WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006400010002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 21, 2016
• Document Release Date: March 25, 2009
• Sequence Number: 2
• Publication Date: April 5, 1968
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review
completed
NAVY review
completed.
Secret
5 April 1968
No. 0014/68
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W I SECRET
(Information as of noon EST, 4 April 1968)
VIETNAM
North Vietnam's response to President Johnson's
speech appears designed to exploit what Hanoi regards
as US weakness and to focus attention on the demand for
a complete cessation of bombing. The North Vietnamese
statement is a clear tactical shift in position, but
does not indicate any change in their terms for a ne-
gotiated settlement.
COMMUNIST OFFENSIVE EASES IN LAOS
The three-week lull in Communist military activity con-
tinues, but enemy forces are still in position to resume
their dry season offensive with little warning.
INDONESIA MOVES TOWARD GREATER STABILITY
Prodded by President Suharto, the Indonesian Congress
has taken steps to ensure a relatively stable govern-
mental structure at least for the next three years.
LEADERSHIP CRISIS IN PEKING DEEPENS
Broadcasts about the removal of the former chief of
staff serve to emphasize the importance of his ouster
and to suggest. that more purges of high-level officials
are coming. These purges may expose and sharpen top-
level differences.
Europe
CZECHOSLOVAK LEADER CONFIRMS LIBERALIZATION TO CONTINUE
At the party central committee :meeting Dubcek stressed
that reforms and the "regenerative process" would con-
tinue, but to allay the fears of domestic and foreign
Communists he asserted the party would retain its lead-
ing role.
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SECRET
POLAND'S GOMULKA SEEMS TO BE LOSING AUTHORITY
Gomulka is being represented merely as a spokesman for an
unspecified party leadership and may no longer be undis-
puted leader of the Polish party. There is no sign
though of any move to unseat him immediately.
MOSCOW BROADENS ATTACK ON INTELLECTUAL DISSIDENTS
Fear of contamination by developments in Czechoslovakia
was behind Brezhnev's call last week for increased in-
ternal discipline.
NEW FINNISH GOVERNMENT MAPS BOLD ECONOMIC COURSE
The Social Democrats' Mauno Koivisto has brought many
Finland's most able political figures into a new five-
party coalition after several weeks of hard bargaining
for a bold program to deflate the economy.
WEST AND EAST EUROPEANS DISCUSS EUROPEAN SECURITY
Domestic politics in the Netherlands and in Belgium ac-
count for the probes which have met some opposition among
NATO members.
SOVIET ECONOMIC REFORM REASSESSED
The efforts to reform Soviet industry in the direction
of greater autonomy at the enterprise level are under-
going critical examination in Moscow.
Middle East - Africa
THE WEEK IN PERSPECTIVE 17
SOVIET INTEREST IN INDIAN OCEAN GROWS
A squadron of Soviet warships visiting the Indian ports
of Madras and Bombay is in return for a visit to the
Black Sea by an Indian cruiser. This is the first sig-
nificant cruise of Soviet warships to the area and high-
lights the growing Soviet interest in this part of the
world.
NASIR'S REFORMS DRAW NO POPULAR RESPONSE
The program of political reforms announced by Nasir on
30 March drew no outbursts of popular support, not even
contrived ones, and will probably leave many Egyptians
dissatisfied.
SECRET
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T"W SECRET
YEAR-OLD REVOLUTION CONGEALS IN GREECE
The military regime in Athens, now nearing the end of its
first year in power, remains in firm control, but it has
so far failed to draw much more than public tolerance of
its rule.
Western Hemisphere
PANAMA'S POLITICAL IMPASSE CONTINUES
The Supreme Court may delay until mid-April its verdict
on the National Assembly's conviction of President Robles
and the installation of "President" Max Delvalle. Mean-
while Delvalle's National Union supporters hope to have
the Attorney General deliver an opinion to National Guard
Commandant Vallarino validating the Assembly's impeach-
ment action.
PERU'S CONTRABAND SCANDAL LOWERS PRESIDENT'S PRESTIGE
A contraband scandal involving close friends of President
Belaunde has seriously diminished his prestige and divided
the governing popular Action Party.
VIOLENT STUDENT DISORDERS IN BRAZIL
The student disorders that have plagued the Brazilian
Government for a week underscore the depth of popular dis-
affection with the Costa e SilvEL administration.
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SIECRE'J
GUATEMALAN PRESIDENT SHIFTS TOP MILITARY COMMANDERS
The removal of the three most powerful army officers
from their posts for diplomatic assignments abroad may
be intended to break up political intrigues and gradually
move back toward civilian government.
MIXED INGREDIENTS IN ECUADOREAN POLITICAL SCENE
Recent student clashes with the military have aroused old
enmities in Ecuador and politicians are contributing to
the increased tension by their maneuvering for advantage
and their encouragement of extremist activities.
VENEZUELAN GOVERNING PARTY SUSTAINS FURTHER SETBACK
Violence during a strike by garbage workers in Maracaibo
last week has further damaged the governing party's
electoral prospects.
SECREIl'
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Nof SECRET *We
FAR EAST
In a surprisingly prompt: response to President
Johnson's announcement of a reduction in air attacks
on North Vietnam, Hanoi has made a tactical shift in
its long-standing position on talks. The move is
probably designed primarily to exploit what the
North Vietnamese interpret as a US retreat and a
readiness to compromise..
Hanoi's announcement of willingness to meet with
US representatives states that the only subject of
these talks will be an unconditional cessation of
bombing and "all other acts of war" against the North,
suggesting that Hanoi will refuse to discuss other
matters unless the US makes this concession. Hanoi's
countermove is thus a device to increase pressure on
Washington to extend the reduction in bombing to a
complete, unconditional cessation. It does not mod-
ify North Vietnam's basic policy on a negotiated
settlement.
The Hanoi leadership appears convinced that it
is operating from a position of strength. The heavy
infiltration of North Vietnamese troops into the
South and Communist dispositions throughout the coun-
try strongly suggest that Hanoi intends to pursue a
strategy of fighting and negotiating at the same time.
These US and North Vietnamese initiatives have
aroused considerable uneasiness in Saigon. Although
President Thieu expressed confidence that the US is
still firmly committed to continuing the war, he
claimed that. South Vietnam would go it alone if the
US should withdraw. His call for total mobilization
if necessary, his rejection of a coalition government,
and renewed discussion in Saigon of a declaration of
war against the North reflect an attempt to influence
US policy at. this critical juncture.
Although most non-Communist Asian governments
welcomed President Johnson's initiative, there is
an undercurrent of uncertainty and apprehension re-
garding the long-term implications of this step.
SECRET
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SIERE"1'
VIETNAM
In its first official re-
sponse to the President's speech,
Hanoi issued a government state-
ment on 3 April saying North
Vietnam is ready to "contact" a
us representative to work out
an "unconditional cessation of
the bombing and all other war
acts against the DRV so that
talks could begin." This state-
ment appears designed to exploit
what Hanoi regards as US weakness
and to focus attention on Hanoi's
primary demand--a complete ces-
sation of the bombing. It serves
to recover the political initia-
tive which had shifted to the
United States with the President's
speech.
The North Vietnamese state-
ment is a clear tactical shift
in their previous position--that
any meeting was out of the ques-
tion without a complete cessa-
tion of the bombing--but does
not indicate any change in their
basic policy on a negotiated
settlement. It appears that
what Hanoi is offering is a non-
substantive form of "pre-talk,
talks." Hanoi intends by this
gambit to increase the pressure
on the United States to extend
the announced bombing restriction
to a complete, unconditional
cessation.
from its assessment of the US po-
sition. Although the restricted
bombing halt is far less than
what it has been demanding, Hanoi
probably interpreted the Presi-
dent's entire speech, including
his decision not to seek another
term, as a tacit signal that the
US was ready to compromise and
as an acknowledgement that it
could not accomplish its objec-
tives in Vietnam. Thus Hanoi de-
cided to make the sort of politi-
cal gesture it has consistently
avoided in the past in order to
exploit the US position. This
suggests that the Vietnamese Com-
munists have decided that the
time is ripe for employing the
tactics of both fighting and ne-
gotiating which their strategy
has long envisioned.
Over-all Communist-initiated
military activity throughout
South Vietnam continued to de-
cline this week. It appears,
however, that Communist forces
in several areas of the country
are continuing extensive prepara-
tions for renewed hostilities
on a greater scale.
Hanoi's unusually quick
response probably stems primarily
the Com-
munists plan imminent widespread
SECRET
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W SECRET
attacks in the northern prov-
inces, the western highlands,
and areas north of Saigon. In
the coastal areas of Quang Tri
and Thua.Thien provinces, there
are concentrations of enemy main
force units and intensive logisti-
cal movements. This enemy build-
up may culminate in an assault on
Quang Tri city and possibly Hue
as well.
Reaction in Saigon
High-level South Vietnamese
reaction to President Johnson's
speech and the North Vietnamese
reply has been a mixture of opti-
mistic approval and outright dis-
may. The majority are expressing
determination to see the war to
a successful conclusion, regard-
less of what the US might do.
President Thieu exemplified
this attitude in his public
statements which, while express-
ing confidence in President
Johnson's firm commitment to
South Vietnam's struggle, have
emphasized his country's readi-
ness to carry on even if the US
should pull out. He said further
that he had approved the bombing
reduction but that this is the
"last time" South Vietnam will
show its good will toward Hanoi.
In reaction to North Viet-
nam's willingness to open explor-
atory contacts with the US, the
Saigon government in a communique
on 3 April, stressed that there
will be full consultation among
the allies on any points of sub-
stance or decisions resulting
from US-DRV talks.
Although a number of promi-
nent South Vietnamese figures
are echoing Thieu's stated confi-
dence in the US determination to
seek a just peace which would not
constitute a surrender to the
Communists, many leaders have
-taken a much more pessimistic
view. Some see the move as an
encouragement to the enemy and
the first step toward appeasement
and eventual defeat. Exploratory
talks in which Saigon is not a
direct party would almost cer-
tainly reinforce such fears.
SECRET
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_f-
nrraa~r yQuang
Government-held location
Communist controlled territory
' rtested territory
LQV7
Ngamr7
- Pittopeu
CTtf'P W, I'
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N SECRET
COMMUNIST OFFENSIVE EASES IN LAOS
The three-week lull in Commu-
nist military activity in Laos
continues, but enemy forces are
still in position to resume their
dry season offensive with little
warning.
In northern Laos, the Commu-
nists have not yet moved against
the key government guerrilla bases
at Na Khang and Muong Hiem, al-
though such attacks can be ex-
pected before the rainy season be-
gins in late May. The capture of
these bases would greatly weaken
the government's position in the
northeast, especially in view of
other recent setbacks in this
area.
In the Plaine des Jarres area,
the movement of Communist forces
indicates that government outposts
to the east will likely come under
attack in the near future. The
Communist push south of the plain
has stalled, at least temporarily.
Heavy truck traffic on Route 7
from North Vietnam in recent weeks
strengthens Laotian forecasts of
an impending Communist offensive
at Muong Soui.
In southern Laos, the Commu-
nists have again pushed government
forces out of some lightly de-
fended positions in the Nam Hin
Boun Valley, some 35 miles north
of Thakhek. The loss of the val-
ley would afford the enemy access
to Route 13 to the west.
Meanwhile, a substantial num-
ber of North Vietnamese troops re-
main dug in around the Bolovens
Plateau, although there is no im-
mediate threat to the provincial
capitals of Saravane and Attopeu.
The enemy has kept government
forces tied down with sporadic
artillery and mortar barrages, and
an attack against the Laotian
regimental headquarters at Lao Ngam
could come with little warning.
The fact that the Communists have
thus far not pressed their mili-
tary advantage in the south sug-
gests that their principal objec-
tive has been to secure the infil-
tration corridor to South Vietnam
at a time when a substantial move-
ment of men and materiel is taking
place.
SECRLT
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INDONESIA MOVES TOWARD GREATER STABILITY
Prodded by President Suharto,
the Indonesian Congress has taken
steps to ensure a relatively
stable governmental structure at
least for the next three years.
The government will continue to
give priority attention to eco-
nomic stabilization and develop-
ment.
During its 21-30 March ses-
sion, Congress elevated Suharto
from acting to full president for
the constitutional term of five
years and postponed congressional
elections until 1971. It reduced
the emergency powers granted Su-
harto two years ago by limiting
them to defined purposes and re-
quiring the president to account
for their use to parliament and
to Congress. Congress instructed
Suharto to appoint a new "devel-
opment" cabinet by July and
charged this cabinet with the
task of drawing up and executing
a five-year economic development
plan.
The compromise package in
which the army-dominated govern-
ment yielded on some of its de-
mands to the civilian-dominated
Congress appears to have tempo-
rarily appeased those elements
which have been concerned over
army predominance. Civilian
leaders feel they have won some
guarantees against authoritarian-
ism. Moreover, the session it-
self was not the stage-managed
affair which many of its members
had anticipated.
The political parties and
action fronts will now begin
maneuvers to ensure representa-
tion in the July cabinet which
Congress has commanded. Suharto
may argue, however, that techni-
cal expertise should be given
higher priority than party af-
filiation in making ministerial
selections.
The government now looks
forward to the pledging session
of Western donor nations which
will be held in Rotterdam from
22 to 24 April. Indonesia, with
the endorsement of the Interna-
tional Monetary Fund, has al-
ready requested $325 million
in foreign economic assistance
this year, but this total is
unlikely to be met. The United
States and Japan will make the
largest pledges. Others will
come from several Western Euro-
pean nations and Australia.
SEGRE' 1`
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SECRET
LEADERSHIP CRISIS IN PEKING DEEPENS
The muffled struggle within
the Chinese leadership appears
to have moved further into the
open following the downfall last
week of former acting Chief of
Staff Yang Cheng-wu. More purges
of high-level figures seem likely.
Generalized accounts of the
meeting at which Yang's removal
was announced have been repeat-
edly broadcast by Peking radio--
a development that not only em-
phasizes the importance of
Yang's ouster but also strongly
suggests that the country is be-
ing prepared for further revela-
tions.
Warnings against the danger
of "rightist resurgence" have
been repeated by provincial
radiobroadcasts--particularly
those from Shanghai--since 25
March. Shanghai radio has also
issued strong warnings against
a tendency to "reverse verdicts"--
that is, to rehabilitate party
and perhaps military officials
who were sidelined by Red Guard
attacks at the height of the
Cultural Revolution. Moreover,
on 30 and 31 March posters were
put up in Peking denouncing former
army marshal Yeh Chien-ying as
Yang's "black backer" and criti-
cizing politburo standing commit-
tee member Li Fu-chun. These
poster attacks have not been sus-
tained, however, and most of those
attacking Li were quickly covered
over.
Canton Military Region com-
mander Huang Yung-sheng has been
confirmed as Yang's replacement
and Huang's deputy in the Canton
MR, Wen Yu-cheng, has been ap-
pointed commander of the Peking
garrison. The Canton Military Re-
gion command was under serious
and sustained attack throughout
the spring and summer of 1967 by
militant Red Guards. Moreover,
despite the clamor over "reversal
of verdicts," no open attacks have
yet developed on controversial
military and party officials who
were confirmed in important pro-
vincial posts in February and
March this year.
Intense behind-the-scenes
maneuvering is now probably under
way in Peking. The importance of
the purge of Yang and his asso-
ciates now appears incontrovert-
ible, but the apparently contra-
dictory nature of the appointment
of "conservatives" in the prov-
inces and of Huang and Wen in Pe-
king, on the one hand, and of the
propaganda attacks on "rightist
:resurgence," on the other, suggests
that the struggle between con-
tending factions is intensifying.
SNCRL,T
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4Ii.CRE7'
The official surfacing of Yang's
"black backer," which may occur
soon, can be expected to further
expose and probably to sharpen
top-level differences.
One element in Yang Cheng-
wu's dismissal may involve con-
troversies over policies with
regard to the army. Yang made
a number of radical proposals
last September, including a plan
to relocate army units and cadres
periodically so that army forces
could not "develop deep relations
with local power holders."
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SECRET
EUROPE
Evidence continued to accumulate this week
of unrest and of a widening of the generation
gap in Poland even as the gap narrowed in Czecho-
slovakia.
In the wake of the student demonstrations,
64-year-old Wladyslaw Gomulka appears to be
slowly relinquishing his grip on Polish affairs.
He is now described in official news releases
merely as a spokesman for an unspecified party
leadership.
In Czechoslovakia, Dubc:ek, who is 42, has
moved ahead vigorously to establish his lead-
ing position in Prague after defending himself
well in Dresden before his Eastern European
party peers. In a key address before the party
central committee this week Dubcek confirmed
the party's course of "democratization" and
sought to allay the fears of domestic and for-
eign Communists by asserting that the Czecho-
slovak party will continue to play a "leading
role."
Moscow has toughened its attitude toward
intellectual dissidents and has begun to apply
sterner penalties to individual protesters.
Brezhnev's call for "iron party discipline" at
a Moscow party meeting last week has been ac-
companied by a series of newspaper articles
condemning the dissenters and justifying ac-
tion against them.
Despite fast-breaking foreign events and
the problems at home, several Soviet leaders
have scheduled trips abroad. Kosygin, because
of developments in connection with Vietnam, may
alter plans for his five-day trip to Pakistan
scheduled to begin on 17 April. Other ranking
officials are planning visits to Turkey and
Finland.
SECRET
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SECRET
CZECHOSLOVAK LEADER CONFIRMS LIBERALIZATION TO CONTINUE
Additional conservative party
leaders were ousted and first sec-
retary leader Alexander Dubcek con-
firmed the party's course of "de-
,ocratization" at the meeting this
~eek of the party central committee.
Dubcek sought to allay the fears
of domestic and foreign Communists
by asserting that the party will
continue its "leading role" in
Czechoslovakia, but he also stressed
that reforms and the "regenerative
process" would continue. He said,
for example, that freedom of speech,
press, and assembly were now "facts"
and must be ensured by laws. He
also welcomed the emergence of in-
dependent trade unions, but glossed
over the role of non-Communist po-
litical parties, which he said
should be partners and not opponents
of the Communist Party.
Dubcek hinted that there will
be further -sweeping changes within
the party, and specifically called
for a reorganization of the presid-
ium and secretariat. He stated that
a new party congress should be held
soon, presumably before its sched-
uled date in 1970.
Hard-liners Jiri Hendrych,
Vladimir Koucky, Defense Minister
Lomsky, and Deputy Premier Simunek
have resigned their party or govern-
ment oosts. Some central committee
members have nominated Ota Sik, a
radical economic reformer, for a
presidium seat.
Dubcek reiterated his view that
the government must "actually rule"
and "respect the will of the supreme
organ of the state, the National
Page 10
Assembly." He advocated major gov-
ernment changes and called for a
new constitution. He also pro-
posed a federal system of govern-
ment under which the Slovak National
Council would be an independent
legislative organ.
Dubcek indicated that economic
reforms will include substantial
changes in the system of management
and production. Enterprise managers
will become more independent. Em-
phasis in allocation of investments
will shift from heavy industry to
agriculture and consumer-oriented
sectors of production. Dubcek again
promised to maintain living standards
at present levels.
Dubcek reaffirmed Prague's con-
tinued alliance with Moscow but sug-
gested that he will pursue a somewhat
autonomous policy, particularly re-
garding West Germany. Prague's so-
cialist alliances, he observed, are
based on "equality of rights" and
"noninterference."
The Soviets, for their part,
seem to be giving the Dubcek regime
the benefit of a doubt. Soviet press
coverage of events in Czechoslovakia,
remains highly selective, but has
become more extensive and positive
in recent days, at least partly in
answer to Czechoslovak complaints.
According to one unconfirmed Western
press report, the Soviets have also
interceded with the East Germans to
get them to tone down their vitriolic
attacks on Czechoslovakia. There may
be no connection, but subsequently an
American journalist was told by an
East German press official that no
further public criticism would be
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44SECRET Ni~
POLAND'S GOMULKA SEEMS TO BE LOSING AUTHORITY
Gomulka may no longer be
the undisputed leader of the
Polish Party, but there is yet
no sign that contending party
factions are trying to unseat
him immediately. The politi-
cal struggle is growing more
serious, however, and is no
longer confined to a few in
the leadership.
Since 19 March, Gomulka
has been represented merely as
a spokesman for an unspecified
"party leadership." He has
not countered this description
thus giving it some element of
truth, probably in the belief
that he may yet win the intra-
party struggle.
Regime propaganda is in-
voking Gomulka's name to jus-
tify the repression of the re-
cent student demonstrations,
but is ignoring his attempts
at moderation. New groups of
middle-echelon officials are
attacked virtually every day,
and further dismissals have
been reported. There are also
growing demands that those
party leaders who have not yet
made their positions clear on
the issues at hand stand up
and be counted.
Military leaders have also
become involved in the crisis,
and some general officers ap-
pear to have been demoted as
a result. The Defense Minis-
try's charges that "ideological
subversion" existed in the armed
forces lends credibility to
previous rumors that some military
commanders were opposed to the
stern repression of recent unrest.
Gomulka seems to be fighting
for time. At a reportedly stormy
meeting of provincial party lead-
ers last week, he is said to have
successfully resisted demands to
convene an early central commit-
tee plenum, probably believing
that he could not control it.
Gomulka's attackers may be
hard-line elements led by Inte-
rior Minister Moczar and polit-
buro member Strzelecki. Polit-
buro member Edward Gierek, party
;Doss of the key industrial prov-
ince of Katowice, has espoused
,a tough line. He has not publicly
identified himself with the
hard liners, however, nor has
he impaired his popular image
as the most likely ultimate suc-
cessor to Gomulka.
Gomulka hopes to avoid a
reckoning until the party congress
late this year. Meanwhile, he
will probably attempt to prevent
his supporters from being swept
out in a forthcoming purge of
diverse party elements which may
be conducted by the hard liners in
his name. He may not, however,
be able to reassert his control
of the party, especially if there
is renewed public violence.
Although the students appear
to have lost some of their initial
militancy, there are signs that
the unrest may resume after Easter
if the regime fails to outline a
satisfactory plan to deal with
student grievances.
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WEEKLY SUMMARY 5 Apr 68
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MOSCOW BROADENS ATTACK ON INTELLECTUAL DISSIDENTS
Fear of contamination by de-
velopments in Czechoslovakia has
increased Moscow's concern over
the problem of intellectual dis-
sidence at home. General Secre-
tary Brezhnev's speech to a Moscow
party conference last week in
which he threatened reprisals
against those engaging in acts of
protest and defiance, was a sign
that the regime recognizes that
large segments of the intellectual
class, not just a handful of ex-
tremists, have succumbed to "in-
discipline."
Brezhnev charged that "repre-
sentatives of the intelligentsia"
were the targets of the "imperial-
ists" in the ideological struggle
and warned that "renegades cannot
expect to go unpunished." At the
same conference the poet Sergey
Mikhalkov denounced "liberalism"
among party members of the writ-
ers' union. Theater directors
who have used contemporary inter-
pretations of classical works to
raise politically provocative is-
sues were also verbally chastised.
The president of the Academy of
Science, Mstislav Keldysh, was
called upon to discipline scien-
tists involved in protest activi-
ties.
The immediate cause for most
of the official attacks has been
the wide protest over the Moscow
trial in January of four members
of the literary underground. One
of the numerous petitions protest-
ing illegal and Stalinist prac-
tices was signed by over 90 mathe-
maticians, including several mem-
bers of the prestigious Academy
of Science and holders of the
Lenin Prize. Another appeal,
circulated at the science city of
Novosibirsk, was signed by 46 mem-
bers of the city's academic com-
munity.
In addition to the broad con-
demnations, the authorities have
warned individuals and expelled
other-s from the party. After the
text of his final appeal at the
trial appeared in the West, the
lawyer for the principal defendant
in the January trial was ousted
from the party and fired from his
post as chairman of a Moscow legal
consultation bureau. The scien-
tists, despite their value to So-
viet progress, have also experi-
enced official reprisals. Trips
to the US by two members of Kel-
dysh's family, who signed the
mathematicians' protest, have been
canceled. Several others were
called in by authorities and per-
suaded to sign statements deplor-
ing publication of the petition
in the West.
Recent developments in Czecho-
slovakia undoubtedly lie behind the
Soviet regime's decision to bring
new pressures against Soviet intel-
lectuals. The news media have pre-
sented only a thin and distorted
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a SECRET lwww
view of de?relopments there , but
foreign news med..I.a are believed to
have brought the true story to a
considerable portion of the Soviet
population. The contrast between
liberalization in Czechoslovakia
and reaction at home is bound to
generate new pressures for greater
freedom in the USSR. Brezhnev
seemed to have this in mind when
he warned--in a paragraph aimed
both at Czechoslovakia and his
domestic audience--against "im-
perialist" efforts to exploit "na-
tionalist and revisionist ele-
ments."
NEW FINNISH GOVERNMENT MAPS BOLD ECONOMIC COURSE
The Social Democrats' Mauno
Koivisto has brought many of Fin-
land's most able political figures
into a new five-party coalition
after several weeks of hard bar-
gaining for a bold program to de-
flate the economy.
three, and a splinter socialist
party, one. The cabinet was en-
larged by one to include the
Swedish People's Party to satisfy
moderates who wanted to provide
more balance to the leftist min-
isters.
The planned economic program
calls for the old practice of
linking wages with the cost of
living to be abandoned in order
to retain the benefits promised
by last fall's devaluation. The
program proposes restraints on
wages and agricultural income,
and controls on prices of goods,
services, and rents. With at least
153 of the 200 seats in parlia-
ment, the coalition expects no
trouble in obtaining passage.
The new cabinet, differs lit-
tle in party make-up from that
headed by Rafael PaaLsio, who re-
signed on 1 March because of per-
sistent complaints about his lead-
ership, especially from within his
own Social Democratic Party. That
party again has six portfolios,
President Kekkonen's Center Party
has five, the Communist-front Fin-
nish People's Democratic League,
The government plans no
changes in Finland's neutralist
foreign policy, the central fea-
ture of which is accommodation
of its Soviet neighbor.
President Kekkonen's unusually
strong constitutional role and his
commanding personality tend to
dominate Finnish politics. Al-
though major party leaders support
him on the most important domestic
and foreign policy issues, there
are fundamental disagreements be-
Low the surface within the coali-
tion parties. Many Social Demo-
crats and Center Party members are
opposed to having Communists in
the cabinet, and have reservations
about how far Helsinki ought to
subordinate its interests to Mos-
cow's. The most immediate threat
to cabinet stability, however, is
the success or failure of the eco-
nomic program.
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WEST AND EAST EUROPEANS DISCUSS EUROPEAN SECURITY
The Belgian and Dutch govern-
ments, responding to domestic
pressures, have recently discussed
European security with Polish,
Hungarian, and Yugoslav officials.
The East Europeans have shown in-
terest in carrying on these talks,
each for his own purposes. The
talks, however, have generated
opposition and much debate within
NATO.
Dutch Foreign Minister Luns,
under pressure from detente-
minded domestic critics, discussed
the possibility of a European se-
curity conference during visits
to Budapest in February and to
Belgrade in March. In his view,
the smaller European countries
could play the initial role in
conference preparations.
The Dutch initiative was
sharply criticized in the North At-
lantic Council (NAC), particularly
by the West German and Italian
representatives. The Italians
argued that the Luns effort had
probably been misinterpreted in
the East as having NATO approval
and that the security conference
idea required a cautious, gradual
approach through intra-Alliance
consultations. The West Germans
warned against moves which East
Germany could exploit for purposes
of de jure recognition.
The Belgians, seeking NATO
initiatives in disarmament, pro-
posed last month to the Poles a
freeze on forces and arms in Eu-
rope as a first step toward mu-
tual force reductions. The freeze
would be in two phases--the first
affecting force levels, the second
weaponry--and would cover one or
more jointly agreed, delimited
zones within central Europe. The
Belgians hope that the NATO minis-
ters will endorse their concept of
a meeting in Reykjavik this June.
The NAC reaction, however,
has been cool with several mem-
bers pointing to difficulties in
the Belgian proposal. Many NATO
members maintain that the proposal
is so complex that endorsement at
Reykjavik is unlikely.
The Hungarians have indicated
some interest in Luns' proposal
of a European security conference
and promised to discuss it with
Poland, East Germany, and Czecho-
slovakia. The Yugoslavs favor
European detente but have shied
away from calls for government-
level conferences, which they fear
the big powers would dominate.
The Poles and the Belgians may ac-
tually be negotiating a preliminary
"text" outlining the freeze concept
in greater detail-.F-
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Nur, S EC RE'JI_'
SOVIET ECONOMIC REFORM REASSESSED
The efforts to reform Soviet
industry in the direction of
greater autonomy at the enter-
prise level are undergoing crit-
ical examination in Moscow. The
reform, now in its third year,
is credited by its proponents
with significant successes but
its failings have not gone unno-
ticed or without comment by im-
portant critics. The decision to
postpone a comprehensive assess-
ment by a conference originally
scheduled for the first quarter
of this year is symptomatic of
the lack of accord.
By revising the guidelines
governing enterprise performance,
the reform shifts the locus of
economic decision making slightly
in the direction of individual
plant managers. Nevertheless,
the regime has proceeded cau-
tiously and has reserved to it-
self what it considers to be the
indispensable levers of central
control. The future course of
the reform now appears to be
under debate.
Published data of the re-
form's results have been sparse
and not especially meaningful.
As of last month the number of
enterprises transferred to the
new system was about 10,000 out
of a total of approximately
45,000 plants. They accounted
for about 50 percent of all in-
dustrial production. At the end
of 1967 the 7,000 plants then
transferred produced about half
of all industrial profits. These
Page 15
figures, together with the gov-
ernment's claim that over ten
million workers, or about one
third of those employed in So-
viet industry, have been af-
fected, clearly indicate that
the USSR converted its largest
and financially strongest plants.
The present timetable calls
for the reform to be completed
"basically" throughout the in-
dustrial sector by the end of
the year. At the same time its
beachheads are to be enlarged
in certain nonindustrial fields
where it has already been in-
troduced. Extension of the re-
form into these areas testifies
to the relative success that it
has achieved, within limitations,
in motivating greater cost
consciousness and increased ef-
ficiency in the use of resources.
Despite these benefits,
the reform has come up against
several basic problems that will
persist as long as the funda-
mental command character of the
Soviet economy is not allowed to
evolve. Conflicts persist be-
tween relative enterprise au-
tonomy and a centralized plan-
ning and supply system, and be-
tween the use of profitability
to measure enterprise performance
and the continued use of fiat
prices. In these circumstances,
profitability can be no more
than an unreliable gauge of
efficiency. In addition, the
reform has not included effective
incentives for introducing
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technological improvements, and
also has failed to bring about
an expansion of credit financing.
Finally, serious obstacles have
been encountered in bringing a
large proportion of industrial
investment under the control of
the enterprises.
These problems may grow
worse in 1968-69 when many enter-
prises earning scant profits or
operating at a loss will be
transferred to the new system.
Special rules, however, have been
adopted for these plants after
their transfer. In general, it
appears that the reform movement
is bringing about the gradual
incorporation of most nonfarm
enterprises into a single, some-
what improved system of man-
agement and incentives.
The now-postponed confer-
ence that was to examine the
reform publicly was announced
last fall with typical fanfare.
Since that time, the press dis-
cussion has become more subdued,
and the economic articles pub-
lished in preparation for the
conference have become more
specialized and tangential to
the fundamental questions re-
lating to the future of the
reform after 1968. It should
not be long, however, before
the regime indicates whether
it will continue to tinker with
the present pattern of demon-
strably inadequate measures or
whether more radical reforms
eventually will be adopted.
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MIDDLE EAST - AFRICA
Prospects for a negotiated settlement of Arab-
Israeli differences have become more remote. The
Jarring UN mission has yet to report any positive
reaction to a proposed conference of the principals
on neutral territory. Meanwhile, the Israelis are
engaging in an unusual amount of military activity
along the Jordanian border, and Arab terrorists are
more openly belligerent.
King Husayn's government is reportedly under
continuing pressure to lessen its close identifica-
tion with the West, particularly the US. The King
is going to Cairo, evidently to try once again to
get Nasir to cooperate in curbing terrorists and
generally easing the pressures on Amman.
India has set forth on an ambitious round of
diplomatic activity in the light of the bombing re-
strictions in North Vietnam. New Delhi continues to
press for negotiations to end the war.
Northern Africa is beset with student unrest
and rioting. The Tunisian Government is planning to
bring to trial the 22 students and eight professors
now in custody on charges of fomenting student un-
rest. The demonstrations began on 15 March when
students took to the streets to demand the release
of an imprisoned student leader. Moroccan and Al-
gerian students have also been demonstrating.
Ethiopian students are rioting in Addis Ababa,
and US installations have been damaged. What started
out as a protest against mini--skirts on the univer-
sity campus soon became anti-American demonstrations.
Unconfirmed reports state that "foreign cultural at-
taches" have been seen talking to the students.
In the Nigerian civil war, federal forces in
the southeast of Biafra have moved forward on a
broad front. In the northeast:, they have broken
through Biafran defenses and are heading toward a
key provincial center. Around Onitsha in the north-
west, however, Biafran counterattacks are disrupting
federal supply lines and preventing further advances.
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SECAU
SOVIET INTEREST IN INDIAN OCEAN GROWS
The Soviets have made their
first deployment of a group of
warships into the Indian Ocean.
Four naval units are visiting
the Indian ports of Madras and
Bombay.
The call has been billed as
a return of the visit of an In-
dian cruiser to the Black Sea in
1964, but the Soviets are taking
the opportunity to impress the
Indians and other South Asians
with their growing naval power.
Six Soviet admirals are with
the task group making the trip,
and the ships are among the most
modern in the Soviet Navy. The
Sverdlov-class cruiser serving
as flagship is accompanied by a
missile-equipped destroyer, a
SAM-equipped frigate, and an oiler.
All of the ships are from the-So-
viet Pacific Fleet.
Soviet interest in the In-
dian Ocean has grown since last
year, when the Soviets began to
use it as a recovery area for
space vehicles involved in lunar
operations. Eighteen Soviet space
support ships were stationed there
during late 1967. A group of
space support ships is currently
moving down the African coast and
by early May is expected to be in
position for tracking and recovery
operations. The Soviets have
agreements for space vehicle re-
covery and port visitation with
Mauritius, Malagasy, and the Sey-
chelles.
The increasing importance of
the Indian Ocean for space opera-
tions and the prospects of deploy-
ing naval units there in the event
the US Navy increases its force
level in the area have prompted
the Soviets to cultivate the In-
dians. The USSR is providing New
Delhi with a few naval vessels to
augment the aging British hand-me-
downs now comprising the Indian
Navy. Several small ships have
already been delivered; three So-
viet diesel-powered F-class tor-
pedo-attack submarines and three
or four antisubmarine escorts are
to be delivered in the coming
months.
The withdrawal of the British
Navy from the area between Aden
and Singapore will be completed in
1971. There are no indications
that the Soviets want to take over
where the British leave off. Thus,
the Indian fleet will become the
major naval power in the Indian
Ocean. New Delhi does not appear
willing to grant the use of its
bases to any foreign power. Never-
theless, Soviet naval units from
the Pacific Fleet will probably
continue to make occasional cour-
tesy visits that will help estab-
lish the USSR's presence in this
part of the world. By equipping
and supplying the Indian fleet,
Moscow can assume that facilities
will be available for its own re-
pair and maintenance requirements.
SFCRIi~ 1'
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SEYCHELLES SEYC . H ELLES
(U.K.) / f : S~s s 1os
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BRITISH INDIAN
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STANDS \~- ~ _ Gae~v / / Ac A^.. ..c
a R p a ~~ MAURITIUS
IsF,~o~ r:
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Via Suez Canal
/ To Baltic Sea 7,700 nm
To Black Sea 3,800 nm
oL
To Black Sea 9,300 nm
To White Sea 10,500 nm
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BE,VGAL.
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MALAYSIA
Soviet Naval Interest'in Indian Ocean
V
E T H I 0
1
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NASIR'S REFORMS DRAW NO POPULAR RESPONSE
Nasir's speech on 30 March
promised a number of dramatic
political reforms, and although
it created interest among some
Egyptians, it is not likely to
answer completely the recent calls
forpolitical change.
Following the announcement
of a new cabinet on 20 March,
Nasir now has outlined his "pro-
gram of action" for mobilizing
the country for future struggles.
He emphasized that Egypt's sole
mass political organization, the
Arab Socialist Union (ASU), was
the body best suited for "mobil-
izing the people's forces through
and on the basis of democracy."
A series of elections for ASU
delegates was proposed, beginning
at the local level and culminat-
ing in the formation of a Central
Committee and a Higher Executive
Committee to chart national pol-
icy. Nasir also promised that
after the removal of the "effects
of the aggression," a national
referendum will be held on a new
constitution, followed by presi-
dential and National Assembly
representative elections. Nasir
set 2 May as the date for a na-
tional referendum to approve his
"30 March program."
Nasir's speech failed to
indicate the place of the cabinet
and the National Assembly in the
proposed reform. Theirpositions
presumably will be clarified in a
series of speeches Nasir is
scheduled to make prior to the
referendum on 2 May. The principle
behind the new plan for creating
a "government of laws and not
men" should meet with general
favor, but there is likely
to be some skepticism that the
program will produce a more demo-
cratic Egypt.
Nasir has attempted to create
meaningful political organizations
several times before, without
notable success. His emphasis
on the ASU as the principal polit-
ical body in Egypt has probably
disappointed many.
There are reports that stu-
dents met in Cairo this week
to discuss Nasir's new program.
Some students were reportedly dis-
satisfied with the program, and
saw it as a mere diversionary tac-
tic. There were no reports of
mass demonstrations of popular
support after Nasir's speech
announcing the political reforms.
Some Egyptians, however, are re-
portedly interested and even some-
what excited by the prospects for
change offered in Nasir's plan.
If these hopes are crushed by
subsequent events, Nasir could
be in deeper trouble than
before.
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YEAR-OLD REVOLUTION CONGEALS IN GREECE
The military regime in Athens,
now near the end of its first year
in power, has yet to capture any
significant public support. At the
same time, no measurable degree of
opposition has emerged to suggest
that any alternative to military
rule is likely in the near future.
To date the junta's simplistic
rule has largely been concerned
with the day-to-day handling of the
government administration. The
government has failed to define
clearly just how it intends to
"purify" and restructure the Greek
state--its avowed aims. The junta
has yet to decide which of its pro-
posed "revolutionary" programs are
reasonably attainable or how much
time will be needed to fulfill them
The regime, however, has not
been inactive. It has announced
limited economic programs, has pro-
claimed some definite reforms in
the field of education, and has
published a draft of a new consti-
tution, now due for a referendum
vote on 1 September. The draft's
publication suggests at: least a
limited commitment to a return to
constitutionalism. As part of the
campaign to eliminate political cor-
ruption, a civil service reform is
in progress and some improvement in
routine government operations has
been noted.
These measures have done lit-
tle to jar the Greek citizenry from
their political apathy; they neither
loudly protest the junta's rule nor
express any vast enthusiasm for it.
This public apathy and the failure
of competent professionals to come
forward to serve the regime is
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traceable to the essential nega-
tiveness of the junta's "reforms."
Very few aspects of the an-
nounced economic plans are unique.
Educational reform, considered a
necessity by past governments,
shows little real forward motion
and has consisted largely of the
firing of a number of "undesirable"
university professors. Civil serv-
ice reform has probably eliminated
considerable deadwood, but the fir-
ing of some 1,200 persons has prob-
ably also carried off some compe-
tent personnel and created morale
problems.
Military purges have continued,
particularly since the King's coun-
tercoup attempt, and some 2,000
suspects remain in prison. More-
over, while Athens' stance on the
Cyprus problem during and since the
November 1967 crisis has greatly
contributed to decreasing tensions
and to raising hopes for at least
a limited settlement of the prob-
lem, the regime has at the same
time lost its leverage for dealing
with Makarios.
In short, the junta so far has
failed to produce either some dra-
matic political victory or a clear
delineation of its aims that might
spark the public support needed to
give the regime an aura of legiti-
macy. Continued internal malaise
seems likely to grow into increas-
ing dissatisfaction, if not active
resistance. The regime has been
making a strong pitch toward various
special groups, most recently the
farmers, and the anniversary of its 25X1
coup on 21 April offers the regime
an occasion to give new impetus to
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WESTERN HEMISPHERE
Perennial dissatisfactions among university
students in four South American countries are flar-
ing briskly, while political activity in Middle
America focuses largely on elections.
Student demonstrations took a violent turn in
several major Brazilian cities and have resulted in
considerable bloodshed. In Colombia, students at
Bogota's National University, responding to agita-
tion by extremists, are sporadically creating dis-
turbances. Venezuelan students got into the act
when striking garbage collectors in Maracaibo
clashed with police last week.
In Ecuador, less than two months before the
presidential election, politicians of every per-
suasion--including President Arosemena--are con-
tributing to increased tension by their irrespon-
sible public statements following student clashes
with security forces.
The Panamanian Supreme Court is now seized
with ruling on the legality of the National Assem-
bly's conviction of President Robles on charges of
interfering with the preparations for the 12 May
presidential. elections. Forces behind opposition
candidate Arnulfo Arias remain unable to counter
the National. Guard's power behind the government
and are increasingly dispirited.
In other election developments, the political
opposition in Honduras is incensed because of its
poor showing in well-rigged municipal elections on
31 March, and is muttering about resorting to force.
Bahamian Premier Pindling seems assured of a
strengthened majority in elections on 10 April
following a generally peaceful camnaian_
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PANAMA'S POLITICAL IMPASSE CONTINUES
The Supreme Court may delay
until mid-April its verdict on the
National Assembly's conviction of
President Robles and the installa-
tion of "President" Max Delvalle.
If the court decides in favor
of Robles as expected, the opposi-
tion National Union could prolong
the legal battle further by im-
peaching the justices. The NU al-
ready plans to have Attorney Gen-
eral Jaime de Leon deliver an
opinion to Guard Commandant Valla-
rino that the assembly's impeach-
ment action against Robles is
valid. De Leon is responsive to
an affiliate party of the NU coa-
lition despite his position in the
Robles government. Like the Su-
preme Court, he has been on statu-
tory vacation but returned to duty
this week.
The attorney general's move,
however, is unlikely to affect
Vallarino's staunch protection of
Robles. Vallarino has reportedly
already leaked word to "President"
Delvalle that only a pro-Robles
decision by the court will be ac-
ceptable to the guard.
The self-perpetuating aspect
of the legal hassle has stalemated
the contest for control of the
electoral machinery. Unable to
break the deadlock, some NU lead-
ers are quietly exploring alterna-
tives that exclude their present
presidential candidate Arnulfo
Arias. Because of his alliance
with some of "the oligarchs,"
Arias has lacked the mass appeal
he possessed as a man of the peo-
ple and the trend of events moves
increasingly in favor of Robles.
Many of the elite families allied
with Arias are seeking a way out
of what they feel is a lost cause.
Arias' long-threatened general
strike has failed, and his NU
backers refuse to risk their
business interests by supporting
the strike call.
Three plans under considera-
tion by various elements in the NU
include the establishment of a ci-
vilian junta, the nomination of a
national unity candidate in place
of Arias and the government-spon-
sored David Samudio, and a take-
over by the guard. These options
represent a loss of confidence by
NU leaders who recognize they have
in effect reached a dead end in
their quest for power and are now
searching for an entree into the
winning camp.
The unconditional support of
the guard makes Robles' position
effectively unchallengeable, and
it seems unlikely that Robles
would be open to NU suggestions
for solving the "crisis" which he
believes he has already won. Ac-
cording to the pro-Samudio head
of the electoral tribunal, the
Robles government has taken the
necessary administrative steps for
the 12 May elections and exacts
them to be on schedule.
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 Approved For Release 2009/03/25: CIA-RDP79-00927AO06400010002-1
I% SECRET
PERU'S CONTRABAND SCANDAL LOWERS PRESIDENT'S PRESTIGE
A contraband scandal involv-
ing close friends of President
Belaunde has seriously diminished
his prestige and divided the gov-
erning Popular Action Party (AP).
Opposition newspapers af-
filiated with the parties that
control Congress are giving heavy
play to disclosures of corruption
and smuggling by figures associ-
ated with the administration.
Numerous officials in the customs
service have been sacked, and
the administration has been forced
to admit that naval officers,
customs and police officials,
and some congressmen have been
involved in smuggling over the
past four years. Congressional
leaders have forced the resigna-
tions of Javier Campos Montoya,
chief of the Peruvian Investiga-
tive Police, and other high rank-
ing officers.
In a move to dissociate it-
self from those involved in the
scandal, the AP has suspended
the membership of two former
cabinet ministers and expelled
other party figures including
a retired admiral. Belaunde's
efforts to prevent action against
his supporters have only dimin-
ished his influence with party
leaders. They are becoming con-
cerned over the effect the revela-
tions will have on the party's
Page 25
chances in the presidential and
congressional elections next year.
Their dismay is compounded
by the belief that Belaunde has
failed to recognize the serious-
ness of the present situation
and is concentrating on the com-
pletion of scheduled public works
projects, including his favorite
jungle highway "Carretera Marginal,"
to the exclusion of other more
pressing political and economic
problems.
The President's speech to
the nation on 27 March, his first
in almost two years, was negatively
received by most party leaders,
who criticized him for failing
to face up to the real issues.
To refurbish his image,
Belaunde may try some spectacular
move to divert public attention
from current political and eco-
nomic problems. A likely target
would be the US-owned Interna-
tional Petroleum Company, whose
long dispute with the Peruvian
Government appears headed for a
showdown. The semiautonomous
State Petroleum Corporation (EPF)
has recommended that Belaunde
take over the La Brea y Parinas
deposits as well as the company's
industrial installations and
allow EPF to administer them for
the state.
SECRET
WEEKLY SUMMARY 5 Apr 68
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 Approved For Release 2009/03/25: CIA-RDP79-00927A006400010002-1
4ECRE"1'
VIOLENT STUDENT DISORDERS IN BRAZIL
The student disorders that
have plagued the Brazilian Govern-
ment for a week underscore the
depth of popular disaffection with
the Costa e Silva administration.
Rio de Janeiro police handed
students and leftists a made-to-order
issue on 28 March when they shot
and killed a youth participating
in a demonstration protesting the
closing of a university restaurant.
Large antigovernment demonstrations
erupted in most key Brazilian cit-
ies, with public sympathy, stirred
up by the press, clearly on the
side of the students. In Brasilia,
students, backed up by opposition
federal deputies, clashed violently
with police, burning a police truck
and the reviewing stand set up for
the anniversary celebration of the
1964 revolution.
Bitter fighting between secu-
rity forces and groups of armed
students and extremists then broke
out in Rio on the night of 1 April.
Army and marine troops supported
by tanks moved into the city after
violent clashes left at least one
demonstrator dead and several po-
lice wounded. Another demonstrator
was killed in the interior city of
Goiania, and on 2 April two stu-
dents there were wounded during a
rally inside the cathedral. Vio-
lence also flared in Belo Horizonte
as police used tear gas to break up
a large demonstration. Incidents
occurred later in Porto Alegre and
in several cities of the northeast.
Leadership of the students has
largely been taken over by extrem-
ists--principally dissident Commu-
nists and members of the radical
Popular Action organization. They
have focused mainly on the Costa
e Silva government, calling for
the overthrow of the "tyrannical
military dictatorship." References
to "Che" Guevara and to throwing
out "imperialists" have also drawn
loud applause. The USIS facility
in Fortaleza was sacked, and both
the embassy in Rio and the USIS
library in Brasilia were stoned.
Student agitators called for
new demonstrations on 4 April when
seventh-day masses were held for
the boy killed in the initial clash.
The effectiveness of the student
leaders has been somewhat limited,
however, because of bickering among
themselves. Many are reported to
believe that students are fed up
with demonstrations and that con-
tinued violence could cause a loss
of popular support.
Many army officers, particu-
larly in Rio, believe that the gov-
ernment has been far too soft on
students. Some military members of
the cabinet reportedly urged the
President to declare martial law,
but he is not likely to act now un-
less his hand is forced by renewed
violence.
Army officers also are con-
vinced that fiery opposition leader
Carlos Lacerda is involved in the
agitation, and Army Minister Lyra
Tavares has -reported to the prin-
cipal commands that action will be
taken against Lacerda when the
"record is clear." It is uncertain
whether Lacerda can be convicted
under the national security law,
but his prosecution would be cer-
tain to add to the internal polit-
ical turmoil.
S I -(,R I ':1'
Page 26 WEEKLY SUMMARY 5 Apr 68
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 Approved For Release 2009/03/25: CIA-RDP79-00927AO06400010002-1
o
Outbreaks of Student Violence in Brazil
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SECRE'.C
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 Approved For Release 2009/03/25: CIA-RDP79-00927AO06400010002-1
5 ECIR I1:i"
GUATEMALAN PRESIDENT SHIFTS TOP MILITARY COMMAINDERS
President Mendez' dismissal
last week of the three most pow-
erful army officers has given him
new prestige, but it may cost him
essential military support.
on 28 March, Mendez removed
Defense Minister Arriaga, Zacapa
brigade commander Colonel Arana,
and Colonel Sosa, the chief of
the National Police. The three
men will be given diplomatic posts
abroad. Other shifts are being
made in the military hierarchy,
and some cabinet changes are ex-
pected. It is possible that Men-
dez wants to break up personal
followings and stop the officers'
intrigues with rightist politicians
Mendez' actions indicate that
he wants to return the government
to civilian hands and bring the
actions of the different security
forces under tighter rein.
SECRET
WEEKLY SUMMARY 5 Apr 68
Public reaction thus far is
that the changes should give
greater stability and cohesion to
the Mendez government. Some ele-
ments appear to be willing to
give the President a chance to
prove himself, but conservatives
and rightists have expressed the
fear that replacement of the three
officers most concerned with the
counterinsurgency program will
encourage Communist terrorists to
resume guerrilla activity. If 25X1
this happens, or if the military
see a threat to their power, coup 25X1
plotting could
gain enough support to threaten
25X1
the government.
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 Approved For Release 2009/03/25: CIA-RDP79-00927AO06400010002-1
Ile
SECRE'T'
MIXED INGREDIENTS IN ECUADOREAN POLITICAL SCENE
Recent student clashes with
the military have aroused old en-
mities in Ecuador and politicians
are contributing to the increased
tension by their maneuvering for
advantage and their encouragement
of extremist activities.
Camilo Ponce and Interim President
Arosemena each considers a move
by the military as one possible
means of protecting his own po-
litical ambitions against the re-
turn to power--for the fifth
time--of Jose Maria Velasco.
Police and military used
force last week to quell student
demonstrations which with the help
of a variety of hard-line Commu-
nists, professional agitators, and
ambitious leftist politicians be-
came violent. The demonstrations
were launched with such disparate
justifications as a decree licens-
ing civil practice by military
engineers and the expulsion of
five students charged with lead-
ing violent outbreaks at the Uni-
versity of Quito last May. Presi-
dent Otto Arosemena's public
statements implicitly supported
student accusations that military
personnel had reacted with "exces-
sive methods" against student at-
tacks on the military engineering
school.
Arosemena, probably under
pressure from military leaders,
later qualified his comments to
caution both sides. The events
have exacerbated the tension which
already caused several deaths
among followers of presidential
candidates for elections on
2 June. The armed forces had
tried to stay aloof from politics
this year, reportedly determined
to avoid the kind of civilian re-
sentment that brought down a mili-
tary junta in 1966. Military
leaders, however, have expressed
concern over a possible breakdown
of public order. There are re-
ports that conservative candidate
Velasco is still considered
the front-running candidate al-
though his month-old campaign is
not arousing public fervor. Ve-
lasco's vice presidential candi-
date, like those of his two chief
rivals, is from Guayaquil, a rec-
ognition of the division of politi-
cal power between that industrial
port and the mountain capital at
Quito. Dr. Victor Hugo Sicouret
is a highly regarded physician and
a political unknown. His chief
asset reportedly is his deep loy-
alty to Velasco, a trait valued
by the ex-president since he was
overthrown in 1961 by his vice
president, Carlos Julio Arosemena.
In a move typical of the
convolutions of Ecuadorean poli-
tics, Velasco accepted Carlos
Julio Arosemena's support this
year, probably in the belief that
this would divide leftist politi-
cal groups. He now is reportedly
moving to isolate Arosemena and
nullify his political influence.
Ponce also appears to be maneuver-
ing behind the scenes, sometimes
using unsavory leftist agitators.
President Otto Arosemena has de-
nied that his pact of November
1966 with Ponce included aid to
the latter in his bid for the
presidency and is using his remain-
ing months as president to
strengthen his own political ima
for 1972.
SECRET
Page 29 WEEKLY SUMMARY
5 Apr 68
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 Approved For Release 2009/03/25: CIA-RDP79-00927A006400010002-1
SECRET
VENEZUELAN GOVERNING PARTY SUSTAINS FURTHER SETBACK
The electoral prospects of
the governing Democratic Action
(AD) Party have been further
damaged as the result of last
week's violence during a strike
by garbage workers in Maracaibo.
The strike was badly mis-
handled by the governor of Zulia
State, an appointee of the gov-
erning Democratic Action (AD)
party. Inept action by the
police resulted in five
deaths, and the national guard
and army finally were called in
to restore order. Governor Paez
has gone to Caracas on an ex-
tended vacation, and Maracaibo is
under the administrative control
of the local army and national
guard commanders and the director
general of the Ministry of In-
terior. The garbage strike has
been settled and the city is
slowly returning to normal, ex-
cept that students continue to
boycott classes.
Much of the violence was
directed against AD. The party
headquarters was gutted by a
fire bomb and mobs tried to
lynch local AD leaders. These
developments are a further in-
dication of the damage the
party has suffered since its
president, Luis Beltran Prieto,
walked out last year and formed
his own movement.
AD claims that the vio-
lence was instigated by the
Communists are unsubstantiated.
The Communist Party, which
currently is emphasizing peace-
ful rather than violent action,
wants to avoid contributing
to urban disorders at the
moment. It fears that public
acceptance of the use of army
and national guard troops in-
dicates that a coup staged to
maintain public order would be
favorably received. The Com-
munists believe that under a
nonconstitutional government
they would have no chance of
regaining legal status, F
SECRET
Page 30 WEEKLY SUMMARY
5 Apr 68
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 Approved For Release 2009/03/25: CIA-RDP79-00927AO06400010002-1 vftool 1400
Secret
Secret
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