WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004700110001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 21, 2016
• Document Release Date: May 29, 2008
• Sequence Number: 1
• Publication Date: January 22, 1965
• Content Type: SUMMARY

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(Information as of 1200 EST, 21 January 1965)
SOVIET CHEMICAL PROGRAM MODIFIED
New investment in the Soviet chemical industry this
year will be considerably less than originally planned,
but an extensive new program of bonuses designed to
promote maximum use of capacity indicates that the in-
dustry retains a high priority. Increases in output
will probably continue to be impressive at least
through 1965.
RECENT SOVIET MILITARY AID DEVELOPMENTS
A new arms pact with Egypt emphasizes the USSR's inten-
tion to continue long-term military aid. Aid shipments
to Somalia are gaining momentum, and Indonesia may soon
receive the initial shipment under an arms agreement
concluded in October.
SOVIET ECONOMIC AID ACTIVITIES IN AFRICA
New credits to Senegal, Uganda, and Congo (Brazzaville)
raise promised Soviet economic aid to Africa to more
than $750 million.
COMMUNIST CHINA'S 1964 AID SETS NEW HIGH
The Chinese Communists ended 1964 with a flurry of aid
activity bringing their total economic aid commitment
to free world countries last year to a record $340.
million.
GENERALS WIN STRONG VOICE IN SOUTH VIETNAM CABINET
They have been given the portfolios of defense, youth,
and psychological warfare, and a fourth general will
serve as second deputy premier. At the last minute
the generals secured the promise of eventual removal
of two additional civilians. Buddhist pressure against
Premier Huong continues.
INDONESIA MAINTAINS PRESSURE ON MALAYSIA
Djakarta has made public gestures toward a peaceful
settlement but continues to pursue its military ac-
tivities against Malaysia. Indonesia is still shap-
ing its tactics on withdrawal from the United Nations.
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ASIA-AFRICA (continued)
Fage
BURUNDI PREMIER ASSASSINATED
The King had appointed Ngendandumwe, a Hutu, only a
week earlier in an effort to reverse the country's
pro-Peiping orientation, and to curb the influence of
the long-dominant Tutsi tribe. He now has asked
Joseph Bamina, also a Hutu, to head the government
named by Ngendandumwe.
SKIRMISHING CONTINUES IN LEOPOLDVILLE CONGO
Following a lull in activity, more extensive fighting
has resumed, and the government seems about to launch
its much-vaunted drive toward the Sudan border to cut
off rebel supply sources.
BREAKDOWN OF ORDER THREATENED IN BRAZZAVILLE CONGO
Faced with mounting opposition from various groupings,
the regime has asked for aid from radical African states.
GHANA POSTPONES ECONOMIC CRISIS
Despite a $56-million credit from a French-Swiss con-
sortium, economic conditions probably will continue
to deteriorate, and onerous fiscal measures will add
to public discontent.
POSSIBLE COMMUNIST REPRESENTATION IN EUROPEAN PARLIAMENT 12
The European Parliament, the debating forum of the
three European communities, may get its first Commu-
nist members if and when the Italian Parliament fills
present vacancies in Italy's delegation. Italy's new
President Saragat and both the Socialist parties in
Italy's governing coalition are committed to the prin-
ciple of Communist representation.
EEC COMMISSION PROPOSES FULL CUSTOMS UNION BY JULY 1967 13
Community agreement on this schedule would accelerate
by two and a.half years the schedule provided by the
Common Market treaty.
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swo
FRANCE AND EASTERN EUROPE
As a result of mutual desire for closer relations,
France and the Eastern European countries have been
increasing their cultural, economic, and technical ties,
and several ranking Communist government officials
have recently visited Paris.
PORTUGUESE FOREIGN POLICY GAINS
Portugal is showing renewed confidence in its foreign
policies following several military successes in Africa
and a tightening of its relations with certain Western
European countries. This confidence is reflected in a
somewhat less critical attitude toward the United States.
NORWAY MOVES TO COUNTERBALANCE SOVIET PRESENCE IN SVALBARD 16
A 1920 treaty gives Norway sovereignty over this group
of islands (the largest of which is Spitsbergen) but
allows the Soviets to exploit its coal deposits. The
Norwegians, believing Soviet mining activity masks an
increasing interest in the islands' military potential,
are moving quietly to assert their control there.
CUBAN SUGAR CROP PROSPECTS BETTER THAN LAST YEAR
An earlier than usual start on the harvest and improved
cane-cutting operations may help boost sugar production
this year to 4.5 to 5 million metric tons, higher than
last year's estimated 4 million but still short of the
5.5 million Castro claims is needed to meet commitments.
RELATIONS BETWEEN BRAZIL AND URUGUAY CONTINUE STRAINED 17
Uruguay refuses to give in to Brazilian pressures to
curtail the activities of Brazilian exiles. Prolonged
delay in achieving a solution to this problem could
have harmful effects on Uruguayan-Brazilian trade.
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EUROPE (continued)
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WESTERN HEMISPHERE (continued) Page
ECONOMIC SLOWDOWN IN ECUADOR 18
A sudden drop in the exchange rate of the Ecuadorean
sucre may foreshadow the end of generally favorable
economic conditions that have prevailed since the junta
took power in July 1963.
COLOMBIA BRACES FOR GENERAL STRIKE AND COMMUNIST TERRORISM 19
Two recent developments,-the threat of a general strike
on 25 January and the emergence of a Communist guerrilla
force--appear to have led feuding leaders of the govern-
ing National Front coalition to close ranks.
NEW TENSIONS AMONG DOMINICAN MILITARY LEADERS
Tensions increased following Triumvirate President Reid
Cabral's removal of the national police chief and the
air force chief and the transfer of the police to military
control.
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New investment in the So-
viet chemical industry this
year will be considerably less
than originally planned, but an
extensive new program of bonuses
designed to promote maximum use
of capacity indicates that the
industry retains a. high priority.
Increases in output will prob-
ably continue to be impressive
at least through 1965. The new
leaders' major changes in the
chemical program so far appear
to be short-term adjustments,
which put emphasis on completing
unfinished plants and on bring-
ing new ones up to designed rates
of output. Some new construc-
tion projects planned a year are
apparently being postponed.
State centralized invest-
ment in the chemical industry
this year now is planned to in-
crease by only 255 million
rubles instead of 665 million
rubles as projected a year ago
for 1965. The head of the State
Committee for the Chemical In-
dustry recently stated that in-
vestment in 1964 increased by
37 percent over 1963. Although
this fell short of the 45 per-
cent planned, it is nevertheless
well above the increase now pro-
jected for 1965.
Simultaneously with the re-
lease of the new investment
figure the USSR disclosed the
establishment of the extensive
new bonus program designed to
stimulate a sharp rise in the
output of plants already in op-
eration. A serious weakness of
the chemical program has been
the slow pace at which plants
have been put into operation
and brought up to planned capac-
ity. Many plants apparently
are producing at less than half
of their rated capacity.
Bonuses are based on a
sliding scale and will be
awarded for increases in out-
put above 60 percent of the
rated capacity of the plant as
long as quality standards are
met. Only at capacity opera-
tion is it specified that pre-
miums depend also on staying
within planned production costs.
Although the program will be in
effect only in 1965, this in-
centive arrangement for an en-
tire sector of the economy goes
substantially beyond previous
piecemeal programs designed to
increase output of specific
items.
Other recent actions re-
lating to the chemical industry
demonstrate that the new gov-
ernment is reviewing this
priority program in the light
of its costs and future bene-
fits. The chemical industry
continues to be pre-eminent
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among nonmilitary industrial
branches, but its development
will be more related to poli-
cies designed to meet other
economic problems than was the
case under Khrushchev.
tespite the availability
of some $650 million in long-
term credit for imports of chem-
ical plants and equipment from
the West, contracts concluded
in 1964 amounted to only about
$240 million. More purchases
may be made, but recent state-
ments by Soviet officials
strongly suggest that such im-
ports will be considerably be-
low the level implied under the
Khrushchev program. Continuing
uncertainty about future in-
vestment patterns, as well as
the low level of financial re-
serves, probably underlies this
change in plans.
Little progress has been
visible in the year-old program
to convert some facilities in
other branches of industry to
produce chemical equipment.
Only two of the 20 plants
so identified have been noted
as complying with this deci-
sion, and it is questionable
how much of their capacity has
actually been conscripted for
this purpose. Production of
chemical equipment last year
probably was short of the 25-
percent annual growth rate im-
plied by the two-year goal.
Although the 1964-65 tar-
gets for chemical products will
probably be met by and large,
the various problems of this
industry and the government's
sober response indicate that
at least some of the 1966-70
goals will be lowered. It
was admitted last November that
the economy's requirements for
products of the chemical in-
dustry will not be completely
met by 1970.
The USSR has emphasized
its intention to proceed with
its long-range military aid
policy by rapidly negotiat-
ing a new arms pact with Egypt
and by a spate of deliveries
to other recipients.
Egyptian military officers
already are winding up contract-
ing sessions for a large new
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22 Jan 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
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arms purchase, first broached
in Moscow in early November.
Shipments under previous
pacts are continuing. During
the first half of January,
seven Soviet ships arrived in
Egyptian ports carrying cargo
which included spare parts,
tanks, helicopters, armored
cars, artillery, trucks, and
surface-to-air missile (SAM)
equipment for the expanding
Egyptian air defense program.
Moscow's aid program in
Somalia is also moving ahead
rapidly. Following the first
major delivery in late October,
two shiploads of military equip-
ment arrived in mid-January.
These included the first air-
craft---three MIG-15 jet fight-
ers--as well as tanks, armored
cars, artillery, and truck-
mounted radar and communications
equipment, probably to support
the aircraft. Future shipments
are likely to include more ad-
vanced MIGs, some helicopters,
and two navy patrol craft--the
first to be received from the
USSR.
The initial shipment to
Indonesia under the arrangement
worked out by General Nasution
in October may be under way.
The Soviet Union continues
its maintenance shipments to Cuba
and is negotiating with other
military aid partners. In late
December the year's seventh all-
military Soviet cargo arrived in
Mariel.
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22 Jan 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
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SOVIET ECONOMIC AID ACTIVITIES IN AFRICA
The USSR continues cau-
tiously to increase its aid
commitments to African coun-
tries. In November and De-
cember Moscow initiated aid pro-
grams in Senegal, Uganda, and
Congo (Brazzaville) with the
extension of economic credits
of $7 million, $16 million, and
$9 million respectively. In
Kenya a Soviet delegation com-
pleted negotiations for a $44-
million aid program agreed upon
in principle last May. These
new programs raise the total of
scheduled Soviet economic as-
sistance to Africa to over $750
million.
Despite continuing diffi-
culties in implementing earlier
credits in Ghana and Guinea,
Moscow may be prepared to offer
additional assistance to both
countries. A proposed Ghanaian
visit to Moscow to seek budge-
tary support was put off
Although
Moscow is unlikely to provide
budgetary support funds, it may
offer additional economic cred-
its as an alternative. In a
recently concluded trade agree-
ment, Moscow continued its pro-
cedure of several years of pro-
viding trade credits to Ghana to
finance the import of Soviet com-
modities for sale on the local
market to generate local funds
for development projects.
Elsewhere in Africa, prog-
ress under Soviet aid programs
continues to be varied. Moscow
appears to be stepping up imple-
mentation of its economic aid
program in Algeria. Large num-
bers of Soviet technicians have
arrived to begin surveys for the
construction of 28 small dams, to
carry out geological and topo-
graphical studies, and to par-
ticipate in agricultural projects.
The next six months should show
an acceleration in Soviet deliv-
eries of equipment and material
as actual construction begins. In
the Sudan and Tunisia moderate
progress continues to be made on
Soviet aid projects. In Tanzania,
despite repeated references to
proposed Soviet aid projects and
the arrival in early December of a
Soviet delegation to undertake
feasibility studies, no final con-
tracts have been signed thus far.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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COMMUNIST CHINA'S 1964 AID SETS NEW HIGH
Communist China ended 1964
with a flurry of aid activity
bringing its total economic aid
commitment to free world coun-
tries last year to a record $340
million. Chinese offers to pro-
vide economic aid are used as an
important adjunct to Peiping's
efforts to penetrate underdevel-
oped countries politically, but
represent little cost to China.
The agreements usually provide
for long-term supply of Chinese
goods and services on favorable
credit terms. Actual drawing of
recent credits--like those granted
earlier--is likely to be slow.
In late December, Cairo re-
portedly received credits of $80
million to finance imports of
Chinese plants and industrial
equipment during the UAR's sec-
ond five-year plan starting in
March.
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In 1963, all of the $90
million extended to non-Commu-
nist countries was concentrated
in Africa and the Middle East.
Last year, in addition to cred-
its given to the UAR and Indo-
nesia about $115 million went
to Africa, and credits of $28
million, $60 million, and $4
million, were extended to Yemen,
Pakistan, and Ceylon.
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South Vietnam's generals,
following up their detente
with Premier Huong's civilian
government, have now won a
strong, if not dominant, voice
in his cabinet. In a cabinet
reshuffle which removed the
civilians under Buddhist at-
tack from the ministries of
information and finance, the
military accepted appointments
of three generals as defense,
youth, and psychological war-
fare ministers. A fourth
general will serve as second
deputy premier, and will prob-
ably be responsible for all
activities related to the war
effort: against the Viet Cong.
By failing to appear for
initial investiture ceremonies,
the military now appear to have
won new last-minute concessions
as the price of their partici-
pation in the cabinet. Charging
that the reshuffled cabinet
was still not sufficiently
"revolutionary," they raised
further demands for the ouster
of at least two additional
civilians, the ministers of
foreign affairs and health,
who they alleged had "unsavory"
connections with past re Imes.
These demands
(stemmed primasf[y
from air force chief General
Ky, the new youth minister,
who has also insisted on re-
taining his a.ir force command.
Huong's apparent readiness
to yield to the military demands
is based on his desire for
their support in the face of
the continuing Buddhist chal-
lenge. Five top-ranking monks,
including Tri Quang, on 20
January began a hunger strike
"to the death" to try to force
Huong's removal. Although
Buddhist leaders claimed that
they were simultaneously calling
an end to public agitation
against Huong, their hunger
strike appears designed to
bring public pressure on him.
New disorders by Buddhist sup-
porters in Saigon have already
occurred, and further public
demonstrations are likely.
Viet Cong terrorist and
military activity declined in
both scale and intensity for
the second consecutive week.
Only one company-size or larger
attack was reported. The cam-
paign of harassment against
district administrative centers
fell off sharply. However,the
discovery on 16 January of a
large explosive device at a
US military swimming pool in
Saigon lends credibility to
numerous reports that the Viet
Cong may try to perpetrate
spectacular incidents against
US personnel or installations,
in addition to intensifying
pressure in the countryside,
prior to "Tet," the Vietnamese
New Year celebration from 2 to
4 February. On the government
side, a marked increase in
battalion-size operations re-
sulted in heavy Viet Cong
casualties and weapons losses.
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Indonesia continues to
talk about a peaceful settle-
ment of the Malaysia dispute
but at the same time is pur-
suing its military build-up
and small-scale infiltration
activities.
President Sukarno publicly
reiterated on 14 January his
willingness to accept a peace-
ful settlement if based on an
investigation of popular wishes
in North Borneo by an Afro-
Asian Commission or even by the
United Nations. A few days
later Foreign Minister Suban-
drio said Indonesia was pre-
pared to hold peace talks with
Malaysia and the UK "without
preconditions." This appears
to have been made only for
public: effect, for no diplo-
matic overtures have followed.
Meanwhile the Indonesian
military build-up in Borneo
fronting the Malaysian border
continues. Small-scale infil-
trations of mainland Malaysia
occur weekly, but most of the
participants are killed or
captured.
Djakarta apparently is
still shaping its policy and
tactics toward the United
Nations. Indonesian officials
have stated during the past
week that although Djakarta has
withdrawn from the UN, it will
not withdraw from all of the
associated organizations.
There are indications that
Indonesia is trying to persuade
Afro-Asian nations to take their
regional and bilateral problems
to the forthcoming Afro-Asian
conference in Algiers rather
than to the UN. The Algiers
conference--now scheduled for
March--may be postponed until
May. Although Indonesia earlier
opposed a delay, it now may pre-
fer to have more time for its
international lobbying. Suban-
drio may raise this subject on
his visit to Peiping scheduled
during the next few days.
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22 Jan 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
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BURUNDI PREMIER ASSASSINATED
The assassination on L5
January of Prime Minister Ngen-
dandumwe of Burundi grew out
of a struggle, backed by the
King, to change the country's
pro - Chinese Coir_munist , pro -
Congolese rebel foreign policy,
and also out of the bitter riv-
alry between Burundi's majority
Hutu people and the minority
but long-dominant Tutsi tribe.
Ngendandumwe, a Hutu, had
been named head of government
only a. week earlier when the
King dismissed his predecessor,
Albin Nyamoya, a. Tutsi. The
King was worried over Nya.moya.' s
radical stance and the growing
influence and freewheeling of
Chinese Communist diplomats.
He also feared that Nyamoya's
aid to the Congolese rebels
would provoke retaliation from
Leopoldville. Ngendandumwe
had barely announced his new
government and declared that
henceforth Burundi would ob-
serve a policy of strict non-
alignment and noninterference
abroad when he was shot.
A Tutsi refugee from
neighboring Rwanda, where the
Hutus have already wrested
control from the Tutsis, has
confessed to the assassination.
He said his refugee supporters
feared Ngendandumwe would ex-
pel the some 150,000 Rwandans
now in Burundi. He has impli-
cated as his accomplices other
extremist Tutsi elements and
leftist leaders of a Peiping-
subsidized labor union and
youth group.
Severe security pre-
cautions have been taken as a
result of the King's fear of
a. coup attempt. A curfew has
been declared in Bujumbura,
the capital. Troops led by
Belgian officers are patrol-
ling the streets, and the labor
union and the youth group
have been banned.
The King has also asked
Belgium to make stand-by troops
available to be called in in
the event of an emergency.
Although no disorders have
occurred yet, the situation
remains tense, and clashes
along tribal lines are possible.
How much of a setback the
assassination represents is
not yet entirely clear. It
seems unlikely that the King
can entirely eliminate extrem-
ist Tutsi influence; the Tutsis
are more dynamic and better
educated and trained than the
Hutus, and are struggling to
maintain their dominance. The
King still appears, however,
to be bent on reversing or at
least moderating Burundi P(,!--
icy. He has asked another
Hutu, Joseph Bamina, pre.,,ident
of the leading party UI;itONA,
to become prime minister and
apparently plans to keep the
government named by Ngendan-
dumwe.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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DEMOCRATIC
REPUBLIC
OF THE
CONGO
-??- International hound 3r,
Prcvi nre hound
it Nati,.r al i; tal
* Proving e caclal
Apprnxirnate area of
uprising
22 JANUARY 1965
P.ni tncrtx! bound-, s hao-e been "I, rp ,L ;td
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Fighting resumed throughout
the Congo last week as govern-
ment troops and rebels jockeyed
for the more advantageous posi-
tions following the previous
lull of activity.
The government is preparing
a major effort to push to the
towns of Aba, and Aru near the
Sudanese and Uga.nda.n borders.
The garrisons in Paulis and
Bunia. in the northeast are gather-
ing men and equipment for this
concerted drive to seal or con-
trol the border areas in order
to cut off the flow of supplies
to the rebels. Mea.nwhile, at
least one group of rebels is
reported to be wearing uniforms
and using modern weapons and
equipment.
The center of Stanleyville
is secure, but sizable numbers
of rebels continue to operate
in the adjacent countryside and
continue to ha.ra.ss all govern-
ment forces entering or leaving
the city. Insurgents have also
been infiltrating the city by
posing: as government supporters.
The government's position
a.round Uvira continues to deter-
riora.te, and the army may not
be able to hold this strategic
city. The army garrison is some-
what unreliable, and the rebels
on the surrounding high ground
possess mortars and reportedly
now control the road to Burundi.
The availability of sizable qua.n-
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tities of supplies from Burundi
depends on the outcome of that
country's current political
crisis.
In Uganda. last week, the
leaders of East Africa--Premier
Obote of Uganda, President
Nyerere of Tanzania, and Presi-
dent Kenya.tta, of Kenya.--met on
the Congo question with rebel
representatives present. They
probably agreed to coordinate
their efforts more closely and
may have decided to step up
their assistance to the rebels.
The Orga.niza.tion of African
Unity's Congo Committee is
scheduled to meet a.gain on 29
Ja.nua.ry in Nairobi. It may
press the search for a, politi-
ca.l solution.
not to visit Brussels.
In Leopoldville, Premier
Tshombd's popularity continues
to grow following his firm
stands on the financial negotia-
tions with Belgium and on recent
comments by Adoula.. Adoula's
public statement that Tshombd
"must go" and his suggestions
for negotiating with the rebels
have unleashed a. wave of demon-
strations against him--to some
extent government inspired--
in Leopoldville. Negotia.tions
with Belgium remain stalled
since Tshombd's recent decision
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BREAKDOWN OF ORDER THREATENED IN BRAZZAVILLE CONGO
In the wake of the recent
French withdrawal of all tacti-
cal military units, Brazzaville's
radical regime is facing a mount-
ing security problem which could
soon lead to a general disinte-
gration of order. To meet this
real. danger, and some imagined
ones, the regime has called on
radical African states for im-
mediate assistance.
Although the regime has si-
lenced all domestic opposition,
the political situation has re-
mained unsettled. No single
leader has emerged to exercise
an effective sway over the het-
erogeneous grouping of extreme
leftists who now hold almost all
top government and party posi-
tions. The regime's authority
over local officials, part icu-
larly in rural areas, is ques-
tionable at best. Outside the
regime there are disaffected
tribal., religious, and trade
union groupings of considerable
size whose discontent is likely
to grow as the economic situa-
tion continues to deteriorate.
In any event, the regime's
ability to maintain order seems
almost certain to be challenged
by the, activities of the free-
wheeling, party-sponsored youth
movement with which the 1,200-
man gendarmerie, the only reason-
ably disciplined force, has
clashed on several occasions.
The youth movement, which now
numbers some 1,500, arbitrarily
arrests "counterrevolutionaries"
and harasses the foreign com-
munity.
Brazzaville's undisciplined
900-man army is totally ineffec-
tive. In addition to signs of
mounting dissatisfaction among
the lower ranks over pay, promo-
tions, and other perquisites,
there reportedly now is a grow-
ing rift between the two top
commanders.
In an effort to cope with
these problems and the most prom-
inent imagined one--that the US
is encouraging subversion and pos-
sibly an invasion by, the Tshomb6
government in the Leopoldville
Congo--the Brazzaville regime has
turned to radical African states.
(Since late
last year the regime has been
negotiating a defense agreement
with Ghana which would establish
a common external command.
Paris, which had earlier re-
frained from using its consider-
able economic leverage to effect
favorable political changes, has
recently begun to react sharply
against harassment of its na-
tionals. In December and again
last week the French ambassador
threatened to withdraw aid and
essential technical personnel if
conditions did not improve. Local
French business interests also
appear increasingly concerned about25X1
the attitude of the regime and
the general security situation.
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An eleventh hour $56-mil-
lion credit reportedly granted
Ghana by a French-Swiss con-
sortium has averted a major eco-
nomic crisis which had appeared
likely to come to a head next
month. This credit and others
likely to follow from West Ger-
many and Canada are geared to
financing imports. However,
they will only mask Ghana's
basic financial problem of liv-
ing far beyond its means ,
Nkrumah's grandiose and
often nonproductive projects at
home, added to costly political
adventures in pursuit of pan-
Africanism, have absorbed most
of the! economic assets Ghana.
possessed at independence. In
recent months government spend-
ing has been financed increas-
ingly by short-term loans from
foreign suppliers and banks, and
the nation's debt has risen
alarmingly. Payments have lagged
or even been ignored, and Ghana's
normal. creditors, chiefly the
US, the UK, and the Soviet Un-
ion, now are showing a marked
reluctance to lend any more.
With the evaporation of its
international credit rating,
Ghana has paid dearly for new
Loans. This latest credit re-
portedly will cost the govern-
ment 1.5-20 percent in commis-
sions? carrying charges, and
kickbacks. It is to be secured
by 120,000 tons of cocoa, 25-30
percent of the annual crop.
The chaos which prevails
in Gha.na.ia.n monetary circles
obscures the picture. Records
are so poorly kept that the
government is not at all sure
how much it owes and to whom pay-
ments are due. There is also
substantial reason to suspect
that financial data, are deliber-
ately falsified and that condi-
tions are even worse than recent
official statistics indicate.
Nkruma.h seems unaware of the
seriousness of the problem and
reacts with chagrin a.nd anger
when foreigners attempt to de-
scribe Ghana's domestic economic
problems and poor international
financial posture.
The record $560-million
1965 budget will exacerbate the
situation. Anticipated revenues
are at least $200 million less
than expenditures. Pending moves
to narrow the gap reportedly in-
clude a. government pension scheme
requiring a, joint employer-em-
ployee contribution of 22.5 per-
cent of wages. This,.however,
would only worsen the position
of a. labor force already caught
in the vise of rising prices
and fixed wages, and would en-
courage employers to hasten
planned layoffs. The budget
calls for increased taxes which
are certain to be unpopular.
Imported consumer goods may be-
come critically short next month
despite the latest foreign credit.
The situation is markedly worse 25X1
than in 196L when a. new tax
sharked a. series of strikes
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Europe
POSSIBLE COMMUNIST REPRESENTATION IN EUROPEAN PARLIAMENT
The European Parliament
(EP), the debating forum of the
three European communities, may
get its first Communist members
if and when the Italian Parlia-
ment fills the present vacancies
in Italy's 36-seat delegation.
Both the Nenni Socialists
and the Italian Social Democrats
are committed to the principle
of Communist representation on
that delegation. As recently as
5 November, President Saragat,
then foreign minister, publicly
supported the principle. He has
also declared, however, that the
matter was one for the Italian
Parliament itself to decide.
The EP has not heretofore
included any Communists because
they have been systematically
excluded from the national dele-
gations by the majority parties
in member countries concerned.
Given the strong initial hostil-
ity of all the European Commun-
ist parties to the three commu-
nities, it was thought they would
be a disruptive element in the
Parliament. Moreover, there has
also been some reluctance to set
a precedent for the WEU assembly
and the meetings of the NATO
parliamentarians where Communist
presence might be a security
problem.
Many EP officials and mem-
bers have long recognized, how-
ever, that the Communists
might eventually be seated--
especially if the EP should
become a directly elected
body--and some of these of-
ficials now see certain ad-
vantages in it. They expect that
the presence of Communists would
not only contribute to "real-
ism" in the Parliament's de-
bate, but also tend to consol-
idate a pro-European majority
on basic issues. The parlia-
mentarians of all parties,
moreover, are probably not
averse to obliging the commu-
nity executives to be more re-
sponsive to an EP which con-
tains a vigorous opposition,
and the membership would also
welcome the increased public
attention to the body. EP of-
ficials doubt in any case that
Communists would be seated now
in sufficient numbers to ob-
struct community business.
Seating of Italian Com-
munists would probably have
important implications for the
French Communist Party, which
has never relaxed its antipathy
to the Common Market. It might
also serve as a lever for cer-
tain Communist trade unions
which have recently demonstrated
increasing interest in gaining
adequate representation in com-
munity affairs.
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EEC COMMISSION PROPOSES FULL CUSTOMS UNION BY JULY 1967
The EEC Commission recom-
mended this week to the Council economy in order to be prepared
of Ministers that the EEC com-
pletely dismantle all its inter-
nal customs barriers by 1 July
1967, and put into full effect
the common external tariff (CXT)
for imports from nonmember coun-
tries. Community agreement on
this schedule would accelerate
by two and a half years the sched-
ule provided by the Common Market
treaty.
These moves would probably
also mean that the anticipated
reductions of tariffs resulting
from the Kennedy Round negoti-
ations will have an earlier ef-
fect on the EEC than otherwise.
To balance this speed-up of in-
dustrial integration the commis-
sion hopes to put uniform EEC
prices for cereals, beef, and
milk into effect in 1967.
The commission's acceler-
ation proposals raise the most
difficult problems for Italy,
which feels it must still take
As a result of a mutual de-
sire for closer relations, France
and the Eastern European coun-
tries have been increasing their
cultural, economic, and technical.
ties, and several ranking Com-
munist government officials
have recently visited Paris.
French Foreign Ministry of-
ficals have for some time indi-
cated that Paris is particular-
ly interested in forging links
for the competition it will
face in a full customs union.
It is not always recognized
that EEC membership and the
Kennedy Round negotiations re-
quire Italy and France--the
traditionally high-tariff EEC
members--progressively to ad-
just to a decade of sustained
and sharp tariff reductions.
Rome may nevertheless be re-
luctant to press for too many
special concessions for fear
that such demands would rele-
gate it to "second-class status"
within the EEC.
The commission, in its en-
deavor to bring about further
measures toward "economic union"
--including common fiscal, mon-
etary, and budget policies--will
probably push strongly now to
complete the community's cus-
toms structure at the earliest
feasible date.
with Rumania, Czechoslovakia,
and Poland. Paris was there-
fore receptive to a Rumanian sug-
gestion that Premier Maurer un-
dertake an official trip to Paris.
This trip, in July 1964, was the
first postwar visit by a Ruman-
ian of Maurer's rank to any West-
ern capital. Follow-up talks in
November 1964 resulted in the
initialing of a three-year agree-
ment aimed at increasing Franco-
Rumanian trade by 60 percent.
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Relations with Czechoslo-
vakia have been improving slowly
since the signing of a two-year
trade treaty last January. In
September the two countries
agreed to promote cultural, sci-
entific, and technical exchanges
and in November Foreign Minister
David :Led the first official
Czech delegation to visit Paris
since 1948.
Despite expressions of in-
terest on both sides, Polish-
French relations have been static
for a year with neither country
ready to make any significant
moves toward improvement. No
high-ranking Polish official has
joined the parade of East Euro-
pean visitors to Paris.
French Foreign Ministry
officials assert that discus-
sions with Yugoslav Foreign Min-
ister Popovic, who was in Paris
in November 1964, were somewhat
disappointing. They were pleased,
however, that Yugoslavia took
the initiative in this case, and
expressed interest in exploring
various possibilities for cul-
tural and economic cooperation
with Belgrade.
Talks with Hungarian Foreign
Minister Peter in January 1965,
were, according to the French,
"rather mechanical and sterile."
The two countries had already
agreed in principle, however, to
conclude a long-term trade agree-
ment, and French Foreign Minister
Couve de Murville is said to be
contemplating a trip to Budapest.
Other developments in
French - East European relations
include an excursion to Paris
by the Bulgarian foreign minis-
ter in November 1964, and France's
conclusion of trade agreements
with Bulgaria and East Germany.
France's present attitude
toward Eastern Europe fits with
De Gaulle's over-all objective
of developing some sort of Euro-
pean structure which he thinks
would lay the groundwork for
the solution of European prob-
lems. Paris, however, can be
expected to proceed with caution
so as not to upset its relations
with either West Germany or the
USSR. Thus the French are likely
to continue relying on trade
and culture as the best way to
broaden the framework for im-
proving relations with the East
Europeans.
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The Portuguese Government
is conducting its foreign rela-
tions more confidently follow-
ing\)a series of military suc-
cesses in its African provinces
and a tightening of relations
with certain West European coun-
tries. Its confidence is re-
flected in a somewhat less
critical- attitude toward the
US, but the change rests es-
sentially on a belief that cer-
tain Portuguese policies which
had been criticized by the US
have now been vindicated. Thus
important points of friction
promise to remain unresolved
for some time to come.
The Portuguese have been
particularly pleased with the
way they have been able to re-
sist pressures aimed at weaken-
ing their position in Africa.
Their forces have made impres-
sive gains in pacifying Angola,
where the nationalist rebellion
has been contained in a small
area in the north. In Mozam-
bique, attacks by nationalists
based in Tanzania have so far
been successfully parried.
Even in Portuguese Guinea, where
their hold is the weakest, the
Portuguese have held their
ground in the past several months.
Military success has in-
evitably strengthened Lisbon's
determination to hold on to its
overseas provinces. This deter-
mination, moreover, is becoming
all the more rigid as Lisbon
observes the chaos in the Congo
and anti-Western tendencies in
various newly independent East
African states.
In Europe, Lisbon has as-
siduously cultivated its rela-
tions with West Germany, France,
and Spain. One result was an
agreement with Bonn for the
joint construction of extensive
German military facilities in
Portugal. Another was the ced-
ing to France of a ballistic-
missile tracking site in the
Azores.
A measure of Lisbon's in-
clination to improve relations
with the US was the repatriation
last month from Portuguese Guinea
of all F-86s provided under the
US Military Assistance Program.
More recently, the Portuguese
agreed to cooperate in control-
ling shipments of strategic tan-
talite from Mozambique which were
believed to be destined for Com-
munist countries. Lisbon none-
theless has continued to show
its displeasure over US African
policy by putting off negotia-
tions for renewing the Azores
base agreement and for granting
facilities for LORAN-C (long-
range aid to navigation) which
the US requested a year ago.
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5Russian mining claim
? Norwegian settlement
Ny-Alesund? VESTSPITSBERGEN
Pyramiden
A\A
? I.ongyearbyen
B a r en b u r g e n
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LIRELAND
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Europe
NORWAY MOVES TO COUNTERBALANCE SOVIET PRESENCE IN SVALBARD
During the past few months
the Norwegian Government has
moved to bolster its authority
over the Svalbard island group
as a. counter to Soviet interest
in the area.. Although sovereignty
over these islands (the largest
of which is Spitsbergen) resides
with Norway by virtue of a 1920
treaty, the Soviets operate a.
coal mining concession which
Norway was bound to grant to
any interested signatory of the
treaty.
Norwegian experts feel, how-
ever, that economically exploit-
able coal deposits are rapidly
being exhausted and that these
do not justify the presence of
a growing number of Russians,
who, at latest count, outnumbered
Norwegians on the islands 2,700
to 900. The Norwegians also be-
lieve the Russians have increa.s-
ingly used their mining rights
as a. cover for their interest in
the islands' military potential
as an advanced base on the flank
of the North Atlantic and Arctic
Ocean approaches to northern So-
viet ports.
Until the end of last year,
Norway, anxious not to antagonize
Moscow, made no effort to super-
vise Soviet activities. However,
Oslo now appears apprehensive
about continuing this policy and
seems to be moving quietly to
assert its control over the
islands.
In November, a bill wa.s sub-
mitted to the Norwegian parlia-
ment by the Ministry of Justice
to establish a. Sva.lba.rd Council,
the function of which would be
to keep the government informed
on matters affecting the politi-
cal and economic interests of
Sva.lba.rd. The chairman of the
council would be the minister
of justice. Another move was
an agreement in December to co-
operate with the European Space
Research Orga.niza.tion (ESRO) in
the construction and operation
of a space research station to
be located at Ny Alesund (see
ma.p on facing page). The Nor-
wegian Technical and Natural
Science Research Council, a
semigovernmenta.l organization,
will build and operate the te-
lemetry station.
There is also growing pres-
sure to construct a. civil air-
field on Spitsbergen. The chief
of the air force recently stated
in public that he was extremely
dissatisfied with the conditions
under which pilots have to oper-
ate in emergency flights to the
islands. He also said he thought
the field should be built even
if the Soviets objected.
This objection is virtually
certain on grounds that the
1920 treaty specifies that the
islands be permanently neutral-
ized and nonmilitarized. Ever
since the Norwegians joined
NATO in 1949, the Russians
have argued that an airfield
on Spitsbergen is out of the
question because it would be
used as a. NATO base in time
of war.
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Western Hemisphere
CUBAN SUGAR CROP PROSPECTS BETTER THAN LAST YEAR
Cuba can apparently look
forward to sugar production in
the range of 4.5 to 5 million
metric tons this year, compared
with approximately 4 million tons
in 1964. This falls short of
the 5.5 million tons that Cas-
tro recently claimed Cuba had
to produce to meet its domestic
and foreign commitments, but the
anticipated improvement is
enough to justify some of Ha-
vana's current optimism.
Cuba probably has enough
standing cane to produce as
much as 5.5 million tons. In
the past several years, the
country has not been able to
cut all available cane and prob-
ably will not be able to do so
in 1965. However, several fac-
tors indicate the harvesting
problems will not be as severe
this year.
The harvest season began
in early December in certain
regions of the country, several
weeks ahead of normal. Also,
five hundred new Soviet cane
cutting combines now are be_
lieved to be in operation. Al-
though these have not had ex-
tensive field testing, they may
be able to cut sufficient cane
to make a difference of several
hundred thousand tons over last
year's performance.
The regime is also making
an all-out effort to increase
the effectiveness of the cane
cutting personnel. A concerted
drive is under way to reduce the
number of inexperienced people
in the fields, in hopes that
this will increase production
and at the same time cut down
on damage to the cane. Favor-
able rainfall and the increased
use of fertilizer may increase
the sugar content of the cane.
The sugar mills are be-
lieved to have sufficient capac-
ity to mill the available cane.
Mechanical maintenance of the
mills is not expected to be as
great a problem this year. The
transportation system has in-
creased in efficiency and also
will be aided by the acquisi-
tion of new vehicles from both
the bloc and the free world.
RELATIONS BETWEEN BRAZIL AND URUGUAY CONTINUE STRAINED
Relations between Brazil
and Uruguay have cooled per-
ceptibly in recent weeks over
the contentious problem of Uru-
guayan handling of Brazilian
exiles. The press of both coun-
tries has covered the question
heavily and bitterL
The bomb-
ing of the Brazi Tan trade
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Western Hemisphere
office in Montevideo last week
has added to the strain.
Brazil is disturbed by its
neighbor's refusal to expel or
restrict effectively the ac-
tivities of extreme leftists
such as Leonel Brizola who have
been 'trying to undermine the
Castello Branco government from
their Uruguayan asylum. Uruguay,
piqued by several months of per-
sistent pressure and by what it
considers to be overaggressive-
ness on the part of Ambassador
Pio Correa, , is reluctant to ac-
commodate the Brazilians for
fear of provoking an adverse
A sudden drop in the pre-
viously stable exchange rate of
the Ecuadorean sucre may fore-
shadow the end of the generally
favorable economic conditions
that have prevailed in Ecuador
since the military junta took
power in July 1963. The junta
for the first time faces some
loss of confidence on the part
of the business and financial
community.
The causes of declining
business confidence are unclear,
but deteriorating trade pros-
pects of the banana, Ecuador's
major export, is probably an im-
portant factor. Banana exports
internal political reaction.
Montevideo is also determined
to uphold the traditional rules
of asylum.
Despite the growing fric-
tion, there is no indication
that either government is con-
sidering a break in relations.
A prolonged delay in achieving
a solution to the exile problem,
however, would probably have
harmful effects on trade. It
might, for example, interfere
with current negotiations for
the sale of Uruguayan wheat to
Brazil.
dropped slightly during 1964,
and this trend is likely to con-
tinue during the coming year.
A new stamp tax on domestic com-
mercial transactions, and pos-
sible currency market manipu-
lations may also be involved.
Regardless of the exact
cause, concern over the well-
being of the economy, coincid-
ing with the politicians' im-
patience with the junta's plan
for a return to constitutional
government, may make 1965 a much
more difficult year for the re-
form-minded military government.
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Western Hemisphere
Two recent developments in
Colombia--the threat of a gen-
eral strike and the emergence
of a Communist guerrilla force
--appear to have caused feuding
leaders of the governing National
Front coalition to close ranks
behind the Valencia administra-
tion.
The most immediate problem
is the prospect that union lead-
ers will go through with their
plans to call a general strike
on 25 January in protest against
a new sales tax. The unions are
being goaded on by some business-
men, who dislike the price freeze
that was also imposed. The Com-
munists are supporting the strike,
as is ex-dictator Rojas Pinilla,
who still exerts considerable in-
fluence.
It is not yet clear how
effective the strike might be.
About half the unions which
originally were committed to
support it have changed their
minds. Those still bent on
striking, however, claim they
will be able to force a broad
shutdown of business establish-
ments.
A more ominous problem is
the growing probability of an
upsurge in Communist-inspired
violence. The chances are there
will be more attacks by Cuban-
trained guerrillas like the one
carried out against the north-
central town of Simacota on 7
January. This attack has cre-
ated an atmosphere of apprehen-
sion among many well-to-do
groups. Their fear has been
intensified by threats of urban
terrorism published in propa-
ganda sheets in Bogota and Bar-
rancabermej a.
On 18 January an army
spokesman reported the capture
of three of the guerrillas who
participated in the 7 January
attack.
President Valencia has fre-
quently been castigated by his
political opponents for weak-
ness and vacillation in dealing
with national problems. There
is, however, still no firm in-
dication that present conditions
have provoked a serious effort
to oust him. On the contrary,
it seems that the politicians
are burying their hatchets--
as they have many times in the
past--in the interest of making
common cause in a situation that
appears to threaten them all.
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Western Hemisphere
NEW TENSIONS AMONG DOMINICAN MILITARY LEADERS
Tensions have increased
among rival Dominican military
leaders following Triumvirate
President Reid Cabral's recent
removal of national police chief
Brigadier General Belisario Pe-
guero and the transfer of the
police to military control.
Reid took this action when it
became apparent that Brigadier
General Wessin y Wessin, who
controls the most powerful
armed forces units, planned to
move against Peguero if the gov-
ernment did not.
To placate resentment that
Peguero's ouster has generated
among certain elements in the
armed services,. Reid also or-
dered the removal of the incom-
petent air force chief, Briga-
dier General Ismael Roman Car-
buccia, who is closely allied
with Wessin y Wessin. The new
air force chief, Brigadier Gen-
eral Juan de los Santos, is be-
lieved to be better qualified
for the job than Roman Carbuccia,
and may be able to reduce dis-
satisfaction among junior air
force officers.
This move, however, has
not dissipated tension among
some high-ranking army officers
who apparently fear that the
balance of power has been tipped
in Wessin y Wessin's favor. On
19 January they unsuccessfully
attempted to force the transfer
of three of Wessin y Wessin's
aides. Although Reid has suc-
cessfully maneuvered Peguero's
ouster, the ensuing unrest among
leaders of the armed forces in-
dicates that his problems with
the military are not over.I
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