The military rulers in Lisbon, who have
considerable prestige invested in their effort to
lead Angola to independence next November,
will probably try to convince the National Front
to return to the government. The Front is
unlikely to return unless the Portuguese can
guarantee peace in the territory, at least until
national elections can be held. It is probably too
late For that, however. Although some 24,000
Portuguese troops remain in the territory, there
is a real danger they would refuse to intervene
between the two hostile liberation groups.
Agostinho Neto
Moreover, troops in Portugal might well refuse
to go to Angola at this juncture.
Portuguese Foreign Minister Antunes, who
made a quick visit to Luanda during the height
of the fighting, was unable to arrange a cease-
fire. He subsequently informed UN Secretary
General Waldheim that Lisbon may have to take
"emergency measures" in the territory. Antunes
hinted last Sunday night prior to his departure
for Luanda that Lisbon might have to appeal to
the UN in order to protect the decolonization
process.
Wh...tever the Portuguese and he National
Front may have in mind, the Popular Movement
appears determined to score a military victory
against its competitors, including the National
Union for the Total Independence of Angola,
the smallest of the three liberation groups. The
National Union has refused to take sides in the
fighting between its larger rivals but on several
occasions has been attacked by she Ponular
I Page 11 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
25X1
MALAGASY REPUBLIC: NASA OUT
On July 11, President Ratsiraka closed
down all operations at the NASA tracking
station near Tananarive and pl.:;.ed the
facility under control of the army. Ratsiraka
had told the US charge the day before that
the station would have to close because of
Washington's refusal to make back rental
payments.
The agreement allowing the US to
operate the station, which had been reached
with a previous regime, expired at the end of
1973. Ratsiraka, who was then foreign
minister, demanded rent amounting to $10
million for the period that had expired as
the price for renewing the agreement. He
again pressed for such a payment after gain-
ing power last month. The US, while reject-
ing Ratsiraka's demand, did agree to pay an
annual rent of $100,000 from 1973.
The closure of the station has had no
effect on the joint US-Soviet space fli!,ht,
because '.other systems are available for
tracking the spacecraft as they pass over that
Page 13 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3 1
ISRAEL-FEDAYEEN: RETRIBUTION
Tel Aviv ceiducted two attacks a week
apurt on fedayeen bases in southern Lebanon in
retaliation for the terrorist bombing in Jeru-
salem :,,i July 4. Fourteen Israelis were killed
and sorr,e 70 people wounded in that incident.
Israeli air, naval, and ground forces first
attacked on July 6, concentrating on guerrilla
bases near the coastal city of Tyre. Tel Aviv
announced that all of its forces returned safely,
and press reports indicated that at least 1.3
Arabs were killed and some 20 were wounded.
The fedayeen and Lebanese said that one
Israeli jet was downed and the crew captured.
Israel disputed fedayeen and Lebanese
announcements and claimed that all Israeli air-
craft had returned safely. The fedayeen dis-
played a parachute as proof that th' Israeli pilot
had bailed out over Lebanon, but it actually is a
dray chute used to slow down aircraft during
landing. The chute apparently was dislodged
from the Israeli aircraft by an SA-7, and the
',lane probably returned to base, even though
damaged.
In the second attack on July 13, Israeli
planes struck what Tel Aviv termed a terrorist
workshop producing war materials. The shop
serves a fedayeen base, which has bean attacked
previously. The base is in or near Ayn al Hilweh,
the largest Palestinian camp in Lebanon. Press
reports indicated that four persons were killed
and some 20 wounded in the raid.
SA-7 and other antiaircraft fire from the
fedayeen may prompt the Israelis to change
their ground attack procedures but will not
deter there from more raids.
Foreign Minister Allon last week defended
Israeli raids on the fedayeen during a conversa-
tion with members of a US congressional delega-
tion. He pointed out that there had been a series
of terrorist incidents in Israel to which Tel Aviv
had not responded. This, he said, might have
encouraged the perpetrators of the terrorist
bombing in Jerusalem on July 4. That incident,
he stressed, had reaffirmed Tel Aviv's conviction
that the terrorists could not be allowed to
operate with impunity. Nevertheless, he went
on, the raid on July 7 was ordered only after a
lengthy discussion within the government and
after it was decided that every effort would be
made to select targets with a view to minir,iizing
civilian casualties.
previous forbearance, it probably will try not to
inflame the situation to the point where Middle
East peace negotiations would be seriously
Although Tel Aviv may have decided that
it must again step up its anti-terrorist activities
both for the reasons Allon cited as well as to
counter widespread domestic criticism of its
Page 14 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Independence Declared
One of the final rounds In the breakup of
France's once extensive overseas empire is being
played out on the Comoro archipelago in the
Mozambique channel. The legislature of the
Comoro Islands declared the islands Inde-
pendent on July 6. The status of one Island?
Mayotte-is still In doubt, however; its inhabi-
tants want to remain part of France.
The Islands are a major source of the base
essence used by the French perfume industry
and have hau a large measure of internal self-
government since 1961. Independence was
abruptly declared by the Comorian government
to counter the effect of a bill passed in late June
by the French National Assembly. The bill pro-
vided for the independence of the archipelago
later this year, but allowed each of the islands to
vote separately on a proposed independence
constitution. This would have permitted the
Mahorais-the Inhabitants of Mayotte--to end
their association with the other islands and
make Mayotte a French department.
In a referendum last December, over 60
percent of the Mahorais opted to retain links
with France, while the people on the other three
islands voted overwhelmingly in favor of inde-
pendence, There is heavy French and Christian
influence in the Mahorais' culture, in contrast to
the Muslim culture that is predominant on the
other islands. Mayotte political leaders de-
nounced the independence,declaration as illegal,
and are demanding that France maintain its
authority on the island. Ahmed Abdallah, the
new chief of state, has vowed to keep Mayotte a
part of the Comoros.
otto. Paris is trying to locate a middle ground
h,Aween Moroni-the Comorian capital-and
Mayotte, but it will not be easy.
France Is concerned that retaining Mayotte
will subject Paris to charges of attempting to
perpetuate a colonial arrangement, in order to
ensure France a military presence in the Indian
Ocean. France is already under increasing criti-
cism from African and Arab countries because
of its continuing hold on the French Territory
of Afars and Issas.
Relations between the Comorian govern-
ment and France will be strained if Paris finally
agrees to retain Mayotte. The Comorians might
refrain from an open break because of their
reliance on French aid. A cooling of relations,
however, would probably encourage the Co-
morians to seek assistance from Muslim
countries.
Libya has shown an interest in the islands;
several delegations have visited the Comoros,
and Abda{lah visited Tripoli in March. Saudi
Arabia may provide some aid to prevent the
islands from falling under radical Arab influ-
ence. Iran may also be willing to help.
31 u r 0 r, ~. oty.
a e r~ 11~, n :r-:, -I
Paris is willing to acc'pt the Comoros' in-
dependence, but it is keeping its options open
regarding Mayotte. The government issued a
communique this week saying it would "take
into account" the wishes of the Mahorais, but it
did not explicitly support Mayotte separatism.
France has agreed to withdraw its troops and
civil servants from all the islands except May-
Page 15 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R00100008003L 1
ARGENTINA: CRISIS CONTINUING
President Peron has been seriously weak-
ened by political and economic otbacks doririg
the past two weeks, and then are no indications
that anyone within the government is capable of
halting her deteriorating position.
Lopez Roga has been ousted horn his offi-
cial posts and has moved out of the presidential
residence, but it is widely believed that he is still
advising Mrs. Peron. Military, labor, and Poroni,t
political leaders will continue to urge the Presi-
dent to end his influence.
The crisis is likely to be protracted. Lopez
Pega's opponents still would prefer that Mrs.
Peron remain in the presidency, and they seem
content for the time being to wait for her to
make the next move. They now appear prepared
to accept her resignation, or even force her
ouster, however, if she insists on retaining him---
even in an unofficial capacity. Three of the
newly appointed cabirrot minister's reportedly
accepted their posts on the condition that
Lopez Rega would have no ; )le whatsoever in
the rjovernment.
The pro5pects for all orderly transfer of
power, in the o vent that Mrs. Peron does step
aside, unproved considerably this week with the
election of a moderate Poronist, Italo L icier, to
fill the Senate's provisional presidency. Luclnr,
who is first in the line of Succession, is a re-
spected constitutional lawyer and academician
and is well regarded in most political circles.
The government has not been able to form-
ulate proposals for dealing with the worsening
economic situation that are politically accept-
able to labor. Min isles of Economy Rodrigo, a
protege of Lopez Roga, is continuing to push
President Peron swears in Carlos Villone as Social Welfare Minister, replacing Lopez Rega.
Page 16 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3 ?
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3 1
most of the economic austerity program he out-
lined on June 30. He is totally discrodited, how-
over, and may soon be forced to resign. Strikes
and work stoppages are occurring dally In vari-
ous cities as concern grows that even the recent,
massive wage hikes soon will be oaten up by
soaring inflation. Moreover, leftists within the
labor movement are seeking to exploit the cur-
rent tonsion and widen the gulf between
workers and their top leaders. Some unions are
jealous because their wage increases did not
match those of other unions.
Though there is no evidence of active plot-
ting against the government, the likelihood of
Mrs. Peron remaining in office until the election
in 1977 has diminished considerably. By cling-
ing to the hated Lopez Rega, the President has
alienated labor and Peronist political leaders at a
time when economic problems have reached
crisis proportions. The economy alone would
have severely taxed the skills of a strong, charis-
matic leader. Since Mrs. Peron is neither, the
added problems caused by her association with
Lopez Rega ma be more than she can handle.
PERU: NONALIGNED CONFERENCE
Latin America will provide the dais for the
next rhetorical attack on imperialism by the
nonaligned conference. As the region has shifted
away from the US toward the Third World, it
has produced a rotating leadership among the
more aggressive proponents of an in!erriational
reformation. Venezuela. Mexico, and Peru en-
gage in an active but friendly competition for
the global spotlight as spokesmen for the area.
The first two will share stardom as launchers of
a new regional organization, a Latin American
Economic System, probably at the beginning of
August. Then Peru will take its turn, as host for
the foreign ministers conference of the non-
aligned on August 25-29.
The Lima site for the meeting underlines
the growing ease with which the Latins play the
Third World role. Only a few years ago, the
Latins saw little common ground with the gen-
erally loss developed Asian and African regions
and shied away from communist regimes. In
1970, Cuba was the solo full-fledged member of
the nonal;gnod conference. By 1973, seven Latin
and Caribbean nations attended the summit at
Algiers as full members; eight wont as observers;
one was "present." Now the Latins are often
instigators of Third World issues in the UN and
other world forums, especially on economic
matters.
Venezuela and Mexico have been particu-
larly agile at maintaining an ambidextrous for-
eign policy that allows for a productive and
cordial relationship with the US and at the same
time strengthens their place with the lesser do-
veloped. Peru had begun to bond somewhat
away from its more clearly adversary role vis-a-
vis the US, but the interest of moderates in the
Peruvian leadership in casing tensions with
Washington will not put a brake on Lima's in-
dulgence in Third Worldism.
The minority of Latin states that hew un.
abashedly to a pro-US position continues to
shrink. Even the Somoza government in Nicara-
gua has begun to examine ways to exhibit dif-
f-rences with Washington in order to avoid iso;a-
tiun from the mainstream of Latin America.
The Lima conference, coming immediately
prior to the opening of the 7th Special Session
of the United Nations, will be the major point
of coordination for the Third World positions at
New York. Many contentious issues will be
topical, and sources of friction and division
among the nonaligned continue to be many.
Cuba, for example, has already attacked the oil
producers as a budding new privileged minority.
The pressure for unity nevertheless remains
powerful, and will probably be further strength-
ened as the group begins to react to recent
warnings from Washington ahni,t its, rnln in the
Page 17 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3 1
Torrijos
pMIcoful solutions are closed to a country, Ihen
it must resort to solutions that are not peace-
ful."
The Panamanian leader is also concerned
about rising criticism at home of his handling of
the negotiations. He has raised expectations for
an advantageous treaty within a fairly short time
frame and feels compelled to produce concrete
results, r\ prolonged delay, he fears, will provide
ammunition to critics and weaken popular port for his regime.
According to the pro-government
Panamanian Student Federation, the administra-
tion is already taking several steps to bolster its
canal negotiating position. The opening of a
dialogue with various sectors of the society is
the first move. In the international arena, there
will be oven more emphasis on establishing
diplomatic relations with all countries (the
USSR and China could conic soon) and
strengthening ties with Third World countries.
At the UN, efforts will be increased to assure
Panama a seat on the Security Council, and the
canal issue will be submitted to the General
Assembly.
Panamanian leader General Omar Torrijos
is laying the groundwork for a campaign to
demonstrate his frustration about the ck'ay in
negotiations on a new canal treaty. Torrijos told
student leaders on July 9 that he no longer felt
bound to preserve the confidentiality of the
talks because the US government had breached
the secrecy agreement. He thus loft the door
open to release those facts that would increase
public support of his canal stand.
Although for the present Torrijos may be
leaning toward this fairly moderate course, he
may decide relatively soon that he should give
Washington a preview of what to expect if a new
treaty is not signed. He could choose to use
carefully controlled student demonstrations,
perhaps involving minor harassment of US
citizens, to demonstrate Panama's unhappiness
with the present situation.
The briefing for the students, the first in a
series of meetings Torrijos intends to hold with
various groups, is probably intended to signal his
annoyance at the lack of recent progress in the
talks, the indications of opposition to the
negotiations by members of the US Congress,
and the pessimistic zrticles in the US press about
the future of the talks. In statements to the
I,ress in early July, Torrijos declared: "When all
At least initially, Torrijos would consider
such actions a necessary tactical move and not a
reversal of his view that negotiation is the best
way to achieve Panama's canal goals. If these
actions failed to produce forward movement, he
could rapidly marshal students and other groups
for more serious demonstrations that could
eventually lead to a confrontation.
Page 18 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3 5X1
PHILIPPINES: UNFINISHED BUSINESS
Buoyed by his successful visit to China,
President Marcos Is now turning his attention to
two other foreign policy Issues: recognition of
thk Soviet Union and renegotiation of the US
military bases agreerent. He considers resolu-
tion of these matters an integral part of his drive
for more balanced international relations.
On the Philippine-US base issue, Marcos'
staff recently submitted a proposal that calls for
Philippine mananemeni and use of the bases for
commercial as well as for military purposes. This
is probably one of a range of options that
Marcos will consider prior to entering
negotiations.
Most of the preliminary negotiations for
diplomatic ties were completed over a year ago,
but discussions on the proposed Philippine-
Soviet trade agreement have been stalled over
most-favored-nation status, the channels for
handling the trade, and the status of trade
representatives to be assigned. Moreover,
Manila's most recent draft is more restrictive
than the one just signed with Peking, and
Moscow is likely to hold out for equal
treatment. A Philippine trade delegation is in
Moscow, and a Soviet one will soon arrive in
Manila to try to iron out remaining difficulties.
President Marcos(I) meets with his Foreign Policy Council
Page 19 WEEKLY REVIEW Jul 18, 75
In recent public statements on the bases,
Marcos and his advisers have taken a more
moderate tone than they did before his trip to
China in early June. Marcos is now publicly
str,assing that whatever arrangements are
eventually worked out must allow the US to
maintain an effective presence in the western
Pacific. Manila's controlled press is also now
parroting this line, a marked change from its
flamboyant anti-US style of some weeks ago.
The Philippine negotiating position on a
future base agreement is likely to be heavily
influenced by the course of current US-Spanish
base negotiations. Marcos is closely monitoring
the talks with Madrid, particularly discussions
about compensation for the bases and ioint use
25X1 25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Z
Prima Minister Whitlam scored a qualified
victory Monday when the Labor Party caucus
supported his firing of former deputy prime
minister Cairns two weeks ago, There was, how-
ever, considerable criticism of Whitlam's
tendency to act without consulting the caucus.
Whitlam probably had some anxiety about
the outcome of the caucus vote, since only a
year ago the caucus selected Cairns as deputy
leader over Whitlam's chosen candidate. Even
though only about 15 of the 95 caucus members
are regarded as part of Cairns' left wing, many
more have a high personal regard for the former
deputy.
The caucus tempered its backing of the
dismissal, however, by selecting Overseas Trade
Minister Frank Crean to replace Cairns as
deputy prime minister. Although Crean, like
Whitlam, is a party moderate, relations between
the two men soured last November when Whit-
lam fired Crean as federal treasurer. The move
was widely criticized in Australia as an attempt
by the Prime Minister to make Crean the scape-
goat for the government's ineffective economic
policies.
Although Whitlam has survived the party
crisis, he still faces intense parliamentary ques-
tioning on the circumstances of Cairns' dis-
missal. The opposition Liberal-Country coalition
is pressing for creation of a royal commission to
look into allegations that Cairns or his associates
stood to make huge profits from foreign loan
deals and that they had misrepresented private
ventures as government business. The opposi-
tion-controlled Senate has also called for testi-
mony from public service officials who might be
able to shed some light on the loans con-
troversy. Whitlam's resistance to this move
could briny additional trouble in the Senate.
For the moment, the opposition seems
content to spotlight the government's alleged
misdeeds through parliamentary investigation. It
probably feels that this will provide campaign
grist for the national election that could come
later this year.
istration. Had Labor lost the state, one of the
two it controls, opposition pressures to force
early national elections would have intensi-
Labor's narrow win last weekend in state
parliamentary elections in South Australia, fol-
lowing a series of electoral reverses, gives some
comfort to the beleaguered Whitlam admin-
The Lao have committed no new mischief
against US facilities in Vientiane since demon-
strators and troops moved into several USIS
facilities nearly three weeks ago. Little progress,
however, is being made toward resolving several
difficult problems.
Students and police still occupy two US
compounds in the capital, and government
Page 20 WEEKLY REVIEW Jul 18, 75
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033- -
officials refused to return non-USAID property
seized by the demonstrators. Efforts to resolve
demands for termination salary by national air-
line employees affected by the end of AID con-
tracts remain deadlocked, despite talks between
the US charge and Prime Minister Souvanna
Phouma as well as other ranking officials. In a
relatively minor concession, Lao troops on July
15 turned over the USISwarehouse to US con-
trol. Ail USIS installations have now been re-
tu? A to the US.
Three hard-line communist ministers,
recently arrived from Sam Neua, have taken up
their duties in Vientiane to replace relatively
moderate communist ministers placed on sick
leave. Phoune Sipraseuth, who is by far the
highest ranking of the trio as acting deputy
prime minister and foreign minister, will pre-
sumably have direct charge of all future nego-
tiations with the US. Phoune proved tough and
inflexible during the lengthy talks that !ed to
the Lao peace agreements.
The Lao are just beginning to realize-
apparently with some shock-that they will not
receive further aid. The communists so far have
offered no signs on whether they will accept
continued diplomatic relations in the absence of
new US aid. On July 11 the Lao government
formally asked for a beginning of negotiations
Paae 21 WEEKLY REVIEW Jul 1R 7R
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
VIETNAM: RECOVERY UNSPECTACULAR
Hanoi has had better than two years since
the signing of the cease-fire arrangements in
South Vietnam to rebuild the economy of
North Vietnam. Overall growth during 1973 and
1974 was unspectacular, and clearly less than
Hanoi had hoped. Moreover, the take-over of
South Vietnam is complicating plans for
development of the North over the next few
years.
Nfter the cease-fire, Hanoi rapidly restored
the bomb-damaged transporation, electric
power, and small modern indu:?:.ial sectors, its
priority objective3. Transport a.tivity increased
as roads and bridges were repaired. Reconstruc-
tion of the Thac Ba hydroelectric power plant,
the Uong Bi and Thai Nguyen thermal power
plants and construction of a new thermal plant
at Nine Binh restored nearly all of the electric
power capacity that existed before the bomb-
ings; 75 percent had been knocked out in 1972.
The reconstruction effort as a whole, however,
was makeshift and shoddy.
There were some gains in production in
1974, but attempts to restore output to pre-war
levels in iron and steel, cement, chemical
fertilizers, and coal were only partially success-
ful. Extensive damage surveys and shortages of
electric power, fuel, and raw materials and
technical skills combined to delay the start of
reconstruction.
Output from light industry and handi-
crafts-which except for textiles emerged f,om
the bombing relatively free of direct damage-
grew moderately with the improvement in
transportation facilities, raw material supplies,
and electric power availability. Repairs to
damaged textile plants, including those at Nam
Dinh and Haiphong, and construction of new
ones probably restored most of the country's
textile production capacity.
Agriculture still dominates the economy,
accounting for 35-40 percent of national output
and employing 70 percent of the civilian labor
force, but this sectc,- has lagged because of lack
of investment and muddled policies. Rice yields
are still among the lowest in Asia, attributable
to insufficient irrigation, water-control facilities,
farm machinery, and high quality fertilizers.
Rice output stagnated in 1973 as adverse
weather damaged the autumn harvest, but last
year output was up 10 percent under favorable
growing conditions.
Hanoi has leaned heavily on its communist
allies for cr-modity and capital assistance. Aid
jumped from $425 million in 1972 to about
$600 million in 1973 and then to $1.2 billion in
1974.
Las' December, Hanoi adopted an
ambitious 20-percent target for economic
growth in 1975, but this now appears u;iattain-
able even Though substantial industrial growth
can be expected as restoration and expansion of
large plants are completed. Hanoi simply did not
anticipate the military take-over of the South in
April, which has forced the North to focus
attention on improving security, administering
the government, and reviving the economy in
the South.
Growth prospects beyond the next year or
so are likely to get worse before they get better,
despite a large labor force and relatively
abundant natural resources. North Vietnam
lacks the management skills, technical compe-
tence, and incentives to grow quickly. The
transition to economic integration of the North
with the South will require major adjustmants in
Hanoi's investment, production, and distribu-
tion plans. For this reason, Hanoi scrapped its
earlier 1976-80 five-year plan and will probably
replace it with a new one that will scale down
economic targets in the North in order to devote
some resources to socialization of the South's
economy. Finally, Hanoi probably cannot count
on receiving as much foreign aid as in the past,
since the USSR and East European countries are
insisting on closer supervision of aid flows in the
future than they did durinn the war.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
 25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
Q
0 Next
le
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080033-3
2 Page(s) In Document Denied