WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300020034-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 22, 2016
• Document Release Date: March 1, 2011
• Sequence Number: 34
• Publication Date: August 1, 1975
• Content Type: SUMMARY

Declassified in Part - Sanitized Copy Approved for Release 2011/11/08: CIA-RDP86T00608R000300020034-1
Secret
meekly Summary
Secret
No. 0031/75
August 1, 1975
Copy N2 1387
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CONTENTS (August 1, 1975)
The WEEKLY SUMMARY, Issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday, It fre-
quently includes material coordinated with or prepared by the
Office of Economic Research, the Office of Strategic
Research, the Office of Geographic and Cartographic
Research, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and
therefore published separately as Special Reports are listed
in the contents.
MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
EAST ASIA
PACIFIC
1 Turkey: Moves Against US Bases
2 Portugal: Power to Triumverate
3 Western Europe:'Economic Summits
4 Italy: Factional Feuding
5 Greece: Air Force Flying High
6 USSR: Soyuz-18 Lands Safely
7 Egypt-Israel: P,lerts Relaxed
7 Israel-UN: Fighting Back
8 Israel-USSR: Expulsion Dilemma
9 Nigeria: Coup Ousts Gowon
10 Ethiopia: Urban Land Reform
11 .^.ngola: Civil War Continues
12 Cuba: A Moderate Castro
13 Panama: Economy Holdinn I in
14 Peru: Independence Day
15 USSR-Southeast Asia: Blocking China
15 Sino-Soviet Trade Agreement
16 Cambodia: Cracks in the Shell
17 Korea-Japan: Improved Relations
17 South Korea: Military Spending
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TURKEY: MOB/ES AGAINST US BASES
Turkey has declared it no longer considers
its bilateral defense agreements with the US
valid and has assumed control of all US-operated
joint installations, following the refusal of the
US Congre: -. last week to lift the arms embargo.
Ankara believes that the agreements establishing
the base:; have been abrogated b the US arms
embargo.
detailing Turkey's long-range plans for the joint
installations.
Turkey's ambassador in Brussels advised
the NATO Council that the Demirel government
hopes to reach a new agreement with the US
that will not uc subject to the "whims" of any
ethnic power group in the House of Representa-
tives. In the absence of any new agreement,
Turkey has indicated that it expects NATO to
help fulfill its arms requirements.
On Cyprus, Turkish Cypriot leaders,
doubtless at Ankara's behest, laced additional
restrictions on the US
Turkish Cyp. iot officials are also likely further
to limit the movements of US personnel in the
rest of the Turkish Cypriot zone.
Negotiators for the Greek and Turkish
Cypriot communities, meanwhile, began another
round of intercommunal negotiations in Vienna
yesterday. No major breakthrough is likely,
although the Greek Cypriot side has apparentIN,
backed down From its insistence on a stronc,
central government and will now concentrate on
the territorial issue.
Prime Minister Demirel has as',ced the
Turkish General Staff to assume responsibility
for redefining Turkey's defense relationship
with the US. In so doing he reportedly hopes to
avoid criticism by either the military leadership
or opposition leader Bulent Ecevit, who has
given grudging approval to the government's
actions. The Turkish press and public have
generally backed Demirel's decisions.
Demirel probably still hopes that an agree-
ment can be worked out between the US and
Turkey that would bring an end to the embargo
or, at the very least, release arms already paid
for by the Turks. Demirel has refrained from
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Aug 1, 75
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PORTUGAL: POWER TO TRIUMVIRATE
Political power-for the present, at least-
has been transferred from the 30-man Revolu-
tionary Council to a triumvirate composed of
President Costa Gomnes, Prime Minister Vasco
Goncalves, and the head of the security forces,
General Otelo de Carvalho. The new leaders
have sharp philosophical and personal differ-
ences, however, and are not expected to deal
effectively with Portugal's deepening problems
at home and abroad.
In addition to giving formal approval to the
triumvirate, the leftist-dominated armed forces
general assembly at its meeting last week down-
graded the formerly powerful Revolutionary
Council to a purely advisory body. The
assembly also reaffirmed its authority to
appoint members of its own choosing to the
council.
Realizing that their efforts to oust
Goncalves had no prospect of success in the
radical assembly, dissident council members
boycotted the meeting and sent a message of
protest. On Wednesday, however, the faction,
led by Major Melo Antunes, attended a council
session to discuss the new cabinet proposed by
Goncalves. Because of the council's reduced
status, it seems unlikely to exercise much in-
fluence over tn.; new appointments, which are
to be announced soon.
The council dissidents have apparently not
decided on their next move. Lisbon has been
filled with rumors of their resignations and
possible arrest. One of the leaders of the dis-
sidents, Major Vitor Alves, told a West European
diplomat last week that they were planning to
resign their posts on the council, retire to mili-
tary units sympathetic to their cause, and work
at the grass-roots level to isolate Lisbon from
the rest of the country.
Meanwhile, the composition of the new
ruli,,ig group has drawn immediate opposition
from the country's democratic parties. The
Socialist Party and the left-of-center Popular
Democratic Party-which polled a combined
vote of 64 percent in the constituent assembly
elections in April-denounced the new .fovern-
ment structure as unconstitutional and a viola-
tion of an agreement signed last April between
the parties and the Armed Forces Movement.
The Socialists have proposed as an alterna-
tive a "government of national sclvation," to be
headed by a nonpartis9n member of the
Revolutionary Council with recognized national
stature. Socialist Party leader Soares also called
for national reconciliation instead of the present
divisive policies of the Movement. Such
proposals, however, coming from party which
is i:icreasingly playing an opposition role, are
not likely to receive a hearing in I_isoon.
General Otelo de C:,rvalho's remarks cn his
return Wednesday from a visit 'o Cuba were
scarcely responsive to calls for reconciliation. He
said that the Movement has been too lenient
with what he described as counter-revolu-
tionaries, and he indicatea that force may be
used against them. He characterized the
Socialists as the "greatest enemy of the left"
and said the question of sending Soares into
::;.ile would be discussed with Movement col-
leagues. The position of General Carvalho, who
already controls the security forces, has been
strengthened considerably by his appointment
to the triumvirate. He is also rumored to be
under considerz!+ion for one of the two vice
prime minister posi.,, and he could emerge as the
most powerful man in Portugal.
Because of probably irreconcilable differ-
ences among the new leaders, it is unlikely that
they will be able to make much headway in
solving Portugal's mounting problems. The
economy is unraveling at a rapid rate, growing
numbers of Portuguese outside Lisbon are
venting their anger at the Movement as welt as at
the Communists, the Azores are edging closer to
a declaration of independence, and the struggle
in Angola continues to cause grave concern. The
new leaders appear to be on shaky ground, but
it is not yet clear what, if any, forces will be
able to marshal the strength to topple them
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Aug 1, 75
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WESTERN EUROPE: ECONOMIC SUMMITS
Frenc'. President Giscard and West German
Chancellov Schmidt met in Bonn last weekend
in the latest of their series of twice-yearly sum-
mit meetings. The two leaders regard their close
personal relationship (rumor his it that Giscard
phones Schmidt once a week) as the key to
establishing closer economic cooperation among
the EC Nine.
Their summit, a week after the meeting in
Brussels of all EC leaders, was complemented by
the visit of British Prime Minister W;Ison to
Hamburg last week. Economic issues dominated
all these meetings and, although coordination of
policies was not very specific, there was general
agreement that the US must also be persuaded
to take reflationary steps.
Giscard and Schmidt saw eye to eye on the
seriousness of the recession in Europe and the
necessity for government programs to stimulate
the economy. Beyond that, there is no evidence
that either side committed itself to initiate ex-
pansionary measures that were not already in
the works. Wilson, for his part, welcomes the
reflationary policies on the continent, but his
government still intends to stress an anti-infla-
tion program for Britain.
Giscard and Schmidt were apparently un-
able to reach full agreement on coordinating the
timing of their programs. Nevertheless, starting
early this fall. Bonn will spend an additional $2
billion, aimed primarily at giving a boost to the
hard-hit construction industry. Added to the
$15 billion government deficit already pro-
jected, this should provide some stimulus to the
economy by year's end.
The French program apparently calls for
some $3.5 billion in additional government
spending; it is not clear if the money will be
spent this year. The infusion of government
money would represent the strongest fiscal step
taken by Giscard since the recession began, but
it would still leave the government deficit small,
relative to those in West Germany and the US.
The French-Germarn summit revealed that
differences still exist on approaches to interna-
tional monetary policy, although Schmidt-
under the influence of Giscard-may be taking a
more favorable view to fixed exchange rates, at
least to the extent of countenancing "managed"
floating. Paris' desire to return to a fixed ex-
change-rate system, with gold as the primary
official reserve, has been the main bone of con-
tention. The Nine will attempt to coordinate
positions later this summer in prepa.-ation for
the September session of the International
Monetary Fund.
Schmidt has hitherto echoed the view of
financial advisers that the present system of
flexible exchange rates should be continued,
given the dislocations in the world economy.
Schmidt is apparently still skeptical about
Giscard's proposal for a summit of the major
Western industrial countries on monetary mat-
ters, but he will support such a conference in
return for Giscard's agreement that it would
encompass economic policy coordination.
Preparations for another conference of oil
producers and consumers received only cursory
attEntion from Giscard and Schmidt. The two
leaders devoted some time to the question of
Arab attempts to oust Israel from the UN.
25X1
As a public relations exercise, the summit
was a success. Giscard and Schmidt have reaped
domestic political benefits from their con-
spicuous efforts to coordinate their economic
programs, as viell as from their explicit emphasis
on the leadership role their countries play in the
EC. It remains to be seen whether such encount-
ers between Giscard anJ Schmidt-the self-
styled "motors" of European integration-will
in fact contribute materially to united action by
the EC as a whole. Some of the smaller EC
members, for example, have already insisLnd
that the Community should be represented at
any summit dealing with international monetary
problems, so that their interests will be pro-
tected. 25X1
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Democrats little time for serious consideration
of policy questions. One issue they will have to
address eventually is the Socialist Party's insis-
tence on closer relations between the govern-
ment and the Communists. The Socialists' cen-
tral committee last weekend unanimously sup-
ported party chief De Martino's stand opposing
any future national government that does not
have "at least indirect" Communist support.
De Martino suggested that Communist
abstention in a confidence vote on a new gov-
ernment might be an acceptable formula for
such support. If the Christian Democrats agree
to such a formula. it will be seen in Italy as a
first step toward broader collaboration with the
Communists that could lead eventually to their
participation in the national government. Social-
ist entry into the government was preceded by a
similar arrangement in 1962.
The Communists have not commented offi-
cially on De Martino's proposal. In any event,
they would want to avoid the appearance of
tacitly condoning the same kind of government
they attacked in the recent election campaign.
They might agree to provide such indirect
support if the Christian Democrats made sonic
concessions-such as holding formal consulta-
tions on the government's program-thiA would
clearly recognize the Communists' potential as a
partner in government.
The Socialist Party chief also won his
party's backing for continuing efforts to main-
tain working relations with the Christian Demo-
crats. With the exception of a small left-wing
faction, the Socialists endorsed De Martino's
rejection of any return at the national level to a
"frontis'" alliance with the Communists.
Some Socialists had been talkie; about a
revival of the "frontist" alternative after last
month's regional and local elections h1-1 led
them to conclude that the Socialists and Com-
munists might win a majority in a national con-
test. Although the two parties guv,:, o together
in many localities, Da Martino-and the Commu-
nists-are against trying it at the national level.
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Aug 1, 75
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Italy's Christian Democrats emerged in dis-
array from their lengthy National Council
meeting last week, failing to make any final
decisions on policy changes or on a replacement
for former party chief Fanfani.
The Christian Democrats found it much
harder to settle on a successor to Fanfani than
to reach agreement on his ouster. His fall was
engineered through an agrec-nent by centrist
and left-wing factions to vote against him in a
confidence vote last week. That alliance fell
apart, however, vwiien debate turned to finding a
replacement.
When none of the rnajur candidates could
muster a majority, the council tapped its
president- 63-year-old Benigno Zaccagnini--to
occupy the party secretaryship temporarily.
Zaccagnini h0s since announced thai he will
remain in office only until the party congress,
which will probably be held in November. As a
result, the Christian Democrats will be pre.
occupied in the coming months with trying to
line up a majority of the factions behind a new
party leader.
The party left may enjoy some advantage
in the maneuvering because Zaccagnini belongs
to the faction headed by Prime Minister Moro,
the left's most influential leader. The left is
more inclined than the other factions to grant
the Socialists increased governmental influence
and to take a le:;s intransigent attitude toward
the Communists, at Icast at the local level.
By choosing only a temporary leader, the
Christian Democrats bought additional time to
settle differences among themselves, but they
probably did more damay'a to their public
image. The fret that the party could not c'ose
ranks in the race of its most serious postwar
challenge-the Communists' unprecedented
gains in the regional and local elections last
month-will strengthen doubts among many
Italians about its ability to deal with the coun-
try's mounting problems.
The lengthy and inconclusive battle over a
replacement for Fanfani left the Christian
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The Greek air force has improved its over-
all combat capability substantially since the
Turkish invasion of Cyprus a year ago. The
inability of the air force to assist Greek forces
fighting on the island and the ensuing personnel
purges had badly damaged morale.
however, that h e
introduction ol large quantities of modern air-
craft and other equipment, effective leadership,
and a new sense of mission we restored con-
fidence.
Two new squadrons of US-built F-4E
fighter-bombers, 35 aircraft in all, have recently
become operational. The Greeks have also
ordered 60 US-built A-7H attack aircraft, 12
C-130 transports, and 40 French-built Mirage
F1-C all-weather interceptors. The initial cadre
of pilots and support personnel have just com-
pleted their training on the A7s and Fls, and
the first deliveries of both aircraft are scheduled
for August. The first C-130 will arrive in Sep-
tember.
By late 1977 all of these aircraft are to be
in operational units. The F-4Es and the A-7Hs
eventually are to replace all of Greece's obsolete
F-84 attack aircraft, and the Mirage Fl-Cs will
replace aging F-102 interceptors. The C-130s
will greatly improve the air force's transport
capabilities, which are limited because of
obsolete and less capable aircraft.
The addition of the new aircraft will enable
the air force to support combat operations in
the Aegean islands more effectively. The A-7F25X1
which are to be assigned to Crete, will give t25X1
Greeks a better but still limited capability to fly
attack and close air-support missions over
Cyprus.
beca25X1
the air force leadership no longer has a desire to
be heavily involved in politics, it is much more
effective and has begun to inspire a high degree
of loyalty from within the ranks. In his view,
the overall combat readiness of the air force
now approaches the optimum possible within
the limits of available resources. Crews are fully
trained, and equipment is maintained in a com-
bat-ready status.
War planning staffs are said to have been
increased threefold and to be manned with the
best talent in the air force. New missions and
strategy are evolving, as the air force perceives .a
possible Turkish invasion of Greek islands o1
the Turkish Aegean coast as the prime threat to
Greece's security. The air force does not believe
Greek naval and ground forces alone can mass
Gree'. F-102 interceptors
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enough firepower to deter a Turkish move
against the islands. Thus, it expects to have
major responsibilities in interdicting sea com-
munications, bombing ports and staging areas,
and providing close air support of ground forces.
Despite its improved outlook, the air force
has serious problems. For the next several years
it will be saddled with large numbers of obsolete
aircraft which will become increasingly harder
to maintain. The air force already suffers from a
shortage of fully trained technicians and has
placed many of its more highly skilled personnel
in training programs for the new aircraft. Main-
tenance equently will
suffer. the air force's
The two Soyuz-18 cosmonauts returned to
Earth July 26 after 63 days in space. The mis-
sion was the longest Soviet manned space flight
so far, but it was short of the 84-day US record
set last year by the crew of Skylab 4.
After more than two months aboard the
Salyut 4 orbiting laboratory, cosmonauts Pyotr
:Nmuk and Vitaly Sevastyanov boarded their
Soyuz-18 space capsule for the return flight.
The landing took place in ne: , darkness in
central Kazakhstan near the spot where the
Soviet crew of the Apollo-Soyuz Test Project
touched down on July 21. Tass reported that a
recovery team was present to assist Klimuk and
Sevastyanov trom their spacecraft and that a
preliminary medical examination indicated the
two were in good health.
The landing was not broadcast live.
Instead, a videotape was shown approximately
one hour after touchdown, possibly indicating
that the Soviets are reverting to the policy of
relative secrecy that characterized their space
program prior to the Apollo-Soyuz mission.
Only Klimuk was shown emerging from the
capsule. The videotaped coverage ended
abruptly without showing Sevastyanov. It is
believed that both cosmonauts were suffering
from a loss of equilibrium caused by extended
weightlessness in space, even though both men
receivGd physiological conditioning aboard
Salyut 4 through the use of a special pressure
suit and treadmill exercises.
During their mission, the cosmonauts con-
ducted a number of scientific, technical, and
medical experiments including celestial photog-
raphy, solar observation, and earth resources
survey (ERS) photography.
The Soyuz 18 cosmonauts are the second
crew to occupy the Salyut 4 space station,
which has now been in orbit for more than
seven months. Because there is only about seven
to ten days' oxygen supply remaining aboard
Salyut 4, the space station will probably not be
reoccupied and ma be e i ed within the
next few weeks.
Page 6 WEEKLY SUMMARY Aug 1, 75
major problem over the next few years will be
to maintain maximum combat readiness in exist-
ing units while introducing the new A-7s and
Fls.
Ankara, meanwhile, is viewing the Greeks'
growing air combat capability with increasing
concern, especially since its own air force can no
longer get new US aircraft and the spare parts
necessary to keep its present inventory opera-
tional. Should the Turks continue to have prob-
lems in acquiring new fighters and spare parts
for their present aircraft during the next two
years, they may well find their air force over-
matched by the Greeks in the Aegean.) ! __?
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SECRET
Egypt and Israel both relaxed their alert
postures last week as tensions eased in the wake
of Cairo's decision on July 23 to extend the UN
mandate in the Sinai.
Thad relaxed its heightened
readiness condition. He said that Egyptian
forces were resuming training and that leaves for
Egyptian military had been reinstated.
shared the spotlight in Tel Aviv last week with
the ongoing negotiations for another agreement
in the Sinai. Israeli officials have linked the two
issues.
Foreign Minister Allon told the Knesset 25X1
last week that Israel would have to "reconsider"
its policy toward UN activities, if the Arabs
succeeded in their anti-Israel campaign. He
pointedly cited the extensive UN involvement in
the Middle East, ranging from peace-keeping
forces to refugee relief programs. Allon warned
that Israel will act tov.,ard the UN on the basis
of "reciprocity," should it undermine Israel's
membership rights.
Gazit complained, however, that Cairo had
been violating the disengagement agreement. He
contended that Egyptian forces on the east bank
of the Suez Canal totaled some 15,000 to
20,000 men and some 41 tanks and 40 artillery
pieces, well over the 7,000 troops, 30 tanks, and
36 pieces of artillery permitted under the dis-
engagement agreement. Gazit added that the
Egyptians had also increased their antitank and
light artillery capabilities on the east bank, but
he did not say this was in violation of the
agreement.
Tel Aviv claimed that some of the Egyptian
buildup had occur-,-,d prior to the latest Middle
East cr;:;is, but that a good portion: had hap-
pened in the few days immediately prior to
Egypt's extension of the UN mandate. Cazit
said Israel had complained to UN authorities
about the excess Egyptian tanks but not about
the excess number of troops because of the
difficult in rovin that claim.
The Arab campaign to deny Israel a seat at
next month's UN General Assembly session
The foreign minister reiterated this posi-
tion even more forcefully in an interview on
July 29, saying he would ask the government to
order a suspension of UN activities in Israel and
would oppose UN participation in Geneva peace
conference activities if Israel were suspended
from the General Assembly. Allon did not speci-
fically refer to the UN peace-keeping forces, but
he is said to believe that Israel's cooperation
with them could be affected. The more conser-
vative Defense Minister Pores, however, drew a
direct connection, telling interviewers that Israel
could hardly be expected to reach any agree-
ment involving UN participation if it were not a
UN member.
Some Israeli commentators are calling on
Tel Aviv to pull out of the UN to avoid the
humiliation of further, attacks. Despite Tel
Aviv's disillusionment with what it regards as
the UN's consistent pro-Arab bias, however, Tel
Aviv has decided to fight hard to keep its dele-
gation in the General Assembly. The gov-
ernment has launched a major diplomatic and
public relations effort which Allon thinks stands
a chance to block the Arab campaign.
Egypt has adopted an ambivalent position
on the UN issue. it is reluctant to buck the tide
of Arab opinion and would like to hurt Israel
politically. In a press coWerence in Khartoum
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Foreign Minister Allon
last weekend, President Sadat argued that
Israel's continued UN membership is more ad-
vantageous to the Arabs because the Israelis are
thus under some obligation to adhere to UN
resolutions. He added, however, that if Israel
continues to procrastinate on implementing
these resolutions, Egypt will "have no choice"
but to go along with the call for its expulsion.
At the OAU conference in Kampala, the
Egyptians have made a fine distinction between
expulsion and suspension, on the rather obscure
grounds that a call for suspension is somehow
more moderate. The Egyptians worked to tone
down an OAU ministerial resolution advocating
expulsion by substituting a call for suspension,
but they apparently fail-or simply refuse-to
recognize that the effect on Israel will be the
same. 25X1
ISRAEL-USSR: EXPULSION DILEMMA
The Soviets are treating gingerly the Arab
moves to suspend Israel from the UN, and they
obviously hope they will not have to vote on the
issue at the UN General Assembly.
Soviet media have alluded only briefly to
the Arab proposal and have avoided formula-
tions that could be read as supporting it. The
Soviet press, for example, only belatedly re-
ported that the Islamic conference in Jidda had
called for Israel's suspension.
Moscow would prefer to avoid having to
take a public position on the issue. A Soviet
vote to oust Israel would contradict the "even-
handed" image Moscow has cultivated as part of
its campaign to win a role in the Middle East
peace negotiations. Support for Israel's ouster
would also add an unneccessary complication to
Soviet relations with the US. On the other hand,
opposition or abstention on this issue would
damage Soviet standin in the Arab capi-
tals. 25X1
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NIGERIA: COUP OUSTS GOWON
Brigadier Murtala Mohammed, a 37-year-
old Hausa tribesman, became chief of state and
head of the armed forces following a bloodless
military coup on July 29 that overthrew General
Gowon's nine-year-old regime. The carefully
staged coup-Nigeria's third since independence
in 1960 -took place while Gowan was attending
the OAU summit in Kampala and met with no
overt opposition. The coup took place on the
anniversary of the coup in 1966 that later
elevated Gowan to office. Mohammed played a
key part at that time.
This latest coup brought to power a group
of relatively senior staff officers, troop com-
manders, and other officers who had become
disenchanted with Gowon's lack of firm leader-
ship and their own exclusion from policy-
making positions. The US embassy's preliminary
view of Mohammed, whose degree of power is
unclear at this point, is that h:s personality and
background could undercut Nigeria's internal
stability. He is
more openly identified with Nigeria's
Muslim north than with the country at large.
In his first speech Wednesday, Mohammed
did not talk about any sweeping changes in basic
policies. Instead, he said, his regime would strive
for more efficient government, implying it
would vigorously attack Nigeria's outstanding
problems. On balance, the embassy feels the
regime is favorably disposed toward the West,
and no abrupt changes in general US-Nigerian
relations are expected. The embassy does not
sense any basic shift in Nigeria's oil policies, but
does believe it will take a more strident stand on
southern African issues.
Mohammed, in a thorough housecleaning,
quickly announced the appointment of a new
22-man Supreme Military Council along with
new service chiefs, state military governors, and
divisional commanders. Former cabinet min-
isters have been dismissed, and a shakeup of
senior civil servants is expected. The new
cabinet should be named soon. Gowon and all
senior army and police officers who served with
him have been retired. Mohammed has declared
that Gowon will be free to return "as soon as
conditions permit."
Gowon stated in Kampala on Wednesday
that he accepts the coup, and he called on
Nigerians to support the new regime for the sake
of national unity. Gowon's pres-i:ige had sagged
among both soldiers and civilians over the past
six months because of his government's seeming
drift in the face of accumulating economic prob-
lems such as inflation and commodity shortages.
Gowon's procrastination in replacing Nigeria's
12 stale governors, a move sought by aspiring
middle-grade officers, also helped spur the coup.
Although Nigeria's new rulers project an
activist image, their background suggests they
may be no better equipped to deal with the
country's complex economic problems than was
the Gowon regime. They lack experience in
governing and may fall back on strong-arm
measures in hopes of producing quick results.
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ETHIOPIA: URBAN LAND REFORM
The ruling military council took another
step toward fulfilling its promise to bring about
"Ethiopian socialism" when it announced a
sweeping urban land reform program on July
26. The program could further alienate large
groups of the population and, more impor-
tantly, the army.
The program calls for nationalization of
almost all urban property; individuals and
families will be allowed to own only one house
and about one-eighth acre of land. Private
owners will be forbidden to earn rent from
urban land or houses after August 7. On that
date all agreements between landlords and
tenants will be terminated. City dwellers'
associations, headed by government officials,
will be set up to collect rents and administer
other aspects of the program.
Nationalization is sure to stir more opposi-
tion to the council from the still politically
potent middle class, which includes many mili-
tary officers who own urban property. Thus far,
the economic interests of most of the middle
class have not been seriously damaged by the
council's policies.
Expecting that its action might trigger
widespread disorder, the council reinforces: and
placed on alert the security forces in Addis
Ababa when the program was announced. The
capital nevertheless remained calm.
The council's authoritarian rule and
socialist policies, particularly rural land reform,
have already cost it the support of large
segments of the population and strained its rela-
tions with most army units. The urban land
nationalization program could pose a severe test
of its ability to survive.
Government forces and rebels in Eritrea
Province, meanwhile, have engaged in several
sizable clashes in recent weeks in addition to
continuing low-level skirmishes. On July 17 a
large engagement took place south of Asmara
when rebels ambushed four truckloads of gov-
ernment soldiers; over 60 soldiers were killed.
Government forces and rebels fought a running
battle about seven miles west of Asmara be-
tween July 22 and 24. Government aircraft
supporting the operation bombed and strafed a
village.
In Asmara, government security forces
reacted indiscriminately to the killing two weeks
ago of four government informers by rebel
assassination teams. In reprisal the government
forces reportedly killed over 60 Eritreans,
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mostly young males seized at random off the
streets. Troops reportedly also killed a large
number of civilians in a raid on a northern
suburb late last week. Heavy firing broke out
sporadically; stringent security precautions,
designed to restrict the movement of rebels and
their sympathizers, are in effect.
The whereabouts of the two Americans
and four Ethiopians kidnaped by the rebels
on
located in western Eritrea,
July 14 is still unknown. The rebels have made
no demands for their release; they may intend
to make use of the them to repair a transmitter
Fighting between the National Front for
the Liberation of Angola and the Popular Move-
ment for the Liberation of Angola is spreading
across much of the northern part of the ter-
ritory. The transitional government appears to
have broken down completely, and there is little
chance that it can be put back together in the
near future.
During the past week the fighting between
Angola's two principal liberation groups has
intensified, with clashes taking place in a num-
ber of towns where neither group is predom-
inant. Reports reaching Luanda are contradic-
tory and often out of date; some towns report-
edly have changed hands several times.
So far, the National Front has made no
attempt to take Luanda, from which it was
forced to withdraw in mid-July after almost a
week of intense fighting. Nevertheless, the Front
is consolidating a major force at the important
junction town of Caxito, where the capital's
water supply and power lines are located. The
Popular Movement is attempting to isolate the
Front there; it has destroyed at least one major
bridge leading out of the town and is mining all
the main roads. As long as the Front holds
Caxito, however, it is in a good position to try
to negotiate its return into Luanda.
conue
Flrnzznvi1 +,
rrKinshnsn
Cabinda
Cabinda
Cermone
OullaxeYj
coxito
Luondo
it rldrrii
oou,
Caungulii
?1WMnlonle
Hunrique
du Carvollro
!Angola
TSouth West Afrlco~
(Inlmnullonnl ren.)
In Luanda, friction between the Portuguese
armed forces and the Popular Movement is
increasing. Last weekend several Popular Move-
ment troops fired on a Portuguese commando
unit; the Portuguese retaliated by attacking the
Movement's headquarters. The Popular Move-
ment has refused to surrender the troops
involved and is demanding that all Portuguese
forces be withdrawn from the territory. The
Portuguese already have pulled most of their
troops out of the countryside. The Portuguese
military commander and the High Commissioner
are trying to remain neutral.
Portuguese officials in the territory have no
idea of how to stop the fighting which has been
going on for several weeks and has produced -
political vacuum in Luanda. They do not want
to risk a military escalation by committing
Portuguese troops to restore order, and they
may not be sure the troops would intervene if
ordered. Officials in Lisbon, preoccupied with
their own political struggles, cannot turn their
attention to Angola.
The Popular Movement and the National
Front seem determined to secure military
dominance through a war of attrition-with no
political solution in sight.
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0 SECRET
CUBA: A MODERATE CASTRO
Fidel Castro's failure to direct brickbats at
either the US or the Organization of American
States during his traditional speech on July
26-Cuba's national day-can be attributed to
his interest in promoting detente and his desire
for access to US trade and technology. Appar-
ently having decided to avoid pointless obstacles
to an improvement in bilateral ties with the
countries of the Western Hemisphere, and with
the US in particular, Castro chose "safe" tcpics
for his speech: events in Portugal, domestic eco-
nomic progress, and a proposed redefinition of
Cuba's political-administrative boundaries.
Castro still has no intention of rejoining
the OAS, but he realizes that the US has tied a
change in its economic denial program to elimi-
nation by the OAS of its sanctions against Cuba.
Now that the OAS has taken this step, Castro
would like at least to get the ball rolling toward
Cuban-US rapprochement prior to 1976, be-
cause he does not believe progress in this direc-
tion is likely in an election year.
In years past, Castro would not have hesi-
tated to use the occasion as a springboard for an
attack on the OAS just prior to one of its
meetings. He understood the sharp division
within the OAS on the Cuban sanctions ques-
tion and presumably hoped in the past that his
verbal blasts would intensify debate, polarize
attitudes, and provoke the organization's dis-
integration. He apparently now realizes that lie
underestimated the OAS' durability and, rather
than work vainly for its destruction, has decided
at least for the time being to ignore it. A reassess-
ment of his position with the benefit of hind-
sight may have taught him that with a less
aggressive, less negative policy toward the OAS
he might have been relieved of its sanctions
some time ago and could have been taking ad-
vantage of the commercial and diplomatic
opportunities their lifting would provide. '
With the OAS sanctions no longer formally
in effect, Castro will be watching the US closely
to pick up any sign of a change in the economic
denial program. Should any portion of the so-
called blockade be lifted, he most likely would
respond quickly with a gesture-possibly the
release of some US citizens jailed or, political
charges-intended to maintain movement
toward eventual negotiations He sees the post-
sanctions period as having great potential for
important foreign policy gains in several direc-
tions and, while watchin,'he US, will also work
to resume diplomatic relations with such
prospective allies as Ecuador, Honduras, and
Costa Rica. Cuba's presence at the current meet-
ing in Panama to create the Latin American
Economic System will provide an immediate
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CIA-RDP86T00608R000300020034-1
opportunit''; for initial contacts aimed at re-
storing formal ties.
Sharing the dais at the national day cele-
bration with Portugal's General Otelo de Car-
valho, Castro paid the expected tribute to the
government in Lisbon and lauded the general as
a hero of the Portuguese revolution. A high
Cuban military delegation has just returned
from Lisbon on a reciprocal visit.
Castro devoted the remainder of his ad-
dress to domestic matters, salting his remarks
liberally with statist"rs that gave a favorable
impression of gains i,, productivity but revealing
nothing of particular significance. His announce-
ment that Cuba's six provinces are due for re-
defining was not unheralded; the draft consti-
tution published earlier this year specified that
political-administrative subdivisions would con-
sist only of regions and municipalities. The new
boundaries are probably still in the drafting
stege and will not be ratified until the'irst party
congress in December. Because the party's struc-
ture also is based on these boundaries, the
redefining process will have some political
impact; the six present provincial party bosses
will be replaced by 15 to 30 regional chiefs,
while the current 59 regional posts will be
25X1 abolished.
Panama's economy, although less buoyant
than in recent years, is apparently sound enough
that the Torrijos government is under little pres-
sure to make concessions to speed negotiations
on a canal treaty.
Economic growth this year will probably
come close to the 3.5 percent of 1974, well
below the 6- to 8-percent rates common in the
past decade. Activity has been incre-sing sharply
in the Colon Free Zone and in the banking
sector. Bank assets increased 80 percent in
1974, and net bank i'old:ngs of foreign reserves
doubled.
The government's credit situation, which
was shaky in the early 1970s when much capital
spending was financed by short-term borrowing,
has been reorganized and strengthened. Debt
service has dropped from 30 percent of the
budget in 1973 to 24 percent this year. The
government has restrained current spending
while continuing capital spending on major con-
siruction projects and should have no difficulty
covering a possible small unscheduled operating
deficit this year.
The leadership has forecast a smaller cur-
rent account deficit this year. banana exports,
down last year as a result of the controversy
with the US-owned banana companies, have re-
covered. Sales of refined petroleum products,
Panama's leading export, are up, helping to off-
set higher costs of imported crude oil. The
$19.3 million already received this year in oil
rebates from Venezuela and the $41 million
expected from the International Monetary
Fund's oil facility will further improve the for'25X1
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SECRET
Independence Day Moderation
lit his first public address since his illness
last February, President Velasco on July 28
delivered a relatively moderate 90-minute
speech marking Peruvian Independence Day.
The US embassy in Lima commented that
Velasco's diction was less clear than in the past,
but that his voice gained strength as he spoke.
There was no indication that the President
intends to give up the position he has held for
nearly seven years, or that he plans to assume a
purely ceremonial role. Despite earlier rumors,
no cabinet or other personnel changes were
announced.
Velasco focused on domestic issues,
singling out "various communist groups" and
the American Popular Revolutionary Alliance
for special treatment. He repeated the regime's
standard "neither capitalist nor communist"
line, but his remarks that both the Alliance and
the communists are incompatible with the mili-
tary's goals were more forceful than in past
speeches.
The President's repudiation of communist
groups reflects his personal distrust of the
Peruvian Communist Party. In addition, his
remarks probably were designed to allay the
fears of more moderate officers who are
increasingly concerned over leftist influence in
the government. At the same time, Velasco
issued a clear warning to civilian politicians that
their parties have no place in the revolutionary
government.
to a third party territory formerly under the
other's control.
Velasco also took the occasion to deny
that there are Soviet military bases or Commu-
nist military advisers in Peru. Nevertheless, it is
unlikely that this signals any change in Lima's
policy of accepting Soviet arms, if the price is
right and the equipment unavailable elsewhere.
President Velasco did not dwell on eco-
nomic issues, a fact not surprising in light of the
recent unpopular lowering of government
subsidies on many consumer goods. Velasco
blamed "imported inflation" for Peru's eco-
nomic ills and promised that the situation would
ease next year. He also touched on the expropri-
ation last week of the large US-owned Marcona
Mining Company.
The Marcona Expropriation
The announcement of Marcona's nation-
alization came after month: of deliberation.
Statements by government leaders since the
take-over reflect an apparent lack of agreement
within the government over compensation. The
minister of mines has taken the hardest line,
seemingly ruling out any payment. The Presi-
dent's Independence Day speech, however, was
much less hostile. Peru claims that Marcona
owes the country approximately $37 million.
There is a wide divergence between Marcona's
valuation of its Peruvian holdings and the gov-
ernment's assessment.
Recent press reports alluding to Peru's
arms buildup and the possibility of a conflict
with Chile drew presidential fire. Lima is
extremely sensitive to such charges, however
vague, and the President took the opportunity
to assure the world that Peru would not be an
aggressor against Chile. Velasco stated that Peru
fully understands Bolivia's need for an outlet to
the sea, but he cautioned that such access mus:
be provided "within the norms of international
law." This presumably is a reference to the 1929
treaty between Chile and Peru, which obligates
each to obtain the oth is consent before ceding
Prior to last week's expropriation an-
nouncerrent, P 'ruvian officials had sought assur-
ances from Japanese steelmakers, Marcona's
principal customers, that they would continue
to buy ore from the new state company, Hier--
.uperu. The Japanese, however, have expressed
doubts about the ability of the Peruvians to
maintain the quality of the ore and timeliness of
the shipments without Marcona's personnel.
Japan is not heavily dependent on Peruvian ore,
which makr's up only about 4 percent of its
imports. The expropriation has heightened con-
cern by Japanese and other foreign investors
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USSR-SOUTHEAST ASIA
Blocking China
Since the communist victories in Indo-
china, the USSR has quietly an,a persistently
engaged in an effort to shore up its position in
Southeast Asia. The Soviets' primary concern is
that China will move into the void left by the
US departure. They recognize that in most
countries of the area they have less going for
them than Washington, Peking, or Tokyo.
The general Soviet approach has been to
fan suspicions of Peking. In this regard, Moscow
views Washington's influence in the region as
having some benefits, and therefore it has not
worked actively against a continuing US
presence. Indeed, there have been times when
Soviet officials have discreetly encouraged it.
Bilaterally, the Soviets have used familiar
tactics, courting Southeast Asian leaders with
invitations to visit the USSR and offers of mili-
tary and economic assistance. The Southeast
Asians see some value in having reasonably
cordial ties with the Soviets as a counter to the
Chinese, but they will not risk raising Peking's
hackles by leaning too far toward the USSR.
proposal for an Asian colle..'.e security system.
Over the past two three months the Soviets have
made low-level demarches to all Southeast Asian
governments-and even to British officials in the
area-to generate support for a security confer-
ence similar to that being held this week in
Helsinki.
The results of these efforts have been
uniformly negative, as the Soviets undoubtedly
anticipated they would be. They will probably
continue to plug for Asian collective security,
however, because it is a useful device for testing
Asian attitudes toward the USSR. Moreover, the
generalized pledges of national independence
and regional cooperation that are part of the
Soviet proposal provide a propaganda counter to
Chinese charges that Moscow seeks heaemonv
Moscow has had more success in Vietnam,
where the USSR has an advantage over the
Chinese because it was quick to provide the
Vietnamese and Lao communists with the diplo-
matic support and aid needed to consolidate
their recent victories. The Soviets probably will
continue to enjoy better relations with Hanoi
than the Chinese, but this will not buy them
much because North Vietnam, as other South-
east Asian nations, cannot afford to provoke
Peking. In an effort to keep Chinese influence in
check, Moscow has encouraged the US to hang
on in Laos and has offered to help the US
establish a relationship with North Vietnam.
Dusting Off Collective Security
In order to show that it has something to
offer, the USSR has dusted off its six-year-old
SINO-SOVIET TRADE AGREEMENT
Moscow and Peking finally got around
to signing their 1975 trade agreement last
week. The announcement of the agreement
did not state either the nature of the goods
to be exchanged or the value of the trade to
be carried out.
negotiations took longer than nor-
mal this year because the two sides agreed to
switch from using artificially low prices-
fixed in 1958-to present world market
prices. If the value of this year's trade
remains a? the level of recent years, approxi-
mately $280 million, it will mean a substan-
tial reduction in the volume of goods ex-
changed.
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Meeting with the Thai
A few cracks are beginning to appear in the
shell of Cambodia's self-imposed isolation.
Low-level Cambodian communist and Thai of-
ficials recently held a meeting near the Thai
border town of Aranyaprathet-on Cambodian
initiative, according to :f Western press account,
The meeting was attended by a Thai district
official, who was in contact with the Ministry of
Interior. The Cambodian side was represented
by a former teacher who told a reporter that he
was a trade representative appointed by the
"military committee" in Phnom Penh.
The two sides are said to have discussed
resumption of trade and diplomatic relations,
opening of the border, and future meetings
between Cambodian and Thai representatives.
Border contacts involving trade have taken place
in the past, but this is the first instance of
discussion of broader issues. Phnom Penh may
be trying to relax the situation along the border
and expand trade in order to alleviate its supply
shortages, particularly in the northwest.
BORDER CONTACTS INVOLVING
TRADE I/A VU 'I AI KEEN PLACE IN 111111
PAST, BUT 7'111S IS '1716 FIRST' IN-
STANCE OF DISCUSSION Ol: BROADER
ISSUES. PHNOill PENH MA Y BE 'l'R Y/NG
TO RELAX 7711 SITUATION it LUNG
'1'lIE BORDER AND EXPAND 7RA1_)1: IN
ORDER 70 ;ILLEVIAT! 17;S SUPPLY
SIIOR7AGUS, Pit i 'I'iLARL)' IN '171
NOR 771 I t~lS l'.
Phnom Penh radio has apparently endorsed
the meeting, stating that the "best atmosphere
ever" now exists for good relations between the
two countries. 'fhe broadcast also spoke of
traditional coexistence between Cambodia and
the "brotherly" peoples of Vietnam, Laos, and
Thailand.
Gull of Ihadand
mitts Ina
5'x!1?74 A-75
Although a Thai Foreign Ministry official,
in commenting on the meeting to a US embassy
official, cautioned that the press account had
exaggerated the significance of the contact, he
said his ministry wouid study the results. If the
rneeting, as the press claimed, came at the
initiative of Phnom Penh rather than from local
officials, it could lead to the development of a
more formal, higher level dialogue.
The chances of an early resumption of
diplomatic relations, however, are probably nil.
The Cambodian communists are almost
certainly not prepared to move in this direction
until the new governmental structure is decided
upon and relations with major allies are for-
malized. 25X1
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KOREA-JAPAN: IMPROVED RELATIONS
Japanese Foreign Minister Miyazawa's two-
day trip to South Korea last week-in doubt
until the last moment-helped clear the troubled
atmosphere between the two countries.
agreed to hold a
formal ministerial meeting with South Korea in
September. This conference, held up over a year
and a half by the Kim incident, has taken on
considerable symbolic importance for Seoul. A
number of bilateral issues, including economic
aid for South Korea, may be resolved at the
conference.
The South Koreans also urged Tokyo to
back a UN strategy tacitly linking the applica-
tions of the two 1' ietnams with those of the two
Koreas.
Despite the improved atmosphere, friction
remains. Tokyo has yet to make a current,
definitive statement on the connection between
Japanese and South Korean security. While
noting that Seoul's security is "of course"
important to Tokyo, various Japanese officials
are saying that the security of the entire penin-
sula is equally important--a modification that
prepares the ground for increased dealings with
Pyongyang.
Shortly after Miyazawa visited Seoul, Kim
II-song for the first time personally received a
delegation of Diet members from Japan's ruling
Liberal Democratic Party. Earlier, one of Prime
Minister Miki's associates was reported to have
conferred with Kim at length and to have dis-
cussed trade issues with other North Korean
officials. The South Koreans will remain sensi-
tive to any increase in economic or unofficial
links between Tok o and Pyongyang.~~
South Korean officials were aware that
Miyazaw;j -end Prime Minister Miki will soon be
discussing Korean subjects in Washington. South
Korean President Pak emphasized to Miyazawa
the need for US-Japanese-Korean cooperation.
Recognizing that a greater Japanese de-
fense effort is not possible, Pak urged closer
political cooperation, to which Miyazawa agreed
in principle. >pecifically, the South Koreans
pressed the Japanese strongly for support of
South Korean membership in the UN. Japan is
chairing the Security Council this month, when
Seoul's applica`ion for membership will be con-
sidered.
SOUTH KOREA: MILITARY SPENDING
The South Koreans are continuing efforts
to develop a more self-sufficient defense force,
securing arms from more broadly diversified
counting on the economic strength of South
Korea by 1980 to permit the acquisition o;F the
best available weapons at the best price.
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25X1
L
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South Korna has recently revised its forts
modernization plan, which now c;Jls for
spending $2.5 to 3 billion for now weapons
systems over the next five years. The plan will
be funded by the recently enacted defense tax.
It is expected that the d -lc:nse budget next year
will be almost double that this year.
According to South Korean officials, the
defense-tax funds will be used for force
improvement and weapons procurement, with
the latter being divided equally between
overseas and local sources. Domestic production
or co-production is to concentrate on artillery,
tanks, and helicopters. Overseas procurement is
to be mainly from US sources, if terms are
sufficiently favorable. Otherwise, the Koreans
have hinied, they will approach other countries.
The South Koreans reportedly hope to
finance their weapons purchases from abroad by
short-term loans, with the defense tax providing
funds to repay the loans by 1980. The finance
minister hopes that foreign exchange expend-
itures for weapons will be minimized until 1978,
when the balance-of-payments situation is ex-
pected to improve. Any major foreign arms
purchases in the near future, however, are likely
to aggravate already serious trade deficit diffi-
culties. 25X1
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25X1
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