WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080054-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 32
• Document Creation Date: December 27, 2016
• Document Release Date: May 13, 2010
• Sequence Number: 54
• Publication Date: December 12, 1975
• Content Type: REPORT

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Top Secret
"NX'eekly Review
Top Secret
Copy
N2 666
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The WEEKLY REVIEbV, issued every Friday morning by the
Office of Current Intelligence, reports and analyze; signifi-
can+ developments of the week liirough noon on Thursday. I:
frequently 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 Directorate of Science and Technology.
CONTENTS (December 12, 1975)
MIDDLE EAST
AFRICA
EAST ASIA
PACIFIC
WESTERN
HEMISPHERE
Israel: Policy Questioned
Lebanon: Sinking Deeper
Angola: Situation;
Bangladesh-India: Tensions Ease
Bangladesh-USSR: Chinese Specter
Soviet Red Sea Aid
Omani Cease-Fire
10 Portugal: Popular Democrats Split25X1
11 France: Problems in the Military
12 UK: Import Controls
12 Spain: Arias Plans New Cabinet
14 USSR: Grain Harvest
15 Western Europe: MRCA Problems
16 Iceland: Angling for Support
17 Finland: Oil Imports
17 Greece: New Army Command
18 China - North Vietnam: Growing
Rivalry
19 Timor: Indonesia Invades; World Watches
21 China: The Tachai Campaign
22 Laos: The Communists Move In
23 Cuba: The First Party Congress Looms
23 Venezuela: Forging Eronomic Ties
25 Mexico: Yaqui Valley Unrest
26 International Economic Cooperation
28 Developing Countries: Price Squeeze
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of the Weekly Review,
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ISRAEL: POLICY QUESTIONED
The reaction in Israel to the recent gains at
the UN by the Palestine Liberation Organization
and to the steps taken in response by Prime
Minister Rabin's government has set the stage for
a major domestic debate on the Palestinian
problem. This week, divisions within the cabinet
over how to approach that dilemma sharpened
perceptibly, and the government came under the
severest press criticism it has yet experienced. A
comprehensive debate in the Knesset is likely to
ensue, perhaps this month.
The criticism began to build soon after the
Israeli air force cap vied out bombing attacks
against Palestinian camps deep inside Lebanon on
Jecember 2. Coming just two days after the UN
Security Council cecided to take up the Middle
fast issue next month with PLO representatives
participating, the raids were seen by many as an
injudicious reaction to that diplomatic setback.
Subsequently, the government has been attacked
for its decision to boycott the Security Council
debate, for yielding to internal pressures for new
Jewish settlements in the occupied territories, and
for its continued rigid position against negotiating
with the Palestinians.
Rabin's government appears united in its
belief that the UN decision was the product of a
concerted Syrian, Soviet, and Palestinian effort to
increase international pressure on Israel. There is
apparently sharp contention within the cabinet,
however, on how best to meet the challenge, and
Rabin is now coming under fire from several of
his colleagues, notably Foreign Minister Mon. At
the cabinet meeting on December 7, AIIon and
other so-called "dovish" ministers reportedly
urged that Israel participate in the coming Securi-
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ty Council debate but leave when the PLO
representative speaks. Rabin won the support of a
majority of the ministers for his boycott position,
but afterwards Allon stated publicly that the
government would have to reconsider the matter
at a time closer to the Security Council meeting.
The government's decision last week to es-
tablish four new settlements on the Golan
Heights-taken partly to demonstrate Tel Aviv's
ability to resist outside pressure to show more
negotiating flexibility-has been criticized in the
press for risking fresh international censure and
increased Israeli isolation. This week, a com-
promise reached with conservative religious
elements attempting to settle in the West Bank
near Nablus was attacked by Allon and others as
an unnecessary deviation from the long-observed
policy barring settlements in areas that Israel
might be willing to return to Arab control in a
future peace agreement. The government allow-
ed some of the unauthorized settlers to stay on at
an army camp in the area and promised to re-ex-
amine within the next three months its basic
policy on new Jewish settlements.
Allon, whose differences with the Prime
Minister may be partly tactical, is also taking the
lead in challenging Rabin's hard line on the core
issue of negotiations with the Palestinians. Acco+-
ding to press accounts, the foreign minister plans
to outline next month a new proposal that will
offer three alternative approaches to a solution of
the Palestine problem. Two of the alternatives in-
clude some form of confederation between Israel
and a Jordanian Palestinian entity, and the third
reportedly provides for a separate Palestinian
state to be linked with Israel and Jordan.
Official government spokesmen have denied
that any change in policy is in the offing. At
minimum, Rabin is certain to reject any plan that
would provide for a separate Palestinian state on
the West Bank.
Nevertheless, the Prime Minister may even-
tually have to modify his tough line to some ex-
tent if he continues to come under fire in impor-
tant political quartets and the press. In addition to
the dovish elements in his dominant Labor Party,
the leadership of Mapam, the leftist party aligned
with Labor, is said to oppose Rabin's inflexibility
on negotiations with the PLO and to believe that
Israel should attend the Security Council meeting.
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LEBANON: SINKING DEEPER
Heavy fighting resumed in all areas of Beirut
last weekend. It continued through the week as
the main combatants-the right-wing Phalanges
Party militia and radical leftists led by Ibrahim
Qulaylat-ignored Prime Minister Karami's call
on December 10 for still another cease-fire.
Despite efforts by the army to separate warring
groups, the leftists by the end of the week had
made limited gains and remained in control of
some previously contested territory in the hotel
district. The Phalangists retained a tenuous hold
on a corridor extending from the hotel area to. a
large Phalangist stronghold south of Beirut port.
The latest cease-fire was called by Karami's
extra-governmental "security committee." The
committee contains representatives of Lebanon's
principal Muslim and Christian political factions,
including the Phalangists, but no radical leftists.
Speaking for the leftists, Qulaylat denounced the
cease-fire; he privately acknowledges that the
radicals' goal is to eliminate the religious basis of
Lebanon's governing system and to take the place
of the traditional and relatively conservative
Muslim leadership.
Karami came under great pressure to
negotiate a new cease-fire when socialist leader
Kamal Jumblatt joined Qulaylat and other radical
leftists in charging that the intervention of army
units in the hotel district beginning on December
8 was aimed at rescuing Phalangists under
pressure there. The army had in fact prevented
either side from making significant new gains, but
had tailed to reduce the level of fighting. Accor-
ding to press reports, as many as 850 army com-
mandos and other troops have taken up positions
in Beirut's commercial center. This represents the
most extensive army involvement in internal
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security functions since the state of emergency in
May 1972
If the fighting should continue at a high level
or become still worse, the army might not be able
to provide much additional help. The 18,000-man
force includes only about 3,600 infantry troops
that could be used for security duties. Over the
past several weeks an estimated 2,000 of these
have been seconded to the government's ex-
hausted 6,000-man internal security force. They
have been guarding government buildings in
Beirut, patrolling the periphery of the city, secur-
ing the road to the airport, and manning buffer
zones between opposing factions in the
Tripoli-Zagharta and Zfihlah areas.
The army's effectiveness in wider hostilities
would be limited by an increased tendency for its
units to divide along religious lines. Because the
force so far has been used primarily for patrol
duties and has seen little sustained combat, this
has not yet become a significant problem.
Karami's willingness to have the army stay in
place to help enforce the new cease-fire despite
leftist criticism is a result of the generally con-
structive attitudes taken by the Syrian govern-
ment and leaders of the Palestine Liberation
Organization. The Lebanese branch of the Syrian
Baath Party reaffirmed its support for Karami this
week. Palestinian leaders have helped by avoiding
criticism of the army, by endorsing the latest
cease-fire, and by pr;vately ordering their forces
to stop backing the increasingly powerful
Qulaylat. However, both Yasir Arafat and Zuhayr
Muhsin appear to be having great difficulty dis-
ciplining their organizations, and fedayeen from
both Fatah and Saiqa are probably fighting with
and supplying arms to the radical left.
The Prime Minister is attempting to minimize
the damage to his political position by claiming
that the army was ordered in by interior Minister
Shamun, a Christian, and that army forces remain
under the command of the internal security
forces. Karami has also pointed out that the
government has not declared a state of emergen-
cy, which theoretically is rc'quired for army in-
tervention.
Lebanon's political leaders so far have come
up with no strategy for ending the renewed
fighting. The best hope is that the leftists-who
are claiming victory-will convince themselves
that their limited military gains constitute suf-
ficient revenge for the murder of numerous
Muslims by Phalangists last weekend. The Id
al-Adha Muslim holiday that starts December 12
could provide an excuse for both sides to reduce
the fighting.
ANGOLA
The Zairian-supported National Front for the
Liberation of Angola has suffered serious reverses
at the hands of the Soviet- and Cuban-backed
Popular Movement for the Liberation of Angola
in recent fighting in northern Angola. In the cen-
tral and eastern sectors, the opposing forces in
the civil war waged new battles, but so far these
have not resulted in significant gains for either
side.
Popular Movement troops, aided by barrages
from Cuban-manned 122-mm. rockets, apparent-
ly advanced last week almost to the Front's
headquarters and major operational base at Am-
briz. The morale of Front troops in northern
Angola is low after retreating from a position that
had placed them within ten miles of Luanda. If
Ambriz falls, the National Front presumably will
regroup at Carmona.
In the east, forces of the National Union for
the Total Independence of Angola,
supplemented by mercenaries and probably
South Africans, is attempting to retake Luso,
which was captured by the Popular Movement
early this month. As of midweek, the Popular
Movement remains in control of the city. A
Popular Movement drive on Silva Porto, the
National Union's main base in central Angola, was
blunted earlier in the week by a National Union
force backed with armor.
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CONGO
'~.drai:arlllcm~ .
rmone\
Popular-Movement
Uonrique
de Cnrvalho
Pc pufa, Movement -a. [ti-
Mounfs Drive *Iusa
Pe io Natlonnt Union
4 NGOLP. (Contesf d)7
i ZAMBIA
advances
Contested
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S0111,111-WEST AFRICA
INAMIBIAI
WESJtao
In the central sector, the main National
Front-National Union - mercenary spearhead that
made major gains along the coast last month
reportedly has been engaged by a strong Popular
Movement - Cuban force near Quibala. The out-
come is not yet known.
Last weekend, Tanzania became the 29th
state-the 13th in Africa-to recognize the
Popular Movement's Luanda-based regime.
Twelve Communist countries, three Arab states,
and Brazil have also extended recognition.. No
state has formally accepted the joint government
proclaimed by the National Union and the
National Front.
Zaire plans to launch a diplomatic
counteroffensive aimed at stemming further
recognitions of the Luanda regime. The joint
government has a number of sympathizers
I;esides Zaire, notably Senegal, Gabon, Ivory
Coast, the Central African Republic, and Tunisia.
These countries are hesitant to extend official
recognition, however, on the grounds that a
government of national unity for Angola cannot
be achieved if African countries are divided in
partisan support for one or the other of the con-
tending nationalist groups. 25X1 25X1
received official endorsement by the required
two thirds of OAU members. The official expects
a preliminary foreign ministers' meeting to open
in Addis Ababa on December 19 to set the date
and agenda for the heads of state session. The
summit itself will probably net be held until after
the first of the year. The Popular Movement's
African supporters, who have pressed hardest for
the emergency session, can be expected to try to
focus any OAU meetings on the issue of South
African involvement in Angola in behalf of the
N -tional Front and National Union. 25X1 25X1
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Somalia's proposal
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BANGLADESH-INDIA: TENSIONS EASE
Meetings between Bengalee and Indian of-
ficials during the past week appear to have helped
lower tensions between the two countries, at least
temporarily. india remains concerned, however,
about the security of the Hindu minority in
Bangladesh and is keeping a close watch on the
internal situation there.
The dialogue began last week with talks in
Calcutta between border security officials from
the two countries. The Indians reportedly parried
Bengalee charges that New Delhi has increased
the number of troops on the border, that some of
these troops have clashed with Bangladesh forces,
and that India is aiding Bengalee dissidents. In the
final communique both sides emphasized their
efforts to clear away misgivings and mis-
understanding.
The generally favorable outcome of these
talks may have influenced Dacca's decision to
send a high-level delegation to New Delhi late last
week for political discussions. The martial law ad-
ministration announced such a mission earlier,
but had held up its departure apparently because
some elements in the regime thought it would be
regarded by India as a sign of weakness.
During the delegation's visit. both sides aired
again their grievances, but the talks sust?ined the
generally positive atmosphere evident at the
Calcutta discussions. Although no definite plans
for further meetings have been announced, the
two countries reportedly agreed to continue the
dialogue.
According to a Bengalee diplomat in New
Delhi, the Indians disclaimed any intention of in-
tervening in Bangladesh and insisted they were
not aiding Bengalee dissidents. The delegation
also received assurances, albeit rather weak, that
unfriendly treatment of the Dacca regime in the
Indian media would decrease. The head of the
delegation gave Prime Minister Gandhi a letter
from Bangladesh President Sayem that apparently
contained reassurances of Dacca's desire for
good relations.
Gandhi did reiterate her concern over
Bangladesh's Hindus. India has repeatedly warn-
ed that a mass exodus of the Hindus into India
would lead to Indian intervention. So far, :here is
no sign of a large-s,-ale flight, although India has
charged that more 'han the usual number have
recently been seeking visas to migrate to India.
Meanwhile, the Bangladesh government is
giving close attention to internal security, in part
because of its desire to forestall additional in-
cidents that would exacerbate relations with New
Delhi. Security units have recently conducted
several raids and also set up roadblocks in the
Dacca area. The regime may be reacting to persis-
tent rumors that dissidents, including the group
that wounded the Indian high commissioner two
weeks ago, are planning further incidents this
month.
The security measures are also aimed at keep-
ing communal tensions under control and easing
the concerns of the Hindus. A rally last Sunday,
heralded by anti-Indian and pro-Muslim leaflets,
turned out to be generally quiet and poorly
attended. The leader of the rally, probably
yielding to government pressure to avoid
provocations, did not mention India and instead
emphasized communal harmony and national
un-
ity.
USSR-BANGLADESH: CHINESE SPECTER
For the Soviets the overthrow of Mujib
Rahman last August was both a shock and a cause
for concern. Moscow felt that Mujib offered the
best prospect for ensuring a stable government in
Bangladesh and one that was friendly to both In-
dia and the USSR. With Mujib out of the way,
however, a pandora's box was opened and
Moscow feared that the resulting political in-
stability might give Peking opportunities to
enhance its influence.
Moscow was even more alarmed when
General Zia assumed power on November 7 and
released some political prisoners Moscow believ-
ed to be pro-Peking. There is no hard evidence
that they, in fact, had any links with Peking, but
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commentary in the Soviet press was harshly
critical of the anti-Indian and anti-Soviet senti-
rrrent in Bangladesh allegedly exploited by these
groups. The Soviet press openly expressed con-
cern that the Zia government was in danger of
losing control over obstreperous elements in
Bangladesh.
Over the past two weeks, as the situation in
Dacca eased, the Soviets have toned down their
alarmist press coverage. For the time being,
Moscow is probably telling the Bengalees to be
mindful of India's interests and, by extension,
those of the USSR. The hard-pressed Dacca
government does not need much persuasion in
this regard and has already gone out of its way to
reassure both Moscow and New Delhi.
SOVIET RED SEA AID
Moscow is attempting to strengthen its
presence in the southern gateway to the Red Sea
by stepping up support for the regimes in South
Yemen, Somalia, and North Yemen.
The USSR has provided 85 percent of Aden's
total arms imports since 1968. In October,
Moscow responded to Aden's requests for
military support with an agreement to deliver ad-
ditional MIG-21s, SAMs, and possibly long-range
artillery. The SAMs will reportedly be installed
along the South Yemen - Oman border to allay
Aden's concern over Omani incursions into
Yemeni airspace. Delivery probably began during
a November airlift. Soviet military personnel in
South Yemen will increase from the 215 present
earlier this year in order to support the new
equipment deliveries.
Somalia's strategic location and political
orientation have made it a continuing Soviet
target. The recent addition of a drydock to Soviet
facilities in Berbera underscores Moscow's grow-
ing involvement in the country. The Soviets
already have a naval missile handling and storage
facility, a large communications station, a housing
area, and a barracks and repair ship in Berbera.
The drydock probably will be used by the Soviet
navy to perform major repairs on the ships and
submarines of the Indian Ocean squadron. 25X1
Soviet Military Aid Extensions to
Somalia, South Yemen and
North Yemen 1955-1975*
120 Million US $
==5---1
115
82
Somalia S. Yemen N. Yemen
3 COrnporrent cannot be esfllnlted presently
Soviet Personnel in Somalia,
South Yemen and North Yemen
December 1975*
Military Economic
Somalia 1,000 1,000
S.Yemen 250-300 160
150
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The expan;on of facilities again will mean an
increase in t;,e Soviet presence beyond the es-
timated 2,000 technicians now stationed in
Somalia. The latter estimate is almost triple the
number present in 1973.
Soviet interest in Somalia dates back to 1961
when Moscow provided credits for building the
port at Berbera, among other projects, under an
e:.onomic assistance agreement. This was follow-
ed in 1963 with the inauguration of military aid,
which now totals about $145 million. Moscow has
delivered at least 33 MIG-21 fighters, 4 IL-28 light
bombei-s, 129 armored personnel carriers, 40
medium tanks, 2 MI-8 helicopters, and 1 Osa-class
patrol boat since 1971. The first SA-2s in
Sub-Saharan Africa were delivered to Somalia last
year.
OMANI CEASE-FIRE
The purpose of the cease-fire, which is to
last three months. is to give Aden enough time
to consider ending its support to the rebels.
Muscat hopes that the moves will encourage
Aden to halt the she:;ing of Omani positions.
During the lull, Omar! forces will move to
secure the border against infiltration and will
initiate civic action programs in western
Dhofar. Iranian troor, will be removed from
those forward positions they now occupy.
Aden did not react to Oman's gestures.
The USSR's first foray into the Red Sea - In-
dian ocean nexus was in North Yemen. During
the 1960s Moscow provided almost 70 percent of
Sana's arms imports, most as grant aid.
25X1 25X1
South Yemeni shelling did slacken for a few
days, but resumed its previous level this past
weekend. Oman apparently has responded
with air and artillery strikes against the Yemeni
positions. South Yemen also continues to rein-
The Sultan has informed Aden through
diplomatic channels that he would consider
any buildup of forces in South Yemen's border
area as cause for an attack by hin forces. He is
oarticularly concerned about reports that in.
creased Soviet and Libyan assistance to South
Yemen may be intended for use in Dhofar. His
willingness to declare a cease-fire, however,
suggests that he will view moderate increases
along the border as defensive and not as an in-
tention to escalate South Yemeni involvement
in the Dhofar area.
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~oA]
PORTUGAL: POPULAR DEMOCRATS SPLIT
Portugal's Popular Democratic Party has
backed off from its outright opposition to Com-
mt'nist participation in the cabinet, a move which
Will probably permit the Azevedo government to
continue in power without a major overhaul.
Despite this concession, several left-wing leaders
of the party have walked out, leaving party
secretary general Francisco Sa Carneiro in firm
control.
The party, which convened its national con-
gress in Aveiro on December 6, passed a resolu-
tion enabling both the Popular Democrats and
the Communists to remain in the Azevedo
government. The resolution appears to have been
a compromise between the party's left
wir;g-which wanted to see the Communists re-
main for tactical reasons-and the conservative
group led by Sa Carneiro, who had been loudly
demanding that the Communists resign.
The unity achieved over this resolution failed
to carry over in the discussion of factional
differences, however. When Sa Carneiro installed
his own hand-picked secretariat, left-wing leaders
stormed out of the congress.
Among the disaffected were some of the par-
ty's ablest leaders, including Emidio Guerreiro,
who during Sa Carneiro's illness led the party to a
second-place finish in the constituent assembly
elections. Also included are a cabinet minister,
two secretaries of state, and 17 members of the
constituent assembly. Additional defections
among assembly delegates are considered likely.
In a press conference this week, Sa Carneiro
scorned the left-wing leaders, alleging that they
were more in sympathy with Marxism-Leninism
than with the aims of their own party. He also said
Prime Minister Azevedo had assured him that
party dissidents could be replaced in the govern-
ment without upsetting its present balance.
The status of disaffected Popular Democrats
in the constituent assembly, however, has not
been resolved. Sa Carneiro insists that the
deputies should not remain in the assembly as in-
dependents after being elected as party members,
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but he admits that the assembly can probably vote
to retain them if it wishes. The present delegates
are more likely to vote with the Socialist majority
on proposed articles for the new constitution
than replacements chosen by the present party
leadership.
As a result of the party split, Sa Carneiro now
presides over a more homogeneous party and
one which is more firmly under his control, but
the p. ice for such control is likely to be a narrow-
ing of the Popular Democrats' political base to the
right.
FRANCE: ARMY UNREST
Paris has acted swiftly against radicals trying
to organize unions in French military units
stationed in France and West Germany. The
government has arrested about 25 recruits and
civilians on charges of "actions detrimental to the
national defense." If convicted, they could be
sentenced to five to ten years in jail. They alleged-
ly were involved with Portuguese and West Ger-
man extremists and French far-left splinter parties
and union members in efforts to undermine
military discipline.
leftist draftees, ai ed by lef-
tist union members, had encouraged unioniza-
tion of military units that were equipped with
"vet y sophisticated equipment.
government believes the activity was designed to
disrupt discipline and to establish an espionage
and sabotage network. in this con-
text a presumed Soviet network uncovered in
France last spring and the appearance in France
last month of leftist Portuguese military men.
Giscard's attempt to exploit the issue is un-
likely to be very effective. The Socialists, who
strongly oppose extremist activity in the military
and unionization in particular, reiterated their
support of military discipline. The French Com-
munists also expressed opposition to inilitai un-
ions. The left scored some points by continuinb to
insist on improvements in military life that would
meet the recruits' efforts to obtain greater 25X1
freedom of expression and association and the
kinds of grievance procedures already available in
the armed forces of other West European nations.
The government's spokesmen-Prime
Minister Chirac and Interior Minister
Pcniatowski-may lose the most in the affair.
Chirac's attacks on the Socialists were
heavy-handed, butt'oniatowski went further and
accused the Communists of inciting French
draftees to learn to shoot so they could attack
their commanders. Poniatowski always relishes a
chance to go after the Communists, and Chirac,
for his part, sees the Socialists as a major threat to
his Gaullist party. Chirac's words may have been
sharpened by concern over the Socialists' in-
creasing popularity among recruits-a reflection 25X1
of a general trend in French society.
Sheltered from social changes since 1968, the
French military establishment has resisted moder-
nization. The problem is partly because of
budgetary constraints, but French soldiers are
aware that it is not greater financial resources that
enables many West European armies to grant
more personal and political freedoms than are
available in France.
ly.
Attempts have been made over the past year
to respond to military discontent, and the
government's response to the current unrest reaf-
firms the thinking of the military leadership that,
while only a small minority of its personnel is
directly involved, such activities cannot be ig-
nored. The government will have to undertake
additional efforts to create a more flexible military
structure attuned to the needs and grievances of
the recruits, if unrest is to be dealt with effective-
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1 LJA'I
UK: IMPORT CONTROLS
The British government will apparently go
ahead with plans for selective import controls.
The final decision on the extent of the controls
may have been held up, however, because of
negative international reactions.
Michael Foot, secretary of state for employ-
ment, told Western diplomats recently that he
supports the import controls and that the govern-
ment will probably announce them before the
end of the month.
Foot indicated that selective controls would
be part of a "Christmas package" of measures in-
tended to increase employment. The package will
probably include retraining schemes and sub-
sidies designed to create new jobs for young
workers.
Although unemployment is not expected to
peak until next year, the government may believe
that the package would in part offset the termina-
tion of Chrysler's operations in the UK. Foot
declined to comment on the status of
negotiations with Chrysler, but did say that a com
plete shutdown would affect the jobs, directly or
indirectly, of 50,000 workers.
Foot's deputy indicated that the primary
target of the import controls would be textiles
from Hong Kong and Taiwan and clothing from
Eastern Europe. Second and third priority targets
would be television tubes and automobiles from
Japan. Such priorities suggest that the British
government wishes to avoid quarrels with its
Common Market partners or the US.
Foot said that the government had warned
the West Europeans of the possibility of controls
and expected no hostile reaction from that
quarter. Several Common Market coun-
tries-West Germany, most recently-have,
however, told the British that they oppose selec-
tive controls. The subject was not on the agenda
of the EC summit meeting in Rome, but it may
have been discussed informally.
Foot justifies his support of import controls
on the grounds that they are necessary to save
jobs and retain vital trade union support for the
Wilson government. He believes that the most
dif,~cult periods for the government will be this
winter, when unemployment peaks, and during
next summer, when the unions decide how to
react to the second phase of Wilson's anti-infla-
tion program.
SPAIN: ARIAS PLANS NEW CABINET
Spanish Prime Minister Arias, acting in close
concert with King Juan Carlos, is reportedly
preparing an extensive cabinet shuffle that is in-
tended to demonstrate the government's com-
mitment to moving Spain toward a more
democratic political system. The new government
may retain only three members of the present
cabinet,
The King specifically re-
quested that port os be given to Areilza,
former ambassador to London Manuel Fraga
Iribarne, and Christian Democrat Federico Silva
Munoz. Areilza would be given
the Foreign Ministry, Fraga would become
minister of the interior, and Silva Munoz would
be offered the ministry of justice or information.
There are indications, however, that Silva Munoz
will not accept either post.
All three politicians will be wary of iden-
tifying themselves with a government that may
prove not very different from its predecessors.
Areiiza voiced this concern to the Prime Minister
and was assured that the intention was to move
Spain down the road toward becoming a
Western-style democracy.
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The three men named by Juan Carlos all favor
gradual liberalization of the regime and all are in
contact with the democratic opposition.
? Fraga, probably the best known
Spanish politician outside the present
government, is basically a centrist who ad-
vocate: change with order.
? Areilza, a former ambassador to
Washington and Paris, is a liberalizer with
one foot in the camp of the temperate op-
position and the other in the establishment.
? Silva Munez, though inherently con-
servative, apparently favors gradual change
under strict controls and, as leader of the
conservative branch of the Christian
Democrats, is in touch with Christian
Democratic factions in the opposition.
Arias may also appoint
General Manuel Gutierrez Mellado deputy prime
minister in charge of coordinating the three
military ministries-perhaps foreshadowing the
formation of a defense ministry in the near future.
Gutierrez Mellado, who is the chief military
spokesman in the base negotiations between
Spain and the US, is generally considered one of
the most intelligent generals in the Spanish armed
forces. He favors gradual liberalization of the
regime and is liked by most of the democratic op-
position, including the Socialists.
the three ministers who
will remain in the government are Minister of
Labor Fernando Suarez Gonzalez, one of the most
liberal members in the outgoing cabinet, Minister
of the National Movement Jose Solis Ruiz, a
cautious liberalizer who is acceptable to both
liberals and conservatives, and the conservative
Minister of the Navy Admiral Gabriel Pita da
Veiga. Political infighting over the past week may
rr.;,u . in a few more conservatives being retained,
but the bulk of the 19-man cabinet is likely to be
made up of technicians who would work to bring
Spain closer to Western Europe and to
membership in the Common Market and NATO.
Page 13 WEEKLY REVIEW Dec 12, 75
If Arias can get his nominationspast the ex-
pected rightist opposition, the new government
will have its work cut out. The localized strikes
that are taking place this week are still likely to be
the forerunners of substantial labor unrest this
winter. A number of important collective bargain-
ing contracts are due to expire on December 31
and last month the government extended the
wage freeze-introduced last summer-for one
year. The extension has angered the workers and
will make the labor movement more receptive to
Communist attempts to politicize the country's
economic difficulties and organize a paralyzing
general stike early next year.
The government will also have to cope with
an increasing number of potentially violent
demonstrations as the opposition steps up
demands for complete amnesty for political
prisoners, legalization of political parties in-
cluding the Communists, and an opening up of
the government labor union.
Prime i.nnistcr Arias chats with King Juan Carlos
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~oA1
USSR: GRAIN HARVEST
This year's grain harvest was the lowest since
the mid-1960s, according to figures provided
recently by Soviet officials.
A published statement by a middle-level
Soviet official indicates that the harvest may have
been about 137 million tons. Soviet Agriculture
Minister Polyansky gave t'. a British arbassador
some figures that point to a crop of between 142
and 152 million tons. This could mean the worst
harvest since 1965.
The severe drought in the USSR lends
credibility to the new figures. One Soviet official
told the British ambassador that the weather this
year was the worst in a hundred years.
A harvest of 137 million tuns would leave the
USSR short at least 40 million tons of grain even if
it imports all it can. The Soviets have bought 26.7
millicn tons so far this year, and they can buy only
another 4.3 million tons from the US. Because
only minimal amounts are available from other
suppliers, we estimate that total imports will be
about 32 million tons. The Soviets thus would have
to curtail domestic consumption sharply.
The 137-million-ton figure is derived from
remarks made at Wednesday's session of the
USSR Supreme Soviet by Grigory Vashchenko,
chairman of the budget and planning commission
of one of the Supreme Soviet's two chambers.
Vashchenko, who is also a member of the Central
Committee, stated that average annual produc-
tion of grain during the past five years was 8 per-
cent higher than the average for the preceding
five years.
Polyansky gave the British ambassador a
range of average annual production for 1971
through 1975. Since official data for past years are
known, output for 1975 can be calculated from
these averages.
Our latest estimate of the Soviet grain crop is
150 to 155 million tons; earlier, unofficial es-
timates given by Soviet officials had been in the
range of 160 to 170 million tons.
So far, the Soviet leadership has not
employed all-out tactics for curtailing consump-
tion such as limiting the sale or drastically reduc-
ing the quality of bread, or delivering public
harangues against waste. We have, however,
good evidence of distress slaughtering of
livestock, reductions in feed rations, and in-
creases in the prices of farm products in the
collective farm market.
scapegoat or two.
end, Soviet leaders may find it impossible to avoid
recriminations and may have to offer up a
Soviet leaders, defensive about the harvest
disaster, are treating economic subjects gingerly,
hoping to avoid recriminations and policy dis-
putes. By stressing that weather was the cause of
the poor harvest, the leaders are trying to block
attempts to blame individuals or policies.
Ukrainian party boss Shcherbitsky, a Polit-
buro member and protege of General Secretary
Brezhnev, warned this fall that a "correct ap-
proach" must be taken in appraising the harvest
and that the work of the party in agriculture
"must not be belittled." The economic slowdown
resulting from the poor harvest, however, will
seriously undcrmine the leadership's prestige.
For the moment, the leaders seem to be stick-
ing with past policies, including Brezhnev's
program of heavy investment in agriculture.
Published references to Brezhnev's speech before
the Central Committee on December 1 suggest
that he off;:red only hackneyed prescriptions
such as "socialist competition" for treating the
economic ills resulting from the harvest.
The economy's poor performance will re-
quire that the preliminary goals set for the next
five-year plan be revised downward. Advocates of
limited reform measures and schemes to
reorganize agricultural and industrial manage-
ment could find their cause strengthened. In the
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WESTERN EUROPE: MRCA PROBLEMS
The West European Multirole Combat Air-
craft project remains barely off the ground some
16 months after the initial flight of a prototype air-
craft. Design difficulties still plague the plane's
highly advanced RB-199 engine. For example, the
engine oil overheats because of poor circulation,
and inadequate cooling of the turbine blades is
causing them to fracture. British officials con-
nected with the program insist the problems are
no worse than those encountered with some
other military engines under development, but
the West Germans remain skeptical.
Earlier this year, the West Germans expressed
an interest in the General Electric F404-400 engine
as an alternate power source. However, an engine
change at this stage of the development program
is unlikely because of the major redesign work
this would entail on the airframe. To refit the
plane would not only push the program back
another 15 to 18 months, but would confront the
co-developers-the UK, Italy, and West Ger-
many-with staggering financial losses.
The engine problems are especially bedevil-
ing because no other serious problems have
cropped up during the test program. The plane's
airframe and other systems are functioning
smoothly, and the general flying characteristics
are said to be better than anticipated. Full
technical and performance ratings are scheduled
to be presented to the NATO MRCA Manage-
ment Agency by next February, but in view of the
continued problems with the engine, they
probably will not be. The three countries are
scheduled to meet next spring to decide whether
to put the aircraft into series production.
The prognosis for the program remains
guarded. Questions about the plane's long-term
cost may be even more worrisome than the
plane's engine problems. The West German
Bundestag has indicated it will continue to sup-
port the project-but only if the plane will not
cost more than $9 million each. Most estimates in-
dicate this ceiling will be exceeded. British Air-
craft Corporation officials reportedly have pro-
jected the production cost at about $13 million
per plane, assuming that all three countries buy
the full order of 807 planes.
The UK, however, is under pressure to cut
back further on its defense spending, and is
reportedly again considering dropping the in-
terceptor version of the MRCA. If the UK decides
to drop its order for 165 interceptors, the cost of
the remaining aircraft may well be forced to an
unacceptable level-especially for the West Ger-
mans and Italians, who are already wavering in
their commitment. Little help can be expected
from the export market, where the prospects for
additional sales are not good.
The Multirole Combat Aircraft is probably
Europe's most ambitious multinational weapons
development program, and its failure could have
an especially heavy impact on the European
NATO countries, which have just begun a con-
certed effort to seek new ways to achieve greater
standardization of weapons. The Multirole Com-
bat Aircraft is slated to replace large numbers of
Phantom interceptors, Buccaneer fighter-
bombers, and Vulcan and Canberra bombers in
the British Royal Air Force. Plans also call for
replacing many F-104 fighters in the West German
air force and navy, as well as in the Italian air force
with the MRCA.
The program's failure not only would mean
that the Europeans had lost a chance to standar-
dize on one aircraft, but could raise serious
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doubts in many European capitals about their
ability to combine their resources and compete
with the US aerospace industry in
high-technology military aircraft programs. Given
Europe's desire to build a defense industry that
can compete with the US in arms development
and production, the Europeans are likely to be
torn between proponents of new efforts to
rationalize the air industry and those forces who
want to increase their ties with the US aerospace
industry in order to stay abreast of its rapidly ad-
vancing technology
ICELAND: ANGLING FOR SUPPORT
Iceland, determined to seek international
support in its fishing dispute with the UK, raised
the issue at the meeting of NATO foreign
ministers in Brussels on December 11-12. Prime
Minister Hallgrimsson diverted pressures to
boycott the meeting as a sign of protest by con-
vincing the cabinet last week that the conference
would give the Icelanders a goldei. opportunity
to air their grievances. An earlier decision to seek
a condemnation of UK "aggression" by the UN
General Assembly has been postponed until after
the talks in Brussels, but a message to the Security
Council is still under consideration.
Hallgrimsson has intimated that he would be
satisfied with expressions of concern by the other
NATO foreign ministers and an offer by Secretary
General Luns to mediate. Luns has already issued
a statement urging moderation in the dispute and
has offered his services to the Icelandic and
British representatives. According to an aide, Luns
hopes that a private meeting between Icelandic
Foreign Minister Agustsson and British Foreign
Minister Callaghan can be arranged during the
NATO session.
A British official said last week that he hoped
the foundation for a resumption of negotiations
couA be laid in Brussels. London is willing to
begin talks and remove its frigates from Icelandic
waters if Reykjavik agrees to stop harassing British
trawlers during the negotiations. Iceland has re-
jected this proposal from the start.
Iceland began talks with the British last
September by insisting that London reduce its
catch to 50,000 tons from the 130,000 tons allowed
under the two-year agreement that expired on
November 13. Iceland later offered to raise the
figure to 65,000 tons and the UK agreed to reduce
its catch to 110,000 tons. The talks broke down last
month when both sides balked at further con-
cessions.
In the meantime, Reykjavik has concluded an
agreement with Bonn limiting the West German
catch to 60,000 tons. The pact with West Germany
has probably encouraged the Icelanders to clamp
down on the British. In addition, Reykjavik is
touting a recently concluded government study
reporting that cod, the main item in the British
catch, have been overfished and are in danger of
extinction unless limits are imposed. The agree-
ment with Bonn reduced the West German cod
catch by 75 percent. Fish, especially cod, are a
matter of survival for the Icelanders, accounting
for nearly 80 percent of the country's exports.
Reykjavik wants to maintain its current yearly
catch of about 230,000 tons and reduce the British
share--a move London is resisting.
The prolonged deadlock at the negotiating
table has led to sporadic incidents at sea between
British trawlers and Icelandic patrol vessels, which
are using hide-and-seek tactics to cut the costly
nets of British trawlers. Three Icelandic patrol
boats simultaneously harassed British fishing
vessels on December 9, causing all of the trawlers
to give up and haul in their nets. In a separate in-
cident, a British tugboat rammed an Icelandic
Coast Guard vessel on December 6, the first such
incident in the current dispute. For the first time,
both sides reportedly threatened to exchange
fire.
A serious incident at sea-particularly if there
are .jsualties-could lead to a rapid escalation of
the cod war. Emotions are already running high in
Iceland, and such an incident would only add fuel
to the fire, endangering the future of the US-
manned base at Keflavik and Iceland's
membership in NATO. The Icelandic government
is aware of the danger and recently ordered the
Coast Guard to curtail harassments of trawlers,
but this may be difficult to enforce.
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FINLAND: OIL IMPORTS
High petroleum prices have set Finnish in-
dustry hard at work producing goods needed to
exchange for Soviet crude. Under barter agree-
ment, the Soviets provide about 70 percent of
Finland's crude oil supplies, or about 40 percent
of total energy supplies. When the USSR followed
the lead of the Arabs in quadrupling oil prices
early last year, the Finnish trade balance with the
Soviet Union got badly out of whack. The value of
Finnish oil purchases from the USSR shot up from
$160 million in the first eight months of 1973 to
$500 million in the same period of 1975.
Helsinki was able to cut its deficit with the
USSR by 75 percent-to $97 million-in
January-August 1975 only by stepping up
shipments to the USSR at the expense of hard--
currency sales to the rest of the world. The
process involved a massive redirection of trade. In
the first eight months of 1974, only 12 percent of
Finnish exports went to the USSR, compared with
20 percent to Britain and 17 percent to Sweden. In
the same period this year, the USSR and the UK
reversed their relative positions. The non-Soviet
trade deficit totaled $1.5 billion in January-August
1975, more than triple the deficit in the same
period last year.
Present export plans call for an approximate
balance in trade with the USSR in 1976. Finland
has been given a guaranteed market for its ex-
ports to the USSR by fitting its industrial goods
closely to Soviet specifications. Ships, pulp and
paper products, and heavy machinery are all to be
delivered in return for the required oil. The
volume of oil imports from the USSR is scheduled
to rise to 130,000 barrels per day next year, about
10,000 barrels per day more than this year.
Helsinki wanted to buy even more, but the
Soviets held the figure down.
High world prices have reinforced Finland's
historic dependence on Soviet oil. Because Fin-
nish-Soviet trade is strictly on a barter basis, no
hard currency is needed to pay for oil imported
from the Soviet Union. Moreover, crude supplies
from the Persian Gulf probably would be
somewhat more expensive because of higher
transportation costs.
The harshness of t"- Finnish climate and high
fuel re';uirements in the forestry industry
frustr:,te attempts at energy conservation. Finland
has few domestic fuel sources. Water power has
already been exploited to the limit, and the use of
wood for heat is declining. Three nuclear plants
are under construction, but will not alleviate the
oil payments problem before
GREECE: NEW ARMY COMMAND
Athens is forming a fourth army corps in
Thrace near the Turkish border. The army is also
working on plans to separate the command of the
eastern Aegean islands from that of the mainland.
These changes are scheduled for completion by
March 1976.
The formation of a corps command in the
border area will better prepare the army for possi-
ble conflict with Turkey. Forces equivalent to two
and a half combat divisions-heavy in both armor
and artillery-already are based in the area. The
new corps will probably receive additional ar-
tillery, reconrd;:,.ance, and engineering units
from the other three corps to fill out its head-
quarters component. Few additional forces would
have to be moved to achieve the same readiness
posture assumed at the height of last year's
mobilization. 25X1 25X1
The command responsible for defending the
Aegean islands traditionally has been the head-
quarters for the entire Greek army's logistic sup-
port, with the secondary mission f
the forces on the Aegean islands
Tension between Greece and Turkey since
the Cyprus invasion last year has prompted both
nations to reorganize their army command struc-
tures. The Turks created a new Aegean command
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1 I I LV/.
CHINA-VIETNAM: GROWING RIVALRY
Sparring Over the SpratlyF
Peking's growing impatience with Hanoi
bubbled to the surface late last month when he
Chinese forcefully reasserted their claim to the
Spratly and Paracel islands in the South China Sea.
The question of sovereignty over the islands
has been a major annoyance in Sino-Vietnamese
relations since the Chinese took the Paracels from
the former Saigon government in January 1974,
but neither side had openly pushed the issue for
several months. The broadside in a People's Daily
article was by far the toughest Chinese statement
c..i the dispute since early 1974 and amounted to
the first direct challenge of Hanoi's claim to the
islands.
The article called for the return of all dis-
puted islands to Chinese control and linked this
demand with China's long-held pledge to
"liberate" Taiwan. This linkage indicates the im-
portance the Chinese attach to their claims but
suggests that Peking may be prepared to wait
some time-as it has with Taiwan.
The People's Daily attack on Hanoi was im-
plicit, but it left no doubt that North Vietnam was
the major target. References to Moscow, on the
other hand, were explicit and vituperative, poin-
ting up Peking's belief that Hanoi is abetting
Soviet attempts to expand their influence in the
region. Significantly, the article was published
only two days after North Vietnamese party chief
Le Duan returned from Moscow, where he had
seconded the Soviet view of detente. His en-
dorsement put Hanoi squarely in Moscow's camp
on an issue of major importance to China and was
almost certainly read in Peking as a deliberate
provocation.
The Chinese clearly see a correlation
between Hanoi's increasing tilt toward Moscow
and the long-range possibilities for Soviet
"meddling," through Vietnam, in Southeast Asia.
The Chinese also seem persuaded that in the
shorter run, Hanoi could by itself disrupt their
hopes of developing a bloc of friendly countries
along their southern border.
The Chinese and Vietnamese share very few
common perceptions of Southeast Asia. They are
on opposite sides in the current dispute between
Thailand and Laos. Hanoi has vigorously defend-
ed the Lao and has frequently attacked Thai
"aggression," while Peking has remained relative-
ly quiet on the issue. Peking has also been on
Cambodia's side in border disputes with Vietnam
and apparently encouraged the Cambodians 25X1
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TIMOR
On December 7 Indonesia launched a
full-scale invasion of Portuguese Timor. Indone-
sian marines and paratroopers captured the
capital at Dili following a naval bombardment.
Indonesia's campaign to convince world opi-
nion that military intervention in Timor was
justified is running into difficulty, in part because
of the unexpectedly strong reaction from Por-
tugal itself.
Jakarta claims that it had to act to restore an
orderly decolonization process because the Por-
tuguese had in effect abdicated responsibility for
the ,.I^ r,'s future. Lisbon has broken relations
with Indonesia, and the Portuguese foreign
minister has branded Jakarta's actions as an "un-
qualified act of armed aggression." Lisbon may be
speaking in part for Portuguese domestic con-
sumption, but also because it wishes to remain on
good terms with its former African colonies,
which are in the forefront of those criticizing
Jakarta.
Jakarta probably would like to follow the
same procedure in Timor that it used in 1969 with
the former Dutch territory of West New
Guinea-annexation after an Indonesian-
managed plebiscite under UN auspices. Several
members of the decolonization committee, press-
ed by former Portuguese colonies in Africa, will
probably try to amend the resolution in order to
condemn Indonesian aggression against Timor.
Portugal has asked for a Security Council session
to consider Indonesian aggression.
Indonesia's Asian friends are working to un-
dercut criticism of Jakarta by other Third World
states and to work out a UN resolution on Timor
that all sides can accept.
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The problem is particularly delicate for the
Australian government, which is ir' the midst of a
bitter election campaign. Left-w ng trade un-
ionists supporting the Fretilin cause are being
joined by usually conservative World War II
veterans who served in Timor and feel an
emotional tie to its people. Australia has been
working for a resolution that avoids any mention
of Indonesian action and talks in general terms
about respecting the rights of Timorese
self-determination. The Australians fear such a
limited resolution has little chance of passage.
Even Jakarta's severest critics do not consider
Fretilin a viable government worthy of substantial
support per se. Both Peking and Hanoi have been
outspoken in denouncing Indonesian aggression,
but neither has recognized Fretilin's declaration
of independence. As the self-proclaimed leader
of the Third World, Peking undoubtedly felt
obliged to criticize Jakarta, but the Chinese
probably hope that the Timor issue will not
become an obstruction to Peking's continuing ef-
forts to improve relations with Jakarta. Hanoi took
the opportunity to blame Washington for en-
couraging the Indonesian attack.
donesian troops can restore law and order an
Most members of the international com-
munity would probably prefer not to stand up
and be counted on the Timor issue. Whether or
not Indonesia's opponents will be able to do
more than cause Jakarta temporary embarrass-
ment will probably depend on how quickly In-
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CHINA: THE TACHAI CAMPAIGN
Agricultural production has enjoyed top
priority in China's economic plans since the early
1960s, but Peking is now stepping up its efforts to
achieve a breakthrough. A new campaign to
mobilize the Chinese peasant-as large as the an-
ti-Confucius campaign in 1974, and perhaps larger
than any since the Cultural Revolution-has come
to dominate China's domestic propaganda and to
shape much of the activity on China's political
and economic scene. Vice Premier Hua Kuo-feng
has placed it on a par with the land reform and
agricultural collectivization movements of the
1950s.
The new campaign, with an old name, is
dubbed "Learn from Tachai" and is aimed at ex-
panding the acreage of stable, high-yield
farmland. This expansion is a prerequisite for the
efficient use of modern agricultural methods,
such as the use of the greatly expanded supplies
of high-quality chemical fertilizer that will be
available by the end of the decade.
Peking's decision to launch the Tachai cam-
paign is clearly related to the start of the Fifth Five
Year Plan (1975-80), which accords agriculture first
call on china's resources. If the plan is successful-
ly carried out, there could be agricultural sur-
pluses by 1980. Chinese leaders h eve repeatedly
emphasized the importance of agricultural sur-
pluses to China's long-term goal of modernizing
its industrial, defense, science, and technology
sectors.
The goal is to establish 500 new Tachai coun-
ties by 1980; there are already 300. Tachai is the
name of a model production brigade that made
great strides in increasing production in the
mid-1960s without state aid. Previously when Pek-
ing has sponsored campaigns to improve yields in
a few selected areas, the state has supplied the
lion's share of the funds. The new Tachai counties
will be subsidized, but the state's share will be
smaller. Most of the investment will come from
mobilizing rural labor for the construction of
water control projects and land terracing and
leveling.
To make sure sufficient labor for such pro-
jects is available, the state is also pushing a
"proletarian dictatorship" campaign designed to
crack down on the permissive policies of the early
1970s that relaxed control of private activities in
the countryside. The regime now wants to
channel these resources back into the socialist
economy and is sending experienced manage-
ment personnel from the cities and the provinces
to the countryside to tighten up on corruption
and cut down on too much private enterprise.
The Tachai campaign appears to represent a
greater effort to galvanize the countryside to
produce larger agricultural returns than any since
the ill-fated Great Leap Forward campaign of
1958-59. An effort of this magnitude is probably
only possible because of the general strengthen-
ing of the party apparatus-crippled during the
Cultural Revolution-that has been apparent
since the beginning of this year. The current
emphasis on tightening party discipline and rec-
tifying work style suggests Peking not only ex-
pects to capitalize on the recent strengthening of
the party apparatus but to further this process
during the campaign.
So far the campaign is emphasizing a sober,
step-by-step approach to China's perennial
agricultural problems and strict accountability of
lower levels. But the scope of the campaign, the
emotional undertones of the current exhor-
tations, the prohibition on expanded material in-
centives, and the somewhat grandiose goals that
have been set are all vaguely reminiscent of the
Great Leap Forward. Thus, at least some possibility
exists that this campaign, like the Great ! eap, the
Cultural Revolution, and the anti-Confucius cam-
paign, could get out of hand and thereby almost
certainly ensure an eventual backlash and con-
sequent retrenchment. The leaders in Peking,
however, are likely to guard against such a
possibility.
We cannot yet determine whether the ad-
mittedly ambitious goals for 1980 can be attained.
If the Chinese can improve water management
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and supply the needed mix of industrially
manufactured materials for agriculture, rapid
production increases could be achieved by the
end of this decade. A breakthrough would re-
quire a substantial upgrading of the number and
quality of China's corps of agricultural scientists.
Peking reportedly has drawn up a new plan for
education, but time is far too short to produce
anywhere near the number of scientists required
by 1980. The plan also ignores the time required
for basic research.
The massive redirection of rural labor from
private plots and sideline production to collective
activitie- such as agricultural capital construction
will be at the expense of the peasants' standard of
living. If the campaign is conducted with some
degree of restraint, the gains in the productivity
of land over the long run will make these short-
-run costs worthwhile. If the new policies are
carried out harshly, peasant morale will be
adversely affected, the rural economy dislocated,
and agricultural output reduced.
LAOS: THE COMMUNISTS MOVE IN
The Lao communist leaders, who spent most
of the last 20 years in the caves of northeastern
Laos, are moving into t::e ministerial offices in
Vientiane. A few of the non-communists in the
former coalition have been included in the
national people's congress that will apparently
rubber-stamp government actions, but most have
been banished to Sam Neua.
Prime Minister Kaysone Phomvihan has
issued a lengthy "action program" outlining
domestic and foreign policies. His program states
that the Pathet Lao intend to impose tight social
controls and to root out "decadent imperialist
culture." The program also proposes numerous
measures designed to reform the primitive sub-
sistence economy and to make Laos self-sufficient
in food. The Lao are undoubtedly counting on
substantial foreign assistance in pursuing their
ambitious economic goals.
Foreign Minister Phoune Sipraseuth has for-
mally notified the US embassy that Laos desires
continued relations with the US, and he conveyed
the same message to the US charge during an un-
usually cordial conversation at a communist vic-
tory gala. The action program, however, links
continuing relations with the demand that the US
provide economic assistance "to heal the wounds
of war." With Kaysone as prime minister and
Phoune, Phoumi Vongvichit, Nouhak Phoum-
savan, and Khamtai Siphandon as his deputies, the
government is now in the hands of those most
closely identified with the North Viet-
namese-and Lao-US relations may well be
hostage to the state of relations between Hanoi
and Washington.
Lao relations with Thailand remain straine.f.
The Thai have not yet reopened the border,
closed following a Lao attack on a Thai Mekong
patrol boat last month. Some food items have dis-
appeared from Vientiane markets, and other
goods have increased in price dramatically.
Gasoline is available only on the black market at
exorbitant prices. The Thai obviously hope that
he closure will impress on the Lao their
dependence on Thailand for supplies and access
to the sea and eventually prompt them to take a
more accommodating attitude on relations.
Hanoi has begun a small-scale airlift using
captured US C-130s to help offset the supply shor-
tages. Unless major deliveries are made by road,
the supply effort will not compensate for the
border closure. Hanoi probably intends that the
shipment of vitally needed supplies will serve as a
gesture of support for its Lao allies and strengthen
Vientiane's hand in dealing with the Thai on the
border issue.
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CUBA: FIRST PARTY CONGRESS LOOMS
Havana is readying itself for the first congress
of the Cuban Communist Party, to be held
December 17 to 22. It is likely to be a~ cut and
dried as any communist congress, but Fidel Castro
may deliver another blast at the US and tell his
people of Cuba's military involvement in the
Angolan civil war. Moscow will be represented by
Politburo member and senior party secretary
for ideology Mikhail Suslov, who will arrive on
December 14. Party leaders of some other Com-
munist countries will probably also attend.
Rather than debate major policy issues, the
congress will do little more than place its formal
stamp of approval on decisions made months ago.
The new constitution to be presented, for exam-
ple, has already been given broad public exposure
and is likely to undergo only minor revision
before being accepted by the delegates. Also ex-
pected to receive perfunctory review are several
"theses" outlining domestic and foreign policy. In
addition, the congress will approve a set of party
statutes that have been in force since early this
year.
There will probably be some changes in the
party structure-the Political Bureau, the
Secretariat, and the Central Committee will
probably be expanded-bit actual power will re-
main in the same hands as before. Castro and his
comrades-in-arms from the early days of the
revolution will maintain control, although some
veterans of the pre-Castro communist party and a
few up-and-coming technical experts will be
given positions at upper party levels. In party
elections held throughout the country, Fidel and
party Second Secretary Raul Castro have been
nominated "pre-candidates" by virtually all con-
stituencies, signifying their continuation in their
respective positions. The same "honor" has also
been awarded all members of the Political Bureau
and the Secretariat.
At least one "old" communist, Deputy Prime
Minister Carlos Rafael Rodriguez, is likely to join
Castro and his guerrilla elite on the Political
Bureau, but this concession to the pro-Moscow
members of the leadership may be balanced by
the addition of one or more former guerrillas.
One of these reportedly is Deputy Prime Minister
Belarmino Casilla Mas, who was one of Raul
Castro's six guerrilla column chiefs during the
revolution in 1958 and has since served in a variety
of top military and civilian posts.
There are signs that the Central Committee may
be broadened considerably. Party elections at the
provincial level have resulted in the nomination
of as many as 160 "pre-candidates" for the Central
Committee, theoretically the party's supreme
decision-making body, aside from the congress
itself. The Central Committee presently has 90
members, down from the original 100 of October
1965 as a result of deaths and purges. All but a few
will probably keep their seats, and there may be
30 or 40 additions. A significant portion of the
new membership is likely to consist of women,
correcting to a small degree what Fidel sees as a
serious political weakness at the highest policy
VENEZUELA: FORGING ECONOMIC TIES
President Carlos Andres Perez has scored a
significant success in expanding Venezuela's
political and economic influence in Latin
America. This development comes at a time when
relations with the US have received a setback.
On November 28, Finance Minister Hector
Hurtado signed comprehensive economic and
commercial agreements with Argentina, which
both nations are hailing as a significant step in the
development of close ties between them. Caracas
agreed to purchase annually 400,000 metric tons
of Argentine grains, with provisions to revise that
amount upward. In return, Argentina will buy
100,000 to 150,000 tons of iron ore during 1976 and
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President Perez meets with Argentine Economy Minister Cafiero
increase the amount to 250,000 tons from 1977 to
1980.
Among issues for future consideration were
imr cementation of agreements for the sale of
petroleum and liquid gas to Argentina, measures
to facilitate the sale of coal to Argentina, and
placement of Argentine external bonds on the
Venezuelan financial market. According to
Argentine officials, Economy Minister Cafiero will
visit Caracas in ea 'v January to sign an agreement
providing for reciprocal technical cooperation.
Most attention has centered on the reasons
behind the unusually large quantity of wheat,
yellow corn, and sorghum grains purchased from
Argentina. In the past, nearly all of Venezuela's
needs for imported rain were lied by the
F US. linked this
move to Perez' anger over the implementation of
the US Trade Reform Act, which excluded
Venezuela and other OPEC members from the
Generalized System of Preferences.
The shift in suppliers is also a conscious
effort to lessen Caracas' dependence on the US
for agricultural imports despite lower prices and
higher quality ii, the US.
The agreement to discuss providing Argen-
tina with petrol' um does not commit Caracas to
more than taking note of Buenos Aires' recent ef-
fort to obtain Venezuelan oil. It does, however,
make the necessary gesture toward Latin
American solidarity while at the same time
solidifying Argentina's cooperation on
hemispheric issues of interest to Venezuela.
Domestically, Perez' handling of the GSP
issue and the agreement with Argentina has won
wide support in Venezuela and may speed con-
gressional approval of certain details involved in
the nationalizat;on of the foreign oil companies.
With less than three weeks to go before the
foreign oil concessions expire and the formal 25X1
transfer of ownership takes place, much remains
to be done. The congress has yet to approve the
compensation agreements laboriously worked
out with the private companies. In addition, the
technical service agreements are still being 25X1
debated and negotiations are just beginning with 25X1
the companies over oil price and purchase con-
tracts to take effect on January 1, 1976.
The governing Democratic Action Party has a
majority in the ccngress, but has been reluctant to
force congressional action without adequate
debate. Nevertheless, its leaders have warned the
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opposition parties that time is running out for
congressional review and that the government's
carefully arranged step-by-step n4tionalization
process could be adversely affected by prolonged
partisan delaying tactics. The legislative session
has been extended until December 28. Tht pre-
sent expectation is that there will be a photo--
finish in resolving the outstanding issues between
the concessionaires and the government and in
getting congressional action setting up nationaliz-
ed companies to take over the assets and
operations of the present concessionaires.
MEXICO: YAQUI VALLEY UNREST
Rural unrest in northern Mexico has in-
creased significantly during the past two months,
particularly in the Yaqui River valley farm belt.
Peasants have occupied land they say had been
promised them years ago, and landowners have
forcibly removed them, often with the help of the
police and army. More than two dozen people
have been killed.
The most serious incident occurred in the
state of Sonora on October 23, when police and
army troops ejected squatters from a farm. Ten
people were killed, 18 wounded, scores arrested,
and the state governor was forced to resign
because of the incident. In early November, lan-
downers in the state of Veracruz killed several
more peasants who had "expropriated" land. On
November 20, while the country commemorated
the anniversary of the revolution that began in
1910, hundreds of peasants began an invasion of
private farms in southern Sonora. The occupation
ended peacefully four days later after federal
agrarian reform officials promised, on President
Echeverria's instructions, to expedite the
peasants' claims.
On December 1, private farmers-owners of
large, productive "agro-industrial" farms in the
25X1
rich, irrigated Yaqui valley-staged a four-day
strike to protest the government's decision to
turn over 12,000 acres of their best land to the
landless. The landowners charged that the
government was following "communist" policies
aimed at altering Mexico's course and eliminating
private agricultural property and private business
as well. The farmers ended the work stoppage
only after the government privately agreed to hd!t
the expropriations.
The region produces about a third of Mex-
ico's wheat, and officials were concerned that the 25X1
walkout would h-,ve ruined the harvest. Any
further farmer walkouts could greatly worsen the
nationwide food problem and deal a hard blow to
the area's earnings from exports to the US of
winter fruits and vegetables.
The landowners were placated in this in-
stance, but sharp disagreements between them
and the campesinos persist. More violence is like-
ly if land invasions continue.
The government is caught up in a situation of
its own making. To feed the country's burgeoning
population and to earn needed foreign exchange,
the government has to keep the large farms intact
and operating. This need runs counter to its own
laws, which limit each private tract to the
equivalent of 100 hectares of irrigated land. For
economic reasons, however, it has turned a blind
eye to the creation of large estates, sometimes of
10,000 hectares or more.
At the same time, the government must back
up its revolutionary land reform slogans (and
relieve peasant pressure for land) by periodically
carving up large holdings and distributing plots to
the landless. The Echeverria administration has
attempted to ease the peasants' burdens by pump-
ing large quantities of credit arid assistance into
(he countryside, but conditions have not im-
proved noticeably. Some of the peasants have
been waiting as long as 25 years to receive title to
land under the land reform laws, and their
patience is wearing thin.
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INTERNATIONAL ECONOMIC COOPERATION
The long-delayed Conference on Int-r-
national Economic Cooperation-first proposed
two years ago as an "energy conference"-will
start in Paris on December 16. Ministers from 27
industrialized and developing countries will ratify
an agreement made two months ago estai 'ishing
four we; king commissions to examine the broad
areas ',f energy, trade in raw materials, problems
of developing countries, and financial issues
r-': (ed to the first three. The commissions, each
composed of five industrialized and ten develop-
ing states, are expected to begin work early next
year. Unless the talks collapse during the next 12
months, the same 27 states will probably meet one
year from now to assess what progress, if any, has
been made.
In the wake of the 7th Special Session of the
UN General Assembly on the problems of the
developing countries last September, the Paris
conference will provide another forum for dis-
cussions of the changing relationship between
rich and poor states. The ultimate fortunes of the
conference depend as much on the progress of
talks in other forums as on the work in the four
commissions. At the same time, however, a
breakdown or a stalemate in the commissions
would tend to destroy the truce which the special
session of the UN created in the running feud that
has characterized relations between the in-
dustrialized and developing world for the last
several years.
In addition to establishing the commissions,
the ministers in Paris will have to set guidelines for
relations between them. Specific agendas will
probably have to be left for later, since both the
rich and the poor countries will come to Paris
with poorly defined ideas of what each wants and
how much each is willing to give up.
The complexity of the issues and the diversity
of interests among members on both sides is
responsible for the tardiness of -oordinated
preparation. The developing states have found
themselves no more able to go beyond general
statements in articulating their demands than the
industrialized states have found themselves able
to coordinate a response. Among the developing
countries, the Group of 77-the caucus of some
105 developing states in the UN-has agreed to
such general, and controversial, positions as are
expressed in the Declaration for a New Inter-
national Economic Order and the Charter of
Economic Rights and Duties of States. In more
narrowly focused negotiations, however, the ap-
parent harmony of the developing states has been
disrupted by differences in levels of economic
development, political structure, ideological
bent, and geographic location.
Developin
g Countries
Canada*
Venezuela* (OPEC) Algeria (
OPEC)
India
Australia
Argentina Cameroo
n
Indonesia (OPEC)
European Community
Brazil Egypt
Iran OPEC
Japan
Jamaica Nigeria (
OPEC)
Iraq OPEC
Spain
Mexico Zaire
Pakistan
Sweden
Peru Zambia
Saudi Arabia (OPEC
Switzerland
Yugoslavia
United States
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A similar pattern is evident among the in-
dustrialized countries. Within the Organization
for Economic Cooperation and Development, the
24 members have been working on a common ap-
proach to the problems of trade in raw materials
and relations of OECD states with the developing
world. Notwithstanding these efforts, which have
borne some fruit, some members are making sure
that work in the OECD does not commit them to
programs and plans that they consider overly ex-
pensive. Some of these states, especially EC
members, may also be concerned that policies
arrived at in the OECD might preempt decision-
making by the EC on similar issues.
The principal stumbling block at the
ministerial meeting will be in discussions about
the substance of each commission's work. The
underlying issue will be whether each should
conduct new and separate negotiations or
monitor the work of existing international bodies.
Generally, the industrialized countries want to
limit substantive talks to the energy commission,
but the developing countries will continue to de-
mand that any substantive progress on energy be
tied to progress in areas of primary interest to
them.
The propnc31s for subjects to be discussed
that were advanced at an earlier preparatory con-
ference by the US and the representatives of the
developing states present sharp contrasts.
In the energy commission, the US wants to
talk about oil prices, security of supply, and a joint
approach to increasing the supply of energy. The
developing countries, on the other hand, want to
concentrate on a study of development and the
demand for energy, oil, and other resources and
the protection of purchasing power of energy ex-
port earnings.
In the raw materials commission, the US has
offered to consider access to supply, the stabiliza-
tion of export earnings, and methods to help
stabilize commodity markets. The developing
countries' emphasis is on increasing and protec-
ting the earnings of exporters.
In the development commission, the
difference is more one of emphasis than sub-
stance. The US has s"ggested a study of the
problems of planning development programs by
states that are suffering large payments deficits.
The US proposal also includes the examination of
mean,; of accelerating growth, promoting
agricultural development, and enhancing trading
opportunities. The poor countries w nt to
emphasize the latter, and they attach great impor-
tance to industrialization and the transfer of
technology.
The purview of the finance commission is
restricted to those issues that relate directly to the
work of the other commissions. The represen-
tatives of the developing world would like to
broaden the talks in this area to a discussion of the
impact of the international monetary system on
development, the protection of real values of
their financial assets, and the problems of inter-
national financial markets. The US has offered to
discuss financial consequences of increased oil
prices, financial implications of commodity
arrangements, and the financing of investment
projects in developing countries.
Another of the issues the ministers may have
to cope with is the membership of each of the
commissions and, perhaps, of the conference
itself. These issues were sharply divisive before
the conference and may not be completely settl-
ed. The developing states have decided io peti-
tion for additional seats-two or three-although
there is no indication it is a condition for par-
ticipation.
The industrialized countries appear to have
resolved their wrangle over representation. Lon-
don and its eight EC partners agreed last week to a
compromise on British demands for a se