STAFF NOTES: WESTERN EUROPE CANADA INTERNATIONAL ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500020035-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 21, 2016
• Document Release Date: February 6, 2008
• Sequence Number: 35
• Publication Date: October 15, 1975
• Content Type: REPORT

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UrLLE X10
Western Europe
Canada
International Organizations
State Dept. review
completed
Secret
I ,30
No. 0287-75
October 15, 1975
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WESTERN EUROPE - CANADA -? INTERNATIONAL ORGANIZATIONS
This publication is prepared for rek Tonal specialists in the Washington com-
munity by the Western Europe Division, Office of Current irstell `gence, with
occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
Italian Political Activity Cent::rs on Internal
Party Debates . . . . . . . . . . . . . . . . 1
Iceland Extends Fishing Limits . . . . . . . . 5
Canadian Minister of Communication Upset In
Key By--election . . . . . . . . . . . . . . . 7
Free Labor. Concerned About Possible US
Withdrawal from ILO 9
. . . . . . . . . . . .
London Concerned That Belize-Guatemala Dispute
May Get Nasty 10
Portugal Seeking Western Assistance To Ease
Economic Crisis 12
Government-Labor Talks in Italy
Threaten Government . . . . . . . . . . . . . 15
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Italian Political Activity Centers on Inttxnal
Party De ates
Political activity in Italy now centers on
debates taking place inside the Socialist and
Christian Democratic parties over how to cope
with the Communists.' vastly strengthened position.
These debates are not far enough along, however,
to permit a renewal of the Christian Democratic-
Socialist collaboration that has been the basis
for most Italian governments since 1963.
The Socialists are ho.Lding a series of
strategy sessions, at which party leader De
Martino is pushing policies designed to stress
Socialist autonomy from both the Communists and
Christian Democrats. The sharp increase in
Socialist-Communist collaboration at the local
level since June has heightened socialist fear
of losing their image as an independent party
and, in the end, being absorbed by the Communists.
That fear is matched, however, by the Sociali'sts'
conviction that they will suffer at the pot's if
they agree to another traditional center-l.e{?t:
alliance with the Christian Democrats.
To cope with this dilemma, De Martino is
drawing a distinction between the party's Long
range and short-range strategies. He recommends
that the Socialists' long-range efforts be keyed
to developing a grouping of leftist forces to
replace the Christian Democrats as the dominant
governing power. While the Communis;:s would
presumably be included in such a grouping, De
Martino Ls already saying publicly that the
Communists' continuing support for many Soviet
policies rules out a "leftist alternative" for
Italy in the near term. By talking about such
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an eventuality, however, De Martino distinguishes
himself from Communist chief Be:clinguer, whose
long-term goal remains the "historic compromise,"
i.e. a rapprochement with the Christian Democrats
that would leave no significant role for the
Socialists.
For the near and medium-term, the Socialist
leader believes that collaboration with the
Christian Democrats remains the only political
and mathematical alternative. He views the old
center-left as "dead," however, and refuses to
cooperate with the Christian Democrats unless
they accept Socialist policy proposals to be
unveiled at the party congress in February.
The Christian Democrats have not yet
scheduled a congress, a fact which suggests they
are ill-prepared to respond authoritatively
to the Socialists. The latest Christian Democratic
directorate meeting ended with a compromise between
left and right-wing factions that called for a
"competitive dialogue" with the Communists while
maintaining the party's traditional "opposition"
to them. Christian Democratic factional alignments,
moreover, are in a state of flux, as exemplified
by the defection of Foreign Minister Rumor from
the largest centrist faction (dorotei). In general,
the internal balance of power seems to be shifting
toward the party left, and Rumor appears to be
moving with it.
One bright spat is interim party leader
Zaccagnini's success; in securing approval of
organizational changes which, if implemented,
could limit the divisive irr)act of the factions
and improve the party's ties with such key sectors
of society as youth and organized labor. The
withering of these ties over the years accounts
in large part for the Christian Democrats' failure
to capture more of the new voters in the June
elections.
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At the moment, Defense Minister Forlani, a
49 year old centrist, is the frontrunner to succeed
Zaccagnini when the Christian Democrats hold their
congress. Elements of the party left who now support
For Tani could back away from him if they conclude
that he remains under the influence of his mentor,
former party chief Far.fani.
The Communists, meanwhile, are translating
their electoral success into tangible power. Allied
with the Socialists, they now govern most major
Italian cities and have increased their influence
substantially at the regional and provincial levels.
Our sources indicate, however, that the Communists
are worried about being saddled with responsibility
in such crisis-ridden areas as Naples. Communist
chief Berlinguer, moreover, wants to move cautiously
in consolidating his gains so as not to jeopardize
his prospects for an eventual deal with the Christian
Democrats, but he is having trouble enforcing that
line with the more militant local Communist organi-
zations.
The smaller parties, for the most part, are
staying on the sidelines. Social Democratic leader
Tanassi, however, has hinted cautiously at reuniting
with the Socialists---an experiment the two parties
could not make work between 1966 and 1969. The
Socialists have shown no interest so far.
The Moro government--in which only the Christian
Democrats and Republicans hold cabinet posts--remains
a convenient expedient whose existence affords all
of the parties time to sort out their options.
Consequently, no one wants Moro to fall just
yet. But the Socialists have hinted at withdrawing
their crucial parliamentary support if current
government-labor talks on major contract renewals
do not produce results satisfactory to the unions.
On the other hand, if the unions get everything
they want, the Republicans--who favor economic
austerity--could pull out of the cabinet.
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A wide variety of Christian Democratic
politicians agree, meanwhile, that because of its
weakness, the Moro government can take no actions
in parliament that are not acceptable to the
Communist party.
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Iceland Extends Fishing Limits
Iceland's unilaterally-declared 200 mile
fishing zone went into effect today, and its
miniscule coast guard has been deployed into
the area.
Iceland's fishing agreement with the British,
which expires on November 13, permits restricted
fishing within the old 50 mile zone. Negotiations
with Bonn broke off last year and there is
no current agreement.
The first round of talks with London on
a new agreement last month was inconclusive.
Opposition leftists in the meantime have stirred
up public opinion against granting the British
any fishing concessions in the new zone and
the second round of negotiations has not been
scheduled. The UK Ambassador in Reykjavik,
however, has told the US Embassy that he hopes
talks will resume in London next week.
The Icelanders' tough stance toward the
West Germans has also not eased and chances
for renewed negotiations are slim. Reykjavik
reportedly is willing to resume talks if Bonn
agrees to support an EC-Iceland tariff agreement
and lifts its ban on the purchase of Icelandic
fish.
Iceland's extension of the fishing limits
and its hard line negotiating position have
increased prospects for a resumption of the
"cod war." Iceland's coast guard reportedly
already escorted two West German fishing vessels
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out of the area. Bonn has said it will ignore
the new limit until an agreement has been reached.
Iceland may also detain British boats in the
50 to 200 mile zone.
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Canadian Minister of Communication Upset In
Key By-election
Prime Minister Trudeau's Liberal party re-
ceived a major political set back yesterday when
the newly appointed Minister of Communications,
Pierre Juneau, was defeated in a by-election in
what was considered one of the party's safest
Montreal constituencies.
Juneau, was chairman of the Canadian'Radio-
Television Commission and not a member of the
House of Commons, when he was named Minister of
Communications after Gerard Pelletier was
appointed ambassador to France in August. He
was, therefore, selected as the Liberal's candi-
date for Pelletier's seat in the constituency
of Hochelaga, which the Liberals had carried
in every federal election for over fifty years
and in last year's general election won by a
majority of 4,000 votes.
In a stunning upset, Progressive-Conservative
candidate Jacques Lavoie polled 8,236 votes to
Juneau's 5,649. The Social Credit Party candi-
date, win had been expected to draw votes away
from the Conservatives, received 1,729 votes.
The Hochelaga constituency is a French speaking,
working class constituency and the Liberals, as the
party in power at both the federal and ~Drovincial
level, appear to have been the target of voter wrath
over Canada's economic malaise, especially high un-
employment and inflation. Trudeau's announcement
of a tough wage and price control program on the
eve of the election probably came too late to
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have much impact, but certainly did not help the
beleaguered Juneau. Furthermore, the choice of
Juneau as a candidate from outside the constituency
brcke a tradition of selecting local residents.
Juneau, a strong nationalist, was proud of
being the chief architect of plans to strengthen
Canadian national radio and television at the
expense of US broadcasters as well as provincial
interests. These issues, while receiving prominent
press coverage, probably had little effect on the
largely working class voters of Hochelaga.
Trudeau still retains a safe 16 vote majority
in the House of Commons and, with a general election
not required until 1979, is in no immediate danger.
He does face the problem of choosing a new Minister
of Communications, unless he can persuade. Juneau to run
in a different constituency or accept appointment to
the Senate.
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Free Labor Concerned About Possible US
Withdrawal from ILO
The possibility that the US might signal
itu intention t,) withdraw from the International
Labor Organization--in reaction to its extension
of observer status to the Palestine Liberation
Organization last summer--is causing great concern
within international free labor and government
The fear that a notice to withdraw--ILO rules
require a two year advance notification--would
be difficult to retract is uppermost in the minds
of these officials, as they believe a US pull-
out would be disastrous for the organization.
Trade unionists, in particular, see continued
value in the ILO's vocational training program and
the organization's use as an instrument to pressure
govern;rtental adherence to international labor
standards.
There is also concern that free labor, and
the West in general, will be seriously weakened
vis-a-vis communist pressures by the absence
of the US. Labor leaders hold that US withdrawal
would be more dangerous than was the US disaffiliation
from the International Confederation of Free Trade
Unions in 1970. Not only is the American contribution
to the ILO budget at stake, but also US participation
in the struggle for free-labor influence within
the organization.
The French and Canadian governments are
among those who have expressed apprehension over
the consequences of a withdrawal. Such a move,
it is felt, might be construed as a sign of resurfacing
isolationism and protectionism in the US. The
governments are also worried about the maintainance
of free-world interests in the organization without
US support.
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London Concerned That Belize-Guatemala Dispute
May Get Nasty
The Belize issue is being debated at the UN
and Guatemalan leaders are still talking about an
armed invasion if the UN adopts a resolution that
calls for independence or self-determination with-
out Guatemalan participation. The matter should
come to a vote early next month.
The British say they are aiming for a re-
solution that would allow Guatemala to save face,
but have acknowledged that Belize might be able to
win support among non-aligned nations and its
Caribbean friends for a resolution that Guatemala
would find objectionable.
If this proves to be the case, the British
say they will withdraw their support of the resolution,
and the Guatemalans would then have a pretext to
initiate hostilities.
In any event, London believes its primary
responsibility is to defend its colony and the
British have strengthened their 600 man garrison in
Belize just in case matters get out of hand. This
move risks provoking Guatemala into military action.
Some Guatemalan political and military leaders seem
to be looking for justification for an invasion and
the.-British reinforcement could provide the excuse.
On October 12, three British troop-carrying
helicopters and eight rubber assault boats, accompanied
by about 50 support and maintenance personnel,
arrived in Belize. These reinforcements will
probably be further supplemented soon by an additional
150 troops.
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The local British commander--who has been
worried over the colony's vulnerability to a sur-
prise Guatemalan incursion--has increased British
troop strength in southern Belize, the apparent
objective of Guatemalan military planners, Jungle
patrols have also been stepped up and the commander
now believes the chances of a surprise attack
have been significantly reduced.
London will also have a frigate on station
within a day's journey of Punta Gorda, the only
port in southern Belize, and plans to increase
the warship's "normal" port calls to remind the
Guatemalans of the British naval presence. The
frigate's guns could shell Punta Gorda's airstrip,
thus hampering re-supply efforts should Guatemalan
troops capture the city. The warship also serves
as a counterweight to an increased Guatemalan
naval presence in w.iters near Belize.
The British feel that Belize's independence
is long overdue. Internal self-government was
granted 12 years ago and full independence would
have come about shortly were it not for the current
territorial agreement.
London has rejected a Guatemalan suggestion
that the dispute be submitted to the International
Court of Justice. The British reason that:
--the ICJ proceedings would be as
tedious and protracted as the
current tripartite negotiations;
--the composition of the court militates
against an objective decision; and
--the government of Belize opposes an
. ICJ adjudication.
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Portugal Seeking Western Assistance to Ease
Economic Crisis
Prime Minister Azevedo's October 13 speech
to the nation emphasized Portugal's enormous
economic problems, in particular the balance of
payments crisis. The trade deficit will total
almost $2 billion again this year, despite the
import surcharge imposed last May. Many essential
supplies for the Angolan refugees entering Portugal
will have to be imported, at the same time as the
domestic economic difficulties are hurting exports.
Meanwhile, earnings from tourism are down sharply,
private investment inflows have almost ceased,
and remittances from Portuguese working abroad
are stagnating.
Without foreign assistance, the 1975 balance
of payments deficit will likely reach $1.1 billion.
Foreign exchange reserves would be exhausted by
year-end, although Portugal still would have gold
reserves worth about $4 billion at the current
market price.
Lisbon's immediate aim is to try to obtain
funds from the International Monetary Fund and the
Bank fcr International Settlements. The remaining
$50 million of an existing loan from the Bank for
International Settlements will be drawn down.
Portugal has already drawn down most of its auto-
matic credits at'the Fund, It will continue to press--
with EC support--for additional funds including loans
from the oil'facility. Such borrov'ing could cut this
year's payments deficit to about $950 million. Foreign
exchange reserves would then probably last until Janu-
ary 1976.
Over the medium term Lisbon will look to the US
and the EC for credits and use its large gold re-
serves as collateral for loans from US and
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European private banks. A gold pledge amendment
is being negotiated for a $150 million loan from
a consortium led by a London financial institution,
although its insistence on actual. possession of
the gold, and the right to sell it, if necessary,
is causing difficulty.
For its part, the EC will provide Portugal
with about $175 million from the European Invest-
ment Bank over a period of two years for specific
projects. The Nine will guarantee the loan and
assume the costs of a three-percent interest rate
subsidy, which adds approximately $35 million to
the cost of the program. Two million dollars in
direct food aid will also be provided as part of
the Community's disaster relief effort for the
Angolan refugees.
The EC is trying to expedite the flow of aid,
but funds cannot be transferred until individual
projects are approved and this is not expected until
mid-1976 at the earliest. EC Commission and European
Investment Bank teams will travel to Portugal to
help prepare appropriate projects.
According to World Bank officials, Lisbon has
already developed many worthwhile projects. The
officials maintain that the recent political up-
heavals have only marginally disrupted the work of
a large number of competent middle-level Portuguese
technicians.
The EC will also set up a committee to monitor
and coordinate the aid commitments of its individual
members with Portugal. Most of these funds will flow
into agricultural and industrial projects, with
housing and construction receiving the highest
priority.
The West Germans have already committed some
$28 million in low-interest loans to be used for
investment in small and medium sized enterprises
and for Angolan refugee assistance. The Netherlands
and Denmark are also expected to provide aid, with
The Hague expected to give $19 million.
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These measures are seen as only a first step
in offsetting Portugal's acute balance of payments
problem. Lisbon looks to a more liberal EC trade
policy as more effective long-term solution.
Negotiations should begin before the end of the year
on the "evolutionary c:i.ause" of the 1973 preferential
trade agreement between Portugal and the Community.
The EC Commission has suggested a variety of approaches
which include an across-the-board reduction of tariffs
on Portuguese goods, extending preferential treatment
for agricultural products, improving benefits under
the the Community's generalized system of trade
preferences, and providing about $400 million in
loans under a new financial protocol.
The foreign ministers of the Nine meet in December
to set specific guidelines for these negotiations.
Deliberations on the size of the financial protocol,
and EC willingness to accept increased exports of
Portuguese wine and tex?.:iles, will sorely test the
Community's resolve to assist Portugal.
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Government-Labor Talks in Italy Threaten
Government
Prime Minister Moro's fragile government
is threatened by problems that have developed
in its negotiations with the federation that
represents Italy's three major labor organizations.
The government and organized labor are trying
to agree on guidelines for the renewal this
year of contracts involving a ci'iarter of the
country's work force.
The leadership of the labor group is inclined
to stress job security rather than the excessive
wage demands which, the government maintains, would
undercut economic recovery efforts. A compromise--
under which the government's proposed 10 percent
ceiling on wage increases would have been only
slightly exceeded--seemed likely until just re-
cently.
In the meantime, however, several major unions
that are not affiliated with the federation have
been striking to protest the prospect of limited
wage hikes. This action has fed rank-and-file
discontent in the federation and brought more
pressure on the leadership to push for larger
wage increases, especially for certain public
sector employees.
Moro is thus finding it more difficult to
reach a compromise that will satisfy both sides
in the negotiations. Deputy Prime Minister La Malfa,
a Republican, has threatened to resign--he has
frequently done so in the past--if the government
agrees to wage hikes that could jeopardize recovery
by substantially reducing the funds available for
investment. The Socialists--whose parliamentary
support is crucial to Moro's survival--would also
have trouble continuing their support unless labor
comes out of the talks satisfied.
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The chief factor favoring Moro it the absence
of any intra-party agreement on how to replace
him--the situation, in fact, that has kept his "
"interim" government afloat for close to a year.
Most politicians still see Moro's government as
a convenient device thy: affords them further time
to sort out their options in the aftermath of the
Communists' electoral success latt June and to lay
the groundwork for the 1.977 parliamentary election.
The collapse of the government in present circum-
stances would likely produce an impasse that could
encourage some political leaders to urge that the
election be held ahead of schedule.
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