STAFF NOTES: WESTERN EUROPE CANADA INTERNATIONAL ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500030013-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 15
• Document Creation Date: December 21, 2016
• Document Release Date: June 2, 2006
• Sequence Number: 13
• Publication Date: December 3, 1975
• Content Type: REPORT

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Confidential
Western Europe
Canada
International Organizations
State Dept. declassification & release instructions on file
State Department review(s) completed.
Confidential
No. 0314-75
December 3, 1975
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CONFIDENTIAL
WESTERN EUROPE - CANADA - INTERNATIONAL ORGANIZATIONS
This publication is prepared for regional specialists in the Washington com-
munity by the Western Europe Division, Office of Current Intelligence, 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.
Japanese and European Shipbuilders Seek
Solutions 4
King Juan Carlos Wins Initial Political Test
in Spain 6
Military's Role in Portuguese Politics Could
Become Source of Friction . . . . . . . . . . 10
Iceland to Attend NATO Ministerial Meeting . . 12
Italian Communists Carry Moderate Labor Policy
a Step Further . . . . . . . . . . . . . . . 13
State Department review(s) completed.
December 3, 1975
-i-
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Japanese and European Shipbuilders Seek
Solutions
Shipbuilders from Japan and Western Europe are
meeting in San Francisco today to seek cooperative
adjustments in the rapidly shrinking shipbuilding
market. They hope to prevent cutthroat competition
that would exacerbate the serious downturn in the
industry during the next two years.
At the heart of the problem is a large and
rapidly growing surplus of tankers which have been
the mainstay of the shipbuilding boom in recent
years. About 14 percent of the world tanker fleet
is now idle and another 14 percent is in operation
only because of the widespread practice of slow
steaming, which can nearly halve fuel costs. The
capacity of tankers on order--most of which is based
on contracts predating the oil crisis--is equal to
45 percent of the existing tanker fleet. New orders
for tankers, which comprise two-thirds of all ships
on order, have decreased sharply and many earlier
orders have been cancelled.
Acceptable programs to reduce the surplus and
ease the impact on shipbuilders have eluded the
OECD and various shipbuilder's associations. An
earlier meeting in Tokyo of those expected at the
San Francisco conference bogged down when the Japan-
ese, who produced half the world's new ships last
year, refused to accept a system of price agreement
and market sharing. The Japanese are now willing to
discuss price guidelines.
Price policy is a critical concern to Japan's
competitors. Japanese shipbuilders have won nearly
75 percent of all new export orders this year,
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repeatedly underbidding European builders by 30
percent or more despite comparable labor costs.
The Japanese have rejected charges of dumping,
attributing their success to the efficiency of
highly automated yards. European analysts suspect
that the high degree of integration in Japan's
steel and shipbuilding industries provides an
exceptional advantage in material costs.
EC nations are insisting on action by industry
and government to cope with the lean years ahead,
although the Community remains committed to de-
creasing governmental subsidies. Individual govern-
ments appear prepared to abandon temporarily this
policy if EC action to counter Japanese competition
cannot be formulated.
At the EC heads of government meeting in Rome
this week, the Dutch and Danes urged that the Comm-
unity adopt procedures specifically aimed at aiding
the shipbuilding industry, which. they said was in
urgent need of immediate assistance.
December 3, 1975
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CON F11EN I IAL
King Juan Carlos Wins Initial Po:.itical Test in
Spain
King Juan Carlos has won his first battle to
put his own men in the Spanish government.
The Council of the Realm is said to have followed
the King's expressed wish when it made Torcuato
Fernandez-Miranda one of its three nominees for
president of the Cortes. A struggle reportedly took
place in the Council where militant rightists fought
to renominate the conservative outgoing president
whose term expired last week.
The King's decree naming Fernandez-Miranda
President of the Cortes was issued yesterday.
Fernandez-Miranda automatically becomes president
of the Council of the Realm, the powerful body that
will play a major role in future government changes.
Fernandez-Miranda is expected to be responsive
to the King. A former professor of law and political
theorist, he was the King's tutor in political theory
when Juan Carlos was preparing for his present posi-
tion, and they have maintained close ties. Fernandez-
Miranda served as minister secretary-general of the
National Movement, Spain's only legal political party,
and deputy prime minister under the late Carrero
Blanco. Although Fernandez-Miranda showed some signs
of supporting moves to open the Movement to broader
participation, he finally followed Carrero's lead in
opposing liberalization.
Fernandez-Miranda will play an important role
in promoting the King's choice for prime minister,
should Juan Carlos decide to replace Carlos Arias.
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CON F11_)LNI IAL
As president of the Cortes and the Council of the
Realm, it will also be Fernandez-Miranda's duty to
countersign a number of executive decisions, which
would give the King more freedom to act.
Meanwhile, the government faces its first con-
frontation with labor since Juan Carlos became King.
A two-day strike in Madrid has been called by the
clandestine Workers' Commissions to start in the
building industry. The strike is being called
ostensibly to protest the government's recently an-
nounced decision to limit wage increases to no more
than 3 percent above the annual increase in the
official cost-of-living index. The leaders of the
Workers' Commissions--which are dominated by the
Communists--reportedly want to see how much support
the Madrid strike receives before deciding whether
to call a general strike later.
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Military's Role in Portuguese Politics Could Become
Source of Friction
The military's dominant political role in Portugal
could become a source of increasing friction between
civilian and military leaders.
The popularly elected constituent assembly took
up the issue yesterday when it met for the first time
since the failure of the leftist military rebellion
last week. The assembly meeting coincided with the
lifting of the state of emergency in the Lisbon area.
Military participation in the government was
formalized before the constituent assembly elections
last spring, when the leftist military leadership
dominated by pro-Communist former prime minister Vasco
Goncalves forced the political parties to agree to a
continuing role for the military for a period of three
to five years. Under the terms of the agreement, the
military has the power to override an elected government,
in addition to having veto power over presidential
candidates and the selection of key cabinet ministers.
At the assembly session yesterday, the Socialist
Party announced that it was prepared to participate in
talks to renegotiate the pact. The party emphasized,
however, htat it was not prepared to call the agreement
with the military into question on its own.
The Socialists' reluctance to challenge the military
at tht_s juncture is understandable. They have cooperated
closely with the anti-Communist Antunes faction since
the overthrow of the Goncalves government and hope to use
;.heir present favored position in the government as a
::springboard to power in the general election promised
for nezt year.
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UUN 1"11M, N11AL
The other democratic parties, however, have shown
no such reluctance and may be expected to press the
Socialists now that the latter have opened the door.
Francisco Sa Carneiro--head of the Popular Democratic
Party, which also belongs to the present government
partnership--on several occasions has called on the
military to return to the barracks, and, more recently,
urged the popular election of a civilian successor to
General Costa Gomes as president. The Social Democratic
Center, a center-right party that is not represented
in the government but which does sit in the constituent
assembly, can also be expected to throw its weight behind
the proposal.
Popular sentiment for an end to military rule
has been on the increase in Portugal, and there is
support for such a move within the military as well.
Although the present military leaders have promised
at various times to respect the results of the election
planned for next spring, they have given no indication
that they intend to withdraw from politics completely.
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C,ONI?11)EN'I'IA1,
Iceland to Attend NATO Ministerial Meeting
Icelandic Prime Minister I-Iallgrimsson has as-
sured the US Ambassador that Foreign Minister
Agustsson will attend the December NATO ministerial
meeting in Brussels despite the fisheries dispute
with Britain. He said that there was little senti-
ment within the cabinet to withdraw from NATO or
dismantle the Keflavik base mann.1 by US forces.
Agustsson had intimated earlier that he would
not attend the NATO meeting and suggested that Ice-
land's permanent delegation might be withdrawn. He
also said that Iceland would withdraw from the al-
liance and dismantle the Keflavik base if the UK
did not remove its frigates from Iceland's disputed
waters. Hallgrimsson attributes the cabinet's
decision to a realistic assessment of world con-
ditions and to Reykjavik's desire to resolve the
fishing dispute through negotiations.
The Foreign Minister's strong anti-NATO state-
ments were designed to focus attention on the dispute
with the UK, and to induce NATO, and especially the
US, to persuade the UK to be more forthcoming.
Reykjavik issued similar threats during an outbreak
of the cod war in 1972-73, but did not carry them
_
ut
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Italian Communists Carry Moderate Labor Policy a
Step Further
Since scoring unprecedented gains in nationwide
local elections last June, the Italian Communists have
made an increased effort to demonstrate that they take
a responsible approach to the country's serious economic
problems. A recent statement by a high-ranking Communist
official shows the extent to which the party is willing
to risk serious rank and file discontent in pursuit
of that objective.
Communist Senator Colajanni, a member of the party's
central committee and of parliament's commission on
state industries, recently told an audience of textile
workers in Piedmont that they should drop resistance
to the closing of plant facilities deemed outmoded and
inefficient by Montedison. Montedison, a huge petro-
chemical firm owned partially by the state, maintains
that it must shut down several of its less productive
facilities in Piedmont as part of a consolidation
effort aimed at improving the company's deteriorating
financial position.
Whether management has the right to take such
actions is one of the major unresolved issues in current
negotiations for the renewal of contrasts involving
about one-fourth of Italy's industrial work force.
The initiative by the Communists, who have predominant
influence in the labor movement, is thus seen by Italian
industrialists as a possible turning point in the talks.
The Communists, however, may not be able to sell
the new line to the rank and file. Most of the unions
have reluctantly gone along with Communist recommendations
to avoid excessive wage demands but have so far shown
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little inclination to go along with industry's plans
to close plants and relocate workers.
The fact that the Communists made their move in
Piedmont will aid their efforts to reassure non-
Communist Italians--particularly in the business
world--who are concerned by the party's increased
influence. Prior to the June elections, the Communists
were in the opposition in Piedmont, but the party now
participates in the regional government and in the
municipal government of Turin, the regional capital.
December 3, 1975
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