WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300020037-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: February 18, 2011
• Sequence Number: 37
• Publication Date: August 22, 1975
• Content Type: SUMMARY

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Secret
Weekly Summary
Secret
No. 0034j75
August 22, 1975
Copy
N? I
387
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CONTENT) (August 22, 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 Techrology.
Topics requiring more comprehensive treatment and
therefore published separately as Special Reports are listed
in the contents,
1
Portugal: Gonsalves' Support Wanes
3
USSR-Portugal: Preparing for the Worst
4
Spain: Crackdown on Terrorism
MIDDLE EAST
AFRICA
5
Fedayeen: Agreement Opposed
6
Bangladesh: Military Coup
8
Nigeria: A Good Start
9
Angola: New Initiatives
10
Libya: Coup Foiled
WESTERN
HEMISPHERE
11
Arfsntina: New Economy Minister
12
Mexico: World Tour
13
Uruguay: Ecor.cmc Tension
14
Venezuela: Reversion Passes
EAST ASIA
PACIFIC
15
Cambodia: International Debut
16
Laos: Liberating the Capital
17
Thailand: A New Look
17
Philippines - North Vietnam: Debacle
18
Timor: Indonesian Shadow Play
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PORTUGAL: GONCALVES' SUPPORT WANES
Prime Minister Goncalves' position is
steadily weakening in the face of the combined
opposition of former foreign minister Melo
Antunes and internal security chief Carvalho.
Even the Communists, Goncalves' staunchest
supporters, appear resigned to his impending
ouster and are concentrating their efforts on
salvaging what they can of the party's influence.
President Costa Gomes' remark earlier this
week that the duration of Goncalves' left-wing
cabinet-now nearly two weeks old-can "be
expressed in days" has touched off speculation
that the Prime Minister is on his way out. Such
speculation is further fueled by the continuing
erosion of Goncalves' support within the armed
forces. Northern military region commander
Corvacho, the only regional commander who
has not taken a stand against Goncalves, has
been relieved of his duties and temporarily
replaced by an apolitical officer. Goncalves
suffered another blow with the firing of Colonel
Varela Gomes, a known Communist supporter,
from the propaganda division of the general
staff.
Lisbon radio reports that a group of offi-
cers headed by Antunes and Carvalho, ac-
companied by the army and air force chiefs of
staff and five other officers, met with President
Costa Gomes on August 19 to present a new
political action program. The program included
a demand for the ouster of Goncalves.
The document presented to Costa Gomes is
reported to be a synthesis of rival documents
presented in an attempt to resolve the current
power struggle. The first, drafted by Melo
Antunes, criticizes the "crisis of authority" in
the military government-mostly the fault of the
Communists-and calls for the construction of a
Prime Minister Goncalves at a recent press conference
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classless, socialist society "under conditions of
democracy and liberty." The second, drafted by
a group of radical populist officers under the
command of General Carvalho, blames both the
Communists and the non-Communist parties for
the present unrest. The Carvalho group foresees
a revolutionary government deriving its au-
thority from popular assemblies that would
cement the alliance between the military and
the people.
Although both documents denounce the
Communists, party leaders appear to regard
adherence to the radical populists' program as
the best way to maintain some of their in-
fluence. The Communists and the fellow-
traveling Portuguese Democratic Movement
joined in a demonstration sponsored by extreme
left-wing groups on August 20 in support of the
populist program, which is generally associated
with General Carvalho. Despite these gestures
toward Carvalho, the Communists will find it
difficult to overcome Carvalho's anti-Commu-
nist bias.
In the face of the continuing attacks on the
Communist Party and its offices throughout
much of the north, party leaders have tried to
regain the initiative but have failed. They began
a campaign to reassert themselves in areas where
they had been forced out by anti-Communist
violence. A rally in the northern town of
Alcobaca on August 16 was broken up by anti-
Communists. The rising level of violence forced
the Communists to cancel a rally in Oporto
three days later. A 30-minute general strike,
organized by the Communist-controlled labor
federation and vigorously promoted by Gon-
calves, was almost a total faiiur .
Apparently taking heed of the changing
situation, Communist party leader Cunhal
softened his line at a press conference on August
20. He reiterated support for the Goncalves gov-
ernment but added that the Communists were
prepared to participate in finding new solutions
for Portugal's political struggles. This is being
taken as acceptance of Goncalves' inevitable
downtall. Although he blamed the Socialists for
creating the split in the Armed Forces Move-
ment, Cunhal retained a conciliatory tone, as-
serting that "no one can place his interests
about the overall interests of the revolution."
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SECRET
USSR-PORTUGAL
Preparing for the Worst
The deepening distress of the Portuguese
Communist Party has produced a marked
change in the Soviet perception of the situation,
at least as reflected in media reporting. Mos-
cow's relative confidence that events in Portugal
were going wall has given way to shrill criticism
of outside meddling.
On two recent occasions, Moscow has
drawn an explicit analogy between current con-
ditions in Portugal and those in Chile just before
the overthrow of Allende. The theme first ap-
peared in a broadcast on August 15 and was
repeated in an authoritative article in Pravda on
August 19. The tenor of the Soviet statements
suggests that the Soviets see the odds increasing
for an outcome like that in Chile.
According to Lisbon's ambassador to Mos-
cow, the Soviets have advised the Portuguese
Communists -to prepare for a return to clandes-
tine status. Such advice is a routine procedure in
contingency planning in unstable countries.
Advancing it now would show growing Soviet
awareness that a Communist debacle is possible
in Portugal.
Unlike most Soviet commentary on Por-
tugal, the Pravda article expressed Moscow's
views directly, rather than putting them in the
mouths of the Portuguese Communists or other
intermediaries. Much of the article is devoted to
harsh criticism of NATO, the Western press,
Western economic organizations, and "interna-
tional social democracy." The Chinese are also
dragged into the cast of evildoers; they are
accused of cooperating with international reac-
tion by fomenting discord in Angola and the
Azores.
Changing Emphasis
Much of the changing emphasis in Soviet
coverage of Portuguese events may be intended
to prepare foreign and domestic audiences for a
Communist setback in Portugal and to identify
villains for the period of recrimination that
would inevitably follow. The Soviets may also
be trying to rebut recent statements of high US
officials by building a case that it is really the
West, not the Soviets, that is interfering in Por-
tugal.
The Pravda article charges that the Por-
tuguese Socialists are providing a rallying point
for reactionaries by attacking the Communists,
but the tone is less strident than when Moscow
was denouncing the Socialists immediately after
they left the government. Indeed, Pravda calls
for "concerted action" by the Armed Forces
Movement, the Communists, Socialists, and
other le 't progressive forces. The Soviets have
repeated this theme, which is nominally in
accord with Portuguese Communist Party leader
Cunhal's professed policies, more frequently in
recent days.
The voluminous Soviet commentary on
Portugal does not offer any practical advice nor
does it provide any clues about what, if any,
action the Soviets might take in support of the
Portuguese party. The Pravda article concluded
with a call for "massive solidarity" with the
forces fighting reaction in Portugal. Under the
circumstances, this is the minimum that Moscow
might be expected to say to preserve its revolu-
tionary credentials.
On August 19, the Hungarian party issued
a short statement, clearly coordinated with Mos-
cow, that expressed solidarity with the Por-
tuguese Communists. Moscow's other friends in
East Europe will probably soon follow suit.
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SPAIN: CRACKDOWN ON TERRORISM
A tough new anti-terrorist law, expected to
be announced after the cabinet meeting on
August 22, will be the government's answer to
the new wave of vioience that has hit the tour
try. If the law leads to repressive measures
against a wide segment of the population, it
would play into the hands of the terrorists and
damage Prime Minister Arias' efforts to project a
favorable image abroad.
draft law, which has been in preparation for
three months, but the cold-blooded killing of a
Civil Guard officer in Madrid by a Marxist ter-
intended to soften some of the provisions in the
Arias had
rorist group last week ended that hope. This was
the third policeman killed since July 14. The
Anti-Fascist and Patriotic Revolutionary Front,
a dissident Communist terrorist group known by
its acronym FRAP, has claimed credit for the
killings, which it undertook to dramatize its
anti-Franco stand.
Rightist groups used the funeral of the
slain guardsman to protest his slaying and to
criticize the Arias government. An estimated
2,000 persons, including members of the Civil
Guard in mufti, participated in a demonstration
that nearly got out of hand. In addition to
blocking the cars of departing officials, the
demonstrators shouted "down with terrorism,"
"power to the army," and slogans critical of
Arias' liberalization program.
The new counter-terrorist measures will
raise new tensions in the Basque provinces,
where the emergency decree granting the police
extra powers was allowed to expire on July 26.
The recent terrorist incidents seem certain to
lead to a new crackdown, and Arias' plans to
devise regional development plans for the
Basque area are likely to be slowed.
The Spanish police have already scored
some success with their roundup in Madrid,
Barcelona, and Galicia of terrorists who are
members of FRAP and of the Basque Father-
land and Liberty. 1 he most important arrests of
Basques were made in Madrid and Barcelona
where four terrorists were seized and one was
killed. One of those arrested was allegedly
involved in the assassination of then prime
minister Luis Carrero Blanco and also had con-
tacts with Uruguayan Tupamaros and the Irish
Republican Army. The arrests allegedly broke
up plans to kidnap prominent officials as well as
to free some Basque terrorists from jail. There is
also press speculation that the Spanish police
have evidence that the Basque terrorists have
developed links with FRAP and a separatist
Galician organization, as well as with foreign
terrorist groups. Publication of such allegations
is likely to lead to further demands for harsh
measures against terrorists.
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FEDAYEEN: AGREEMENT OPPOSED
Leaders of the three least radical fedayeen
groups-including Fatah and Saiqa, the two
largest-have joined with fedayeen and other
Arab radicals in publicly condemning Egypt's
moves toward a new disengagement agreement
with Israel. The possibility of an early agree-
ment has already strained Egyptian-Palestinian
relations and prompted the Palestinians to move
closer to Syria. Implementation of an accord
might lead these Palestinians to adopt more
extreme policies, including the increased use of
terrorism.
Palestine Liberation Organization Chair-
man Yasir Arafat, according to a pro-fedayeen
newspaper in Beirut, has said that his Fatah
organization "rejects the American settlement
and will resist it through the barrels of our
guns." Such rhetoric is usually intended for
internal fedayeen consumption, but might in
this case presage an increase in terrorist activity
designed to improve Arafat's political position.
Since Arafat's widely publicized appearance at
the UN last year, his prestige has diminished
steadily as a result of his failure to produce
anything concrete for the Palestinians.
Last March, Fatah commandos raided Tel
Aviv in an effort to undermine Secretary Kis-
singer's attempt to arrange a second Egyptian-
Israeli disengagement. That attack had no direct
effect on peace negotiations, but helped protect
Arafat against charges by fedayeen "rejec-
tionists" that he was cooperating with Egypt
and the US in the false hope that the Pales-
tinians would gain something from negotiations.
Syria's stand will be the most important
single force in determining the extent to which
the more conciliatory fedayeen groups oppose
Egyptian President Sadat. If the Egyptians are
able to reassure Syrian President Asad and limit
Syrian criticism of Egypt, those Palestinians will
have little choice but to follow Damascus' lead.
This would further weaken Arafat by providing
his opponents another opportunity to charge
that the Arab states are pursuing their own ends
in disregard of Palestinian interests.
Damascus so far has not joined the Pales-
tinians in criticizing the Egyptians. This suggests
that Syria views the prospect of another Sinai
accord with less alarm than it did last March and
will take no steps to upset it. The Syrians ap-
parently have some confidence that Sadat will
include in any new agreement provisions for
negotiations on the Golan Heights.
More may be known of Syria's posiflon
when Damascus responds to the latest Pi,Ies-
tinian initiative to implement the "Palestinian-
Syrian joint political and military command."
The command was originally proposed by
President Asad during the March round of peace
negotiations. The proposal lay dormant until
late last week, however, when the PLO central
committee called for the "highest speed pos-
sible" toward setting up a joint body that could
take a unified stand on "current developments."
If Syria becomes disillusioned with Egypt
and abets Palestinian obstructionism, Arafat and
his associates will more directly and forcefully
criticize Egypt, the US, and the principle of a
negotiated settlement. If unchecked by
Egyptian assurances of early negotiating
progress on Palestinian issues, such criticism
could lead ultimately to a new round of terrorist
activity in Israel and abroad. i
SECRET
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There have been no signs of resistance to
the new government since it came to power in a
military-led coup last Friday. Within the regime,
however, a power struggle may be developing
between the middle-grade army officers who led
the coup and senior officers who supported the
plotters but now want to assert their own
authority.
Several army majors have been identified as
the main instigators of the coup.
Senior officers
did
not participate in the coup until after it was
under way. This week there were indications
that tension was starting to grow between the
two groups.
Khondakar Mushtaque Ahmed, Mujib's
commerce minister, was selected by the plotters
to serve as president. They appear to have given
him broad authority to administer the country.
Mushtaque, however, is unlikely to act against
the wishes of whoever emerges in control of the
army, which is the dominant force in the new
regime.
Mushtaque was long regarded as one of
Mujib's more pro-West and conservative political
lieutenants. He has named a cabinet comprised
largely of middle-of-the-road civilians from
Mujib's government and Awami League. The
regime apparently wants to restore democratic
government and civil liberties, abrogated by
Mujib early this year, but Bangladesh's massive
economic and social problems may make it dif-
ficult to abandon martial law soon.
The government's initial statements on for-
eign relations indicate a strong interest in
establishing closer ties with other Islamic
nations. Islamabad, with which relations had
been very limited under Mujib's leadership since
Bangladesh became independent from Pakistan
in 1971, was the first to extend recognition. The
Pakistanis also promised emergency economic
assistance in the form of rice and cloth. Several
Arab nations, including Saudi Arabia, have
extended recognition, as have the UK and
Japan.
The emphasis on Islamic ties, and Pak-
istan's enthusiasm for the new regime, are
causing some concern in New Delhi, which
enjoyed good relations with Mujib's secular and
generally pro-Indian government. The Indians
probably are also uneasy about the possibility
that the new regime will be friendlier toward
China than toward the USSR. So far, India has
adopted a cautioi's stance. It reportedly has
sealed the border and reinforced police and
army units in the area, but US officials in India
believe these are only contingency moves aimed
at preventing a possible influx of Hindu refugees
who may fear future communal strife in Bangla-
desh.
The Indians seem unlikely to intervene
militarily in Bangladesh, unless major instability
develops there or the new regime pursues
strongly anti-Indian policies. Mushtaque is
regarded as somewhat cool toward India, and
anti-Indian sentiment has been re-emerging in
Bangladesh during the past couple of years, but
the new government is making efforts to avoid
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Mushtaque
antagonizing its much larger and stronger
neighbor to the west. For example, it appears to
be backing away from its initial moves toward
designating Bangladesh an "Islamic republic."
Mushtaque has declared that his govern-
ment wants friendly ties with all three major
powers. Mujib's regime had generally good rela-
tions with the US and the Soviet Union and was
on poor terms with China, which had sided with
Islamabad during Bangladesh's independence
struggle.
The Soviets have been publicly non-
committal about the coup, but-like most
observers-presumably see it as a setback for
both the USSR and its ally, India. Moscow is
unhappy about what it sees as pro-US sympa-
thies of the new rulers. Its greatest concern,
however, is that Dacca may now seek to im-
prove relations with Peking.
Until the Soviets have a better idea of
Dacca's intentions, they are unlikely to do or
say anything to antagonize the new leaders.
Moscow will probably let India take the lead in
testing the sincerity of the new government's
expressions of desire for friendship with all. The
Soviets may caution India against over-reacting,
although India apparently needs no such advice.
China is guardedly optimistic about
developments in Dacca. This was reflected in its
prompt reporting of the coup. Peking no doubt
is encouraged by indications that the new
regime is moving toward better relations with
Pakistan. If this trend continues and the new
government displays staying power, the Chinese,
who see Bangladesh as a potential source of
leverage in dealing with India, will probably
move quickly to establish diplomatic ties with
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Muhammed (1) with Brigadier Obasanjo
The new military regime that took po\rer
late last month has made a good initial impres-
sion on the Nigerian public by avoiding any
suggestion of ethnic favoritism so far and by
moving to tackle several long-standing domestic
problems. Foreign policy remains on the back
burner for now, although continuity in Nigeria's
relations is being stressed.
Head of state Brigadier Muhammed, who
comes from the large Hausa-Fulani tribal group-
ing of northern Nigeria, has taken ri hard line
against the corruption endemic in the gov-
ernment and has indicated that closer super-
vision by the Supreme Military Council is in
store. In outlining the regime's mode of opera-
tion last week, he declared that cabinet deci-
sions would be made collectively and within
guidelines set by the Supreme Military Council.
An advisory role is envisioned for senior civil
servants who exercised considerable indepen-
dence under Gowon.
State military governors have been ad-
monished not to tolerate graft or abuse of
power in their administrations. They are dis-
missing large numbers of allegedly corrupt state
officials. At the federal level, steps are being
taken to revitalize the watchdog role of the
auditor general. Despite clamor by the press and
student groups, it does not appear that assets of
high-level officials who had been in the govern-
ment of deposed head of state Yakubu Gowon
will be investigated. Such a move could result in
embarrassing counter charges against some mem-
bers of the new regime, including Muhammed
himself.
Panels have been set up to examine the
feasibility of relocating the federal capital from
overcrowded Lagos and to determine whether
additional states should be created within Ni-
geria's federal system. Both issues involve tribal
interests and are politically sensitive. The ques-
tion of more states is particularly thorny. The
regime risks opening a Pandora's box of agita-
tion for the creation of numerous tribally ori-
ented mini-states that would be economically
weak.
On the economic front, the regime has
thrown its support behind the $48-billion five-
year development plan Gowon introduced last
April. A task force is being formed to recom-
mend ways to control Nigeria's soaring rate of
inflation, now approaching 40 percent. The gov-
ernment has also issued new scheduling direc-
tives intended to help ease the country's severe
port congestion that has resulted in shortages of
many essential imports. Various proposals are
being considered to expand and modernize port
facilities.
Nigeria's new rulers may not fully appre-
ciate the complexity of some of the problems
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SECRET
ANGOLA: NEW INITIATIVES
The Soviet-backed Popular Movement for
the Liberation of Angola, having succeeded in
driving the two rival nationalist groups from
Luanda, is jockeying with the Portuguese for
political control there. At the same time, the
organization is trying to strengthen its hand by
taking military control of the territory's major
economic centers.
On August 19, the Popular Movement an-
nounced that it will establish paramilitary
"people's defense committees" in Luanda. The
committees will be under the administrative
control of the Movement's armed forces. They
will be composed primarily of the thousands of
civilians in the Angolan capital who were armed
by the Movement earlier this year. Similar com-
mittees will probably be established in other
areas where the Movement is militarily domi-
nant, such as Cabinda.
The Popular Movement has long had the
support of the bulk of Luanda's population, but
in the past that support has been unorganized or
diffused among disparate social or quasi-political
organizations. The defense committees will give
the Movement an umbrella organization under
which to mobilize popular support. As part of
the Movement's military force, the committees
will also be an effective means of intimidating
what little popular support the other liberation
groups may still have in the capital.
The Movement's announcement is also a
strong challenge to Lisbon to either recognize
the Movement as the only effective political
organization in the territory or back up its own
claim to sovereignty by suppressing the com-
mittees. Last weekend, the Movement rejected
they intend to tackle. They will soon have to
translate their good intentions into some more
visible progress or face early public disenchant-
ment with their performance and increased pres-
sure for a commitment to return Nigeria to
an announcement by the acting high commis.
sioner on August 12 that he was assuming ad-
ministrative control of the territory because the
transitional government that had included all
three nationalist groups was no longer func-
tioning.
Aug 22, 75
Page 9 WEEKLY SUMMARY
The Movement is trying to capture An-
gola's major port of Lobito and the nearby rail
head at Benguela. The fighting there is now into
its second week. The Movement appears to be
encountering stiff opposition from the National
Union for the Total Independence of Angola,
which has strong popular support in that area, as
well as from the National Front for the Libera-
tion of Angola, the Movement's main rival.
Portuguese military officials have been
unable to arrange a cease-fire through nego-
tiations and are unwilling to use their own
troops to impose a truce. In any event, it is
probably too late for the Portuguese to impose a
truce or reassert their authority over Angola.
The territory's future is in the hands of the
liberation groups, who appear determined to
settle the question on the battlefield/_1
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LIBYA: COUP FOILED
Libyan President Qadhafi foiled a coup
attempt last week led by two members of the
ruling Revolutionary Command Council. Al-
though Qadhafi easily countered the conspiracy,
ha has now lost the mystique of the "unchal-
lengeable" leader that provided part of the
underpinning for his special brand of personal
rule.
Major Umar Muhayshi and Major Bashir
Hawadi-two of the lesser lights on the 11-man
council-are the only members directly
implicated in the plot, although Egyptian media
claim others were involved. Muhayshi escaped to
Tunisia where he apparently will be allowed to
remain, despite Libyan efforts to have him
extradited. Hawadi is under arrest in Tripoli.
The ease with which the coup was
squelched and the relatively relaxed atmosphere
in Tripoli suggest that Qadhafi still commands
the loyalty of key officials in the security and
military services. The search for other plotters is
apparently still going on, but Egyptian press
reports of massive arrests and widespread defec-
tions are almost certainly exaggerated.
'Muhayshi has had a stormy relationship
with Qadhafi, who has never trusted him fully
and has occasionally manipulated his assign-
ments and responsibilities within the council.
Muhayshi has had no direct command over mili-
tary or security forces since 1969 and often
chafed under Qadhafi's high-handed ways.
Hawadi is the secretary general of Libya's sole
political party; he, too, has never had direct
access to the levers of power in Libya. Both men
have in the past been harshly disciplined by
their leader for "immoral" behavior and, there-
fore, were motivated at least in part by personal
grievance. However, their defections were prob-
ably also prompted by broader differences with
Qadhafi over foreign policy and economic issues
and thus may well be a measure of growing
frustration with Qadhafi throughout the regime.
The extent of foreign involvement, if any,
in the plot is unclear, but Libya's closure of its
border with Egypt during the period when the
coup attempt took place indicates that Cairo is
under suspicion.
References to the coup attempt in several
Libyan newspapers suggest that Qadhafi is not
especially worried about public reaction, al-
though one editorial-probably written by
Qadhafi himself-warns of a possible purge. This
warning was underscored by a series of council
decrees issued last weekend making subversion,
contact with foreign powers, and other political
crimes punishable by life imprisonment and in
some cases death.
That Qadhafi has ruled Libya for six years
without such laws and without being challenged
attests to his reliance on personal charisma, the
loyalty of his colleagues, and "revolutionary"
esprit de corps as sources of power and
authority. The defection of two of the original
12 leaders of the 1969 coup will erode these
intangibles and presumably the confidence and
security with which Qadhafi has ruled. The
Libyan leader is adept at using other instru-
ments of control, however, and will be forced to
do so in the months ahead. Over the long term,
his stern hand will create new stress in a regime
already strained by internal differences.
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Economy Minister Cafiero (:second from left) attends cabinet meeting with President Peron
Antonio Cafiero, a 52-year-old Peronist
economist, was appointed minister of economy
late last week. The last member of the new
cabinet to be named and by far its most pres-
tigious minister, he faces an ever deepening
recession that could lead to further troubles
with Gabor.
During the 1950s, Cafiero held several
important positions under Juan Peron. Most
recently, he was his country's ambassador to the
European Common Market. He has served as an
adviser to the powerful Peronist labor con-
federation and has long been thought to be
labor's choice for the post he now holds.
Cafiero will find it difficult to retain the
support of organized labor, however, because of
the effect of the recession on workers already
angered by the precipitous rise of prices. As
demand reacts to rising prices, thousands of jobs
are being wiped out. The US embassy reports a
sharp upsurge in the number of dismissal notices
this month, and many firms have been forced to
curtail or cease operations because they cannot
pay the huge wage increases wen by labor.
Accelerating unemployment could lead labor-
which had a major hand in the ouster of Lopez
Rega-to take to the streets again for a new
round of protests over government failure to
reverse economic deterioration.
Cafiero's only specific policy statement
thus far has been - declaration that he is con-
templating no new devaluations of the peso.
Large, successive devaluations earlier in the year
provoked angry reactions from businessmen and
consumers alike, since the moves contributed to
rising prices. For the moment, Cafiero is limiting
himself to statements of the need for the co-
operation of all sectors in problems that he
admits are serious but claims can be solved.
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MEXICO: WORLD TOUR
President Echeverria returned home today
from a grueling 45-day, 14-nation trip whose
purpose, although unstated, was to launch his
campaign to become the next secretary general
of the United Nations.
At each stop on the tou; of Africa, Asia,
the Middle East, and the Caribbean, the usual
economic, cultural, and technical agreements
were signed, but most were of dubious signifi-
cance. Of more importance to Echeverria was
the chance to be seen and heard in countries
whose support he will need for the UN post.
Should Echeverria actually run, his most
obvious opponent would be the current secre-
tary general, Kurt Waldheim, whose term ends
on December 31, 1976. Waldheim has given no
indication of his intentions about seeking re-
election.
Since entering office in December 1970,
Echeverria has visited 36 foreign countries and
established diplomatic relations with over 25,
most of them within the past six months.
Clearly, he has been attempting to portray
Mexico and himself a,: dynamic and "revolu-
tionary" leaders of the developing world. The
fact that this image does not quite square with
Mexico's national reality nor with Echeverria's
own internatior:il stature apparently does not
trouble him.
The President appears to have convinced
himself that he has the answers to troublesome
world problems. His dogged pursuit of support
for his Charter of Economic Rights and Duties
of States, a UN document that attempts to
r.'order international economic activity, is an
example of his messianic character. While in
Egypt, Echeverria announced another brain-
storm-an organization to defend Third World
economic interests. This organization, according
to Echeverria, would go beyond the scope of the
nonaligned group to counter the "imperialism"
of transnativnal enterprises.
Echeverria is not inclined to rely much on
his institutional advisers and frequently
bewilders them with unexpected decisions,
leaving them to pick up the pieces. His sudden
decision to break relations with Chile last year
left the Foreign Secretariat groping for a
rational explanation. His announcement during
his latest trip that Mexico claimed a 200-mile
maritime zone had the appearance of another
hasty presidential decision. Official spokesmen
later offered assurances that Mexico was not
claiming a territorial sea, but the unilateral move
ran counter to the apparent pi,licy in the For-
eign Secretariat of working in harmony with the
US on ;natters concerning law of the sea.
Despite his frequent travels abroad,
Echeverria remains unsophisticated in his world
views, and his dazzling solutions to international
issues derive from oversim-lification, if not
ignorance. In the Middle East, for instance, his
hopes of playing the role of peacemaker in the
Arab-Israeli dispute prompted a naive effort to
arrangs a meeting between Sadat and Rabin, a
typical instance of his disregard for expert
advice. While in the area, Echeverria added
another fillip to his radical foreign policy by
meeting with Palestine Liberation leader Arafat
and announcing Mexico's recognition of his
organization.
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Although he sees the major world problems
as economic in nature, he does not have a good
grasp of the subject. As in foreign relations,
Echeverria appears to rely little on his advisers.
Under Echeverria, inflation in Mexico has be-
come a serious problem, the balance of pay-
ments has deteriorated, and private investment
has stagnated. Many of his economic decisions
seem intended for short-run political gain. The
recent agreements with Vie EC and CEMA may
eventually benefit the country economically,
but during their early years their impact will be
primarily political.
Echeverria's five-day visit to Cuba this
week completed his tour. Squired around the
island by Prime Minister Castro, Echeverria was
rich in his praise of the Cuban revolution and
critical of US actions against the Castro regime.
The two leaders shared their enthusiasm for the
Latic American Economic System, another
Echeverria brainchild.
The President's next trip abroad will prob-
ably be to the UN in October, where he no
doubt will all but offer himself as a candidate
for secretary general.r
URUGUAY: ECONOMIC TENSION
The confrontation last week between
civilian and military officials over economic
policy-making was settled by an imposed com-
promise, but the underlying causes remain and
could resurface at any time.
The focal point for the continuing dispute
is the personality and policies of Minister of
Economy and Finance Alejandro Vegh, who
advocates a strict austerity program to cope
with the country's inflation-ridden economy.
His program is designed to reform the nation's
cumbersome economic system, restore its
credit-worthiness in the eyes of international
financial institutions, and attract badly needed
foreign investment.
Some nationalistic officers such as General
Gregorio Alvarez, the ambitious commander of
the Fourth Army, and General Abdon Rai-
mundez, vice president of the Bank of the
Republic, disagree with many of Vegh's policies
and criticize his alleged subservience to the re-
quirements of international financial institutions
and his favorable treatment of multinational
corporations. Most members of the military high
command tend to agree with Vegh's views but
not his independent approach to economic
policy. President Bordaberry, however, sees this
independence on the part of a civilian cabinet
member as giving him some maneuverability in
the rreilitary-dominated government.
The most recent clash between Vegh and
the military was triggered by the armed forces'
attempt to cancel a $110-million loan, secured
by Uruguay's gold reserves, that he had nego-
tiated with a consortium of foreign banks. The
irate cabinet officer submitted his resignation,
which Bordaberry refused to accept. In a sub-
sequent acrimonious meeting with the armed
service chiefs, Vegh demanded that his program
be implemented without interference and that
Raimundez and other directors of the bank be
removed and replaced by persons who had his
confidence.
As in previous conflicts between civilian
and military officials, both sides eventually com-
promised to avoid a national crisis. Vegh's gold-
backed loan was approved, and Raimundez re-
mained in his post, although he apparently was
told to stop meddling in the economy minister's
activities.
Whi?.; this agreement provides some tempo-
rary stability, the continuing struggle over the
nation's economic policy-making macFinery
undermines foreign and domestic confidence in
Uruguay's long-term economic prospects. Vegh
may be able to centralize economic decision-
making within his office for a while, but his
moves will be closely scrutinized by the military
high command, and the conflict between civilian
and military officials over who makes economic
policy will continue to be a major political irri-
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VENEZUELA: REVERSION PASSES
On September 2, President Perez will sign
legislation nationalizing the billion-dollar for-
eign-owned petroleum industry. The formal
transfer of the facilities to state control is to
take place on December 31.
The bill's passage through both legislative
chambers was marked by stormy debate and
charges that steamroller tactics were used by the
governing Democratic Actin Party, which com-
mands a majority in the Congress. All political
parties agreed that the time had come for Vene-
zuela to take over and operate for its own
benefit the country's major extractive industry.
Nevertheless, sharp differences emerged over
what role, if any, the foreign petroleum com-
panies would be permitted after nationalization.
President Perez insisted on being given maxi-
mum flexibility to enter into "association agree-
ments" with the companies if he considered
them to be in the national interest.
Although Democratic Action leaders have
privately criticized the government's handling of
the oil bill, they gave Perez full backing in the
several months of intense congressional debate.
In dealing with his own party as weii as the
opposition, Perez' hand was strengthened by his
personal popularity, rising nationalistic senti-
ment, and the apparent inability of the opposi-
tion parties to generate public interest in either
the vulnerable features of the nationalization
program or the government's failure to specify
how it intends to run the industry.
A major reason for the lack of effective
opposition is the internal dissension that is
debilitating the major opposition groups. The
Social Christian party is in the midst of a power
struggle between former president Rafael
Caldera and left-wing leader Herrera Campins
for the secretary-generalship of the party, a
traditional stepping stone to t'i presidential
nomination. Further left, the Marxist Movement
to Socialism, which for some time was con-
sidered a leftist party with real political poten-
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tial in 1978, is having similar problems. The
dissension, which began in 1974 as largely
philosophical, has now heen accelerated by the
personal ambitions of the party's various
leaders.
With the passage of the nationalization bill,
the government and the companies can be ex-
pected to get down to serious negotiations. A
Venezuelan team headed by Mines and Hydro-
carbons Minister Valentin Hernandez has been
holding separate talks with representatives of
the major oil firms since June to consider
possible post-reversion contract arrangements as
well as compensation.
Following President Perez' promulgation of
the nationalization act, the government, under
terms of the bill, must submit a formal offer of
compensation within 45 days. The former con-
cessionaires must then reply to the ofter within
15 days. If the petroleum companies do not
agree to the offer, then article 13-which re-
quires the Venezuelan Supreme Court to deter-
mine the amount of compensation-would take
effect.
The talks so far have been conducted pri-
vately, but Venezuelan officials report they are
going well. This optimistic appraisal appears to
be supported by some companies' interest in
supplying technology, transportation, marketing
outlets, and management, in order to maintain
access to the oil.
With approximately 19 foreign oil firms
operating in Venezuela, the negotiations will
probably ta1;e some time to complete. The cur-
rent Venezuelan negotiating strategy is to con-
cen'rate on reaching a settlement first with, the
larger t producing companies-Creole (EXXON),
Mene Grande (GULF), and Shell of Venezuela-
with .he thought that the others will fall quickly
in line. Such thioking may be unrealistic-with
less at stake and not as dependent on Venezue-
lan petroleum, the smaller concessionaries may
be tough bargainers. This phase of the talks
could become acrimonious and lengthy
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CAMBODIA: INTERNATIONAL DEBUT
In preparation for an international debut in
Lima and the UN, Phnom Penh's communists
are bestowing government titles on several of
their prominent party leaders and are trying to
resolve the problem of Sihanouk. The new gov-
ernment has sent .its firs'L official delegation
abroad since the communist take-over-a short
visit to Peking and Pyongyang led by Deputy
Prime Minister Khieu Samphan.
The four-day visit to China generated a
spate of mutually laudatory public statements,
effusive praise of the close relations between the
two countries, and a joint expression of opposi-
tion to "h"gemonism," Peking's label for Soviet
expansionism. The Cambodians were treated to
talks with Premier Chou En-lai and Vice Premier
Teng Hsiao-ping.
The signing of an economic and technical
cooperation agreement highlighted the visit, and
Samphan referred to it as "unconditional and
gratis aid." The Cambodian leader also hinted
that an agreement covering telecommunications
and civil air service was reached.
The Cambodians said they agreed with
Peking on "the current international situation,"
a probable indication that the Cambodians
accept Peking's dark view of Soviet and North
Vietnamese designs in Southeast Asia-and the
joint communique refers specifically to the close
unity between the two sides in the "struggle
ahead against colonialism, imperialism, and
hegemonism."
to get directly involved in determining
Sihanouk's future role in the new regime.
The brief announcement from Pyongyang
revealed at least an interim agreement on the
Sihanouk issue and indicated that the prince
would accompany Khieu Samphan back to
Phnom Penh, would retain his position as chief
of state, and will probably continue to perform
ceremonial duties. There was no indication,
however, th;it this is a long-term solution.
Earlier reports have indicated that the prince's
return to Cambodia could well be temporary
and that he may soon make another trip abroad.
In Pyongyang, the prince himself said that he
will return to North Korea to celebrate the
anniversary of the Korean Workers' Party in
October.
Even before Khieu Samphan's trip to sort
out the Sihanouk issue, Phnom Penh named two
more leading in-country communists as deputy
prime ministers, further erod;ng the position of
the Prince and his supporters in the government.
Widely traveled leng Sary, who probably holds a
top position in the Khmer Communist Party,
was named deputy prime minister for foreign
affairs. Up to now, Foreign Minister Sarin
Chhak, who has been a Sihanouk loyalist and is
based in Peking, has handled most foreign con-
tacts for the new communist regime. Son Seri, a
member of the central committee of the Khmer
Communist Party and former chief of staff of
the Cambodian People's National Liberation
Armed Forces, is the new deputy prime minister
for national defense affairs.
The only apparent problem in the visit was
what to do with "head of state" Prince
Sihanouk. The Chinese made a pro forma refer-
ence to Sihanouk in their section of the com-
munique; the Cambodians did not. More im-
portant, Sihanouk did not return to China to
meet with the Cambodian leaders. The fact that
the meetings with Sihanouk took place in
Pyongyang, where Sihanouk has been since May,
is a clear signal that the Chinese are not anxious
Deputy Prime Minister Khieu Samphan's
reception in Peking-equal to a visiting head of
state-reinforces the belief that he is in fact
Cambodia's prime minister, although Penn
Nouth, a Sihanouk ;oyalist, still holds the
formal title. Phnom Penh's announcement of
Samphan's visit to China listed him as Deputy
Prime Minister for "general affairs" and as Com-
mander in Chief of the People's National Libera-
tion Armed Forces, omitting his former position
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as defense minister. Son Sen probably has
primary responsibility for military affairs.
The communists appear to be retaining
Penn Nouth for the sake of appearance. He
played a secondary role in the Cambodian del-
egation's visit to China but, in a possible show
of deference to Sihanouk, Penn Nouth was
listed as the leader of the Cambodian delegation
in its visit to North Korea, and Khieu Samphan
was listed as deputy chief.
LAOS: LIBERATING THE CAPITAL
After nearly three months of painstak-
ing preparations, the communists on August
15 began the "liberation" of Vientiane.
Their objective is to end the joint commu-
nist and non-communist control of the ad-
ministrative capital in Vientiane and the
royal capital in Luang Prabang that was set
up in accordance with the 1973 Lao peace
accords.
Communist organizers mustered several
thousand people for rallies in various sec-
tions of Vientiane and for one rally in Luang
Prabang on August 18. The participants, ac-
companied by Pathet Lao troops and cadre,
followed instructions by shouting slogans
calling for changes in the local government,
but in general the crowds seemed unenthusi-
astic. Nevertheless, Radio Pathet Lao
quickly announced that the government had
bowed to the will of the people and had
replaced corrupt non-communist officials
with those of proper revolutionary spirit.
The demonstrations are supposed to be
followed by a massive rally in downtown
Vientiane where the crowds will ask the
government to change the 1973 accords to
end the city's neutral status. Restrained anti-
long Sary's prominence in foreign affairs is
highlighted by his role as deputy in the delega-
tion to China and as head of the delegation to
the nonaligned conference to be held in Peru in
late August. There has been no indication of any
intention to include Sihanouk in the delegation,
but Sarin Chhak is the deputy. Attendance at
the nonaligned conference will mark Cambodia's
first participation in an international event since
the communists came to power in mid-April_ __ _ .
US demonstrations are expected to coincide
with the final mass rally. Anti-US propa-
ganda has increased measurably in the past
several days, with the US being blamed as
the source of most problems in Laos and
elsewhere in Indochina. As the process of
"liberation" progresses, the Communists are
moving quickly to tighten population con-
trols. Pathet Lao troops have set up road-
bloLks throughout the city and are ex-
amining documentation and searching
vehicles.
Communist organizers are reportedly
claiming they will not use this round of
demonstrations to alter the arrangements set
up for the rational coalition in the 1973
agreements. Many Lao suspect, however,
that the communists will use the rally iu
pressure non-communist ministers to resign
by instigating charges of corruption.
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THAILAND: A NEW LOOK
Thailand's increasingly tough stance to-
ward Laos and North Vietnam in recent weeks
points to a new and more balanced conduct of
Thai foreign affairs.
During the past week, Bangkok expelled
two Lao diplomats in retaliation for the arrest
of two Thai military attaches in Vientiane and
was prepared to order an economic boycott if
the attaches had not been released. The Thai are
convinced that the release of the attaches was
prompted as much by their toughness as by
Vientiane's desire to preserve good relations.
Bangkok is also convinced that improving
relations with Peking has helped in dealing with
Hanoi. In sharp contrast to a desire to accom-
modate to Hanoi's demands several months ago,
Bangkok is stiffening its bargaining position and
appears in no hurry to establish diplomatic rela-
tions. Foreign Minister Chatchai, who had been
the most prominent advocate of accommoda-
tion with the North, recently told Hanoi to
"mind its own business" in response to a Viet-
namese broadcast attacking a joint US-Thai
naval exercise.
The shift from a precipitate embrace of
communist neighbors and cooling of relations
with the US can be attributed in part to Prime
Minister Khukrit's efforts to put his personal
stamp on Thai diplomacy. Within the past
month Khukrit not only has conferred with
Chinese leaders but has visited Kuala Lumpur,
Jakarta, Manila, and Singapore, his partners in
the Association of Southeast Asian Nations.
The Prime Minister returned from his
travels convinced that Thailand should work to
strengthen ASEAN politically and economically
as a means of countering communist influence.
Toward this end, he has encouraged an early
convening of an ASEAN summit conference and
the early implementation of proposals for a free
trade area and joint economic projects.
While the process of adjusting Thai foreign
policy to post-Vietnam realities is far from
complete, the broad outlines of Khukrit's new
directions are already clear. Foreign policy will
be neutralist in orientation and anchored to
efforts to develop balanced relations with the
great powers as the principal means of assuring
Thailand's security. in an effort to restrict Viet-
namese influence in Southeast Asia, the Thai
will seek to maintain good relations with the
US, the Soviets, and the Chinese. To prevent
Thailand from being dragged into great-power
competition, Bangkok will use ASEAN to try to
make the region a "zone of peace and
neutrality."
The Thai will also work to strengthen their
neutralist credentials by becoming more active
in Third World political and economic causes.
Bangkok will probably vote more frequently
with this bloc in forums such as the UN
PHILIPPINES - NORTH VIETNAM
Diplomatic Debacle
President Marcos is in a diplomatic bind.
Earlier this month an overeager career diplomat
exceeded his authority by signing a joint com-
munique establishing relations with North
Vietnam on terms that are unacceptable to
Manila.
According to Philippine officials, Ambas-
sador Mangila was sent to Hanoi to discuss the
repatriation of several hundred Philippine
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citizens stranded in Saigon when the com- communique to criticize Thai refusal to return
munists took over, but he was told to sound out such equipment.
prospects for diplomatic relations if the oppor-
tunity arose, Hanoi has apparently not yet been offi-
cially informed that Manila repudiates the com-
The joint communique, which Mangila munique, but the Vietnamese undoubtedly are
signed in Hanoi on August 7, contained pro- suspicious. Mangila did not confirm diplomatic
visions with an anti-US tone. In the commu- relations publicly on his arrival in Manila this
nique, Manila promised not to let the US use week, as stipulated in the communique. He said
Philippine territory "to oppose the Vietnamese only that he had submitted his report to the
people," and agreed that all property belonging president.
to the former Saigon government should be
returned to the communist regime.
Marcos is doubtless aware that once the
Backtracking affair becomes public, he will be subjected to a
propaganda barrage from Hanoi and be vilified
Marcos is now on sticky ground with North as a US puppet who buckled under pressure
Vietnam. Presumably he will try to resume from Washington. The debacle is not only an
negotiations in Paris on the basis of the status acute diplomatic embarrassment for Mai-cos but
quo ante. He may also want to inform his a setback in his careful campaign to improve his
partners in the Association of Southeast Asian nonaligned image and end Manila's close public
Nations about what has happened. The North identification with US foreign policv interests in
Vietnamese have already used the Philippine Asia. 25X1
TIMOR: INDONESIAN SHADOW PLAY
Portuguese authorities report that civil pathize with the Indonesian position, but is
war has broken out between rival Timorese in no position to act positively.
factions. The situation in the Portuguese ter-
ritory had been deteriorating all week, but
local officials now admit that they can no The rapid breakdown of public order
longer control the situation or guarantee the in Timor makes Indonesian military action
safety of Portuguese and foreign citizens. in the near future much more 25X1
Indonesian officials have maintained that
Jakarta would take drastic action if an un-
stable situation developed in Timor that
posed a threat to Indonesian security.
25X1
Earlier Jakarta reportedly protested to
Lisbon about the developments in Timor.
Indonesian officials, who have been sus-
picious about possible double dealing by
Lisbon, called on Portugal to restore order
in Timor and to continue the orderly pro-
cess of decolonization. Lisbon may sym-
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UN: SPECIAL SESSION INDICATORS
The outcome of the meeting of nonaligned
foreign ministers in Lima next week will be the
single most important factor determining
whether the 7th Special Session of the UN Gen-
eral Assembly on development and economic
cooperation-which opens September 1-can
avoid another open fight between rich and poor
states. Representatives of some developing states
and many industrialized nations have been
lobbying against possible efforts by other
developing states such as Algeria to launch an
offensive against the developed states in Lima
that will carry through the special session. The
radical wing of the developing state group is
seeking a fundamental realignment of the inter-
national economic system to one more favorable
to all developing states.
Although the radicals remain in firm con-
trol of the nonaligned movement, their victory
at Lima-which appeared likely earlier this
year-no longer is a foregone conclusion. They
have dominated the nonaligned movement since
before the Algiers nonaligned summit in
September 1973 and have increasingly pushed
the group to set the policy for developing states
on economic issues. Control over the nonaligned
by extremists has lessened of late, in part be-
cause their very success in promoting the move-
ment has led to more competition for leader-
ship.
Those developing countries that oppose the
Algerian stand meanwhile have had some success
in moderating the stand of the poor-country
caucus at several international meetings this
summer. At last month's session in Geneva of
the UN Economic and Social Council-which
was almost exclusively devoted to setting an
agenda for the 7th Special Session-less extreme
developing states were instrumental in forging
an agreement with the industrial states on a
"neutral" agenda. The ECOSOC session thus
became the only productive forum so far in
preparation for the special session. Its con-
ciliatory tone was sustained at the meeting of
the Trade Development Board of the United
Nations Conference on Trade and Development
last week and in this week's meeting of the third
preparatory conference for the special session.
Although the Algerians and their allies did
not impose their will at the summer meetings,
they made sure their presence was felt. Algeria
went out of its way during informal talks with
several EC states to lecture them about their
"unsatisfactory" policy with respect to the
demands of the developing states. Algeria also
lashed out at a group of African states that
challenged Algeria's opposition to singling out
the need for aid to the poorest developing
states.
Negotiations in several other forums will
also have an impact on the deliberations of the
special session.
The International Monetary Fund meets at
the end of August in Washington. If the indus-
trialized states settle some of the outstanding
issues on monetary reform, they may get around
to establishing a special fund to help developing
states. Such a decision, immediately preceding
the special session, would strengthen the influ-
ence of the less extren ~ developing states; fail-
ure would strengthen radical arguments for con-
frontation.
The Commonwealth finance ministers will
meet in Guyana on August 26 to consider a
document which reportedly endorses many of
the fundamental demands of the developing
states. Although the genesis of the document
was a speech by British Prime Minister Wilson in
Jamaica last spring, the paper, as it is currently
formulated, goes well beyond Wilson's original
suggestions. If the UK officially endorses the
paper, those developing states that seek dialogue
over confrontation would presumably be heart-
ened-even though Britain could by such en-
dorsemnrt cause strains among the developed
countries.
Should details on calling another confer-
ence of oil producers and consumers be settled
before the special session begins, the less ex-
treme developing states might also be strength-
ened in their arguments that prospects for a
meaningful dialogue with the developed states
should not be stymied by creating an outright
clash at the New York session.
SECRET
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