WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A007200040001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 21, 2016
• Document Release Date: March 4, 2008
• Sequence Number: 1
• Publication Date: July 18, 1969
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Secret
4
_.. ,P 18 July 1969
State Dept. review completed N6. 0379/69
v &L . ,ECORD
PLEASE RETURN TO
1U"NCY r Ci'L Yl~ JI,~S
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OL' Ul\lL 1
(Information as of noon EDT, 17 July 1969)
VIETNAM
The Communists quickly rejected President Thieu's
election offer, perhaps in the hope of forcing addi-
tional concessions or some changes in the Saigon
government. Thieu's idea was also denounced in
South Vietnam by a group in his progovernment polit-
ical front. Le Duc Tho's unexpected return to Hanoi
may signal another round of policy deliberations.
On the military scene, reports persist that the
enemy is preparing for another surge of activity.
MALAYSIAN DEVELOPMENTS THREATEN FURTHER INSTABILITY
The threat of a split within the ruling Malay party
has increased the probability of further communal
violence.
LAO GOVERNMENT FORCES GO ON THE DEFENSIVE
The failure of the government's effort to recapture
Muong Soui has raised fresh concern over Communist
military intentions.
Europe
MONNET COMMITTEE ARGUES CASE FOR EUROPEAN UNITY
Jean Monnet's Action Committee is discussing this
week reports by eminent Europeans which conclude
that the problems posed by British entry can be
solved by strengthening the structure of the Euro-
pean Communities.
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HUNGARY PUSHES AHEAD WITH ECONOMIC REFORM
Recent speeches by Hungarian leaders indicate that
the government intends to continue its relatively
cautious program of economic reform (the NEM); the
new targets Budapest has set for the future are
modest and can be changed as the situation demands.
EAST GERMAN DELEGATION RETURNS FROM USSR
A joint statement issued after the delegation left
stressed the unity of the two allies and was a
strong expression of Soviet support for East Ger-
many.
CZECHOSLOVAKS ANNOUNCE ADDITIONAL PERSONNEL SHIFTS
The campaign to install more "realistic" supporters
of party chief Husak on all official levels is in
full swing.
GROWTH RATE DECLINES IN OUTPUT OF SOVIET FUELS
The growth rate is unlikely to improve in the near
future without substantial increases in investment.
Middle East - Africa
THE WEEK IN PERSPECTIVE 19
ALGERIA'S REFORM PROGRAM CONTINUES SLOW PROGRESS
The regime seems more stable now than at any time
since it overthrew Ben Bella in 1965. Barring
assassination or a coup, Boumediene seems likely
to stay in power indefinitely.
PAKISTAN GOVERNMENT PROPOSES FAR-REACHING REFORMS
Recently announced budgetary measures and new poli-
cies for labor and education highlight efforts to
eradicate causes of social discontent.
CRISIS ERUPTS WITHIN INDIA'S CONGRESS PARTY
Prime Minister Indira Gandhi appears to have lost a
major test of strength with her long-time antagonists
in the Congress Party hierarchy. She managed to even
the score partially, however, by forcing one of her
strongest opponents in the cabinet to resign.
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Western Hemisphere
SALVADORAN-HONDURAN CONFLICT EVADES SOLUTION
The machinery of the Organization of American States
has been brought into motion, but little progress has
been made in arranging a cease-fire.
GUATEMALA--THE PRE-ELECTION SITUATION
The frail political stability laboriously developed
under the present Guatemalan administration will suf-
fer serious strains during the political campaign now
under way for the general elections next March. Vio-
lence has shown a steady increase since May, and
intelligence reports suggest that Communist terror-
ists will try to disrupt the electoral process in
hopes of goading the military to overthrow President
Mendez. Supporters of the rightist presidential can-
didate have threatened similar action if their candi-
date seems in danger of losing the election or being
deprived of the presidency illegally. With the rul-
ing Revolutionary Party in control of the electoral
machinery, either development is possible. The armed
forces, the most important ingredient in the polit-
ical spectrum, have the power to install the legally
elected candidate or anyone else they wish. So far
in this century, only one duly elected Guatemalan
President has turned over control to a duly chosen
successor, and the present prospects for a peaceful
transfer are not encouraging. (Published separately
as Special Report No. 0379/69A)
COMMUNISTS HAVING MIXED LUCK IN COSTA RICA
Despite government efforts to prepare the Costa
Rican public for increased contact with Communist
countries, the local Communist party has been dealt
a serious setback in its bid to participate in next
year's presidential election.
CHILEAN CHRISTIAN DEMOCRATS RESUME IN-FIGHTING
President Frei's party has decided against formal
cooperation at this time with other parties. It
will choose its presidential candidate next month.
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CUBA UNIMPRESSED BY SOVIET NAVAL VISIT
The Castro regime has thus far demonstrated remark-
ably little interest in the Soviet naval visit to
Cuba scheduled for 20 to 27 July.
BOLIVIAN POLITICAL MANEUVERING CONTINUES
Relations between President Siles and the politically
ambitious commander of the armed forces have been
complicated by Siles' support for the presidential
candidacy of the mayor of La Paz.
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SLUKJ l'
The North Vietnamese have begun preparations to celebrate 1970 as a
year of historical significance, and a politburo resolution focusing on internal
issues may indicate that there will be significant policy changes. Le Due Tho,
North Vietnam's chief negotiator in Paris who is also responsible for internal
party and domestic matters, has again returned to Hanoi. His trip may signal
another round of deliberations on the Paris talks and the war, but he may
also be involved in discussions concerning what appears to be continuing
disarray on the home front. A decision by the North Vietnamese leadership
to concentrate more on internal development could involve some compro-
mise in the war effort.
The North Vietnamese quickly rejected President Thieu's offer last
week to let them share in running new elections. There was some strong,
critical reaction also from some South Vietnamese politicians. The Commu-
nists charged that the offer was a public relations gambit that fell far short of
facilitating any movement in the Paris talks. Hanoi is probably not as
reluctant to negotiate the election issue as the Communist propaganda
suggests, however.
Communist military activity in the South has returned to a low level.
The relative lull in ground action has persisted since the latter part of June.
Reports persist, however, that the enemy will soon launch another round of
localized attacks.
Communist military operations in Laos are causing fresh concern. The
government effort to recapture Muong Soui has been given up. Meo leader
Van Pao believes that the Communists intend to move into northern
Vientiane Province. Government leaders are also apprehensive about what
they regard as a growing threat to the royal capital of Luang Prabang.
The probability of further communal violence in Malaysia has been
increased by frictions within the ruling Malay party. Many university stu-
dents and some junior- and middle-grade army officers are believed to
support Malay extremists who are pressing for more openly pro-Malay
policies. Should the political situation deteriorate further, some army ele-
ments favorable to the extremists probably would press for a larger military
role in decision making and for increased military controls.
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VIETNAM
The Vietnamese Communists
quickly denounced and rejected
President Thieu's offer last week
to let them share in running new
elections, charging that it was
a public relations gambit which
fell far short of facilitating
movement in the Paris talks.
Their rejection was foreshadowed
three weeks ago when Le Duc Tho
ruled out Communist participa-
tion in a joint electoral com-
mission with Saigon.
Hanoi is probably not as re-
luctant to negotiate the elec-
tion issue as Communist propa-
ganda suggests, however. In their
own official proposals, the Com-
munists endorse general elections
in deliberately vague language
and leave the impression that
their position on this point has
considerable flexibility. Their
rejection of Thieu's new offer
is probably a part of their cur-
rent hardening toward Saigon in
general that is designed to force
either additional concessions or
some structural change in the
Saigon government.
President Thieu's election
plan has also generated strong
reaction in South Vietnam, much
of it critical. In contrast to
the equanimity with which most
of the country greeted the initial
US troop withdrawals from the
delta, Thieu's election proposal
has been interpreted by many
strongly anti-Communist Vietnamese
as bowing to US pressure for more
concessions and as weakening the
government's over-all position
against the Communists.
The sharpest opposition to
the peace plan was registered by
the Greater Solidarity Force, a
predominantly northern Catholic
group and a charter member of
Thieu's progovernment political
front. The group's strident pub-
lic statement, consistent with
its traditional hawkish attitude
toward the Communists, branded
Thieu's offer as unconstitutional
and called for a joint session
of the National Assembly to de-
bate the issue. As did other
critics, the solidarity force
based its stand on Article 4 of
the constitution, which prohibits
Communism or any activity de-
signed to further Communism, and
suggested that Thieu's election
offer was designed only for for-
eign audiences.
Several politicians charged
that the timing of Thieu's speech
made him appear to be taking or-
ders from Washington. One of
these, Senator Tran Van Don, who
is a leading figure in the opposi-
tion to Thieu's political front,
publicly accused Thieu of sub-
verting the constitution. Vice
President Ky, while supporting
Thieu's election proposal, weighed
in with a harangue against Ameri-
can conduct of the war, probably
in the hope of re-establishing
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his credentials as a leading
hawk and of portraying himself
as independent of the US in con-
trast to the purported subserv-
ience of Thieu.
North Vietnamese Political
Developments
Le Duc Tho, meanwhile, ar-
rived in Hanoi on 13 July. His
sudden and unexpected return
could be connected with the Paris
talks and, perhaps, signal another
round of policy deliberations in
Hanoi. On the other hand, indi-
cations continue that disarray
exists on the home front and Tho's
counsel may be needed on party or
domestic matters--areas in which
he has special responsibilities.
His return coincided with the an-
nouncement of a politburo decree
that marks the year 1970 as a
benchmark in Vietnamese Communist
history. Ostensibly, four impor-
tant anniversaries occur then,
but the decree may also signal
a campaign to publicize certain
new and basic postwar policies
for North Vietnam. The resolution
calls for major policy papers
from Hanoi's leaders, mass study
sessions, and unprecedented adula-
tion of President Ho. It directs
almost all attention inward to
domestic North Vietnamese issues.
This and the directive's refer-
ences to important policy con-
siderations suggest that the lead-
ership may be preparing its people
for a major change in policy
emphasis--perhaps involving a
compromise in the war effort to
clear the way for greater empha-
sis on internal development and
consolidation.
Military Activity
Communist military activity
in South Vietnam returned to a
low level this week after brief
flurries of light shelling at-
tacks on 6 and 11 July. The
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relative lull in ground action
has persisted since the latter
part of June when the Communists
pulled back from Ben Het and Tay
Ninh city.
om-
munists are preparing for another
surge of activity to climax their
so-called "July Action Phase."
The surge probably will feature
shellings and limited ground
probes similar to the highpoints
in May and June.
The heaviest action will
probably come in Tay Ninh and
Binh Long provinces northwest of
Saigon, where the enemy may try
to penetrate allied defenses
around the provincial capitals.
There have also been persistent
reports of enemy plans to launch
rocket attacks and infiltrate
sappers into Da Nang and Saigon.
25X1
25X1
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Most enemy main force units, ex-
cept for those in the provinces
northwest of Saigon, are holding
their positions in base areas
away from prime targets and do
not appear ready for heavy combat
in the near future.
Infiltration
Current evidence continues
to indicate that the flow of new
replacement troops into the in-
filtration pipeline is at a low
ebb.
There are signs that some
five replacement packets entered
the infiltration pipeline this
past March. Captured documents
and prisoners imply that about
2,500 men were in these groups
and that they were slated for
I Corps.
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MALAYSIAN DEVELOPMENTS THREATEN FURTHER INSTABILITY
The threat of a split within
the ruling Malay party has in-
creased the probability of further
communal violence.
The executive committee of
the United Malays Nationalist
Organization on 12 July ex-
pelled an extremist leader from
the committee for circulating a
letter calling for Prime Minister
Rahman's resignation. The letter
charged that Rahman's pro-Chinese
policies had been responsible for
the party's electoral losses last
May and the subsequent communal
rioting.
Although the committee's
action demonstrates that the top
echelon of the party and the gov-
ernment continues to be dominated
by moderates, the extremists are
believed to have widespread popu-
lar support, including many uni-
versity students and some junior
and middle-grade army officers.
The expelled extremist leader told
a US Embassy official that he
will continue his anti-Rahman
campaign.
Conversely, Rahman's de-
termination not to be forced out
by extremist pressure appears to
have been strengthened. The 66-
year-old prime minister, although
beset by health problems, views
himself as the only national
figure with Chinese as well as
Malay support and believes his
resignation would result in
further polarization of the races.
If a major split does develop
in the party, with the extremists
either forming a new opposition
group or joining the racist Pan
Malayan Islamic Party, the popu-
lar base of the emergency regime
will be seriously eroded. In
any event Malay extremists can
be expected to step up their ef-
forts to pressure the emergency
government to adopt more openly
pro-Malay policies. These ef-
forts in turn will almost cer-
tainly lead to further harassment
of the Chinese.
The political disarray in
Malaysia has permitted increased
military influence in the gov-
ernment through the presence of
two high-ranking army officers in
the top level of the emergency
government. Should the politi-
cal situation deteriorate further,
some army elements who share the
extremism of the Malay "ultras"
probably would press for a larger
military role in decision-making
and for increased military con-
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SLVKL 1
LAOS: Current Situation
. ` = oia
ore trinent effort fails, Long
to recapture_towf
Commun ts.,T.pbuff Government
attempt to clear lower valley rac
and pro V south to Pak Ou F Na eKhangli
A- 77
4
Thong
THAILAND
Gpverllment-held Iecation
11
Communist-held location
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LAO GOVERNMENT FORCES GO ON THE DEFENSIVE
The failure of the Lao Gov-
ernment's effort to recapture
Muong Soui has raised fresh con-
cern over Communist military in-
tentions.
The two-week operation had
made some headway but sharp enemy
counterattacks, unusually poor
flying weather, and the reluctance
of the progovernment neutralist
forces to carry out their share
of the offensive led Meo General
Vang Pao to call off the operation.
Vang Pao has now turned his atten-
tion toward establishing a defen-
sive line to the north and south
of Muong Soui.
Van Pao believes that the
Communists intend to drive west-
ward on Route 7 and then move
south into northern Vientiane
Province. He calculates that the
enemy will move in this direction
in order to isolate his bases at
Long Tieng and Sam Thong. These
dire expectations appear to reflect
Vang Pao's low morale rather than
any hard intelligence on Communist
plans.
Government leaders, meanwhile,
are apprehensive about what they
regard as a growing threat to the
royal capital of Luang Prabang.
The Communists have countered the
government's attempts to clear the
lower portions of the Nam Ou Val-
ley, and probes have been made as
far south as Pak Ou on the Mekong
River. It is too early to tell
how significant these probes are.
Three North Vietnamese battalions
appear to have moved south from
the Nam Bac area for this cam-
paign, raising the possibility that
the Communists may intend to iso-
late Luang Prabang.
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Foreign Minister Gromyko's foreign policy review before the Supreme
Soviet last week made clear that China continues to be the major preoccupa-
tion of Soviet thinking on international affairs. Gromyko reserved his harsh-
est words for Peking's leaders, asserting that Moscow's "most rabid enemies"
had never used such "unworthy methods" to discredit the USSR. In con-
trast, Gromyko handled the US with kid gloves. He acknowledged that the
USSR is preparing for an exchange of views with the US on strategic arms,
noted President Nixon's call for an "era of negotiations," and said that the
president's support for a summit meeting had "not gone unnoticed."
References in the speech to subjects of special interest in Eastern
Europe met varying reactions there. The Poles and East Germans apparently
were shown the speech a day or two before it was given. The Poles approved.
Comments by East German leaders, however, indicate they have reservations
about those portions of the speech dealing with West Germany, Berlin, and
European security. An East German delegation in Moscow signed a com-
munique on 14 July which negated Gromyko's approach to these subjects
and got the East Germans' hard-line points of view across.
The Yugoslavs were pleased with Gromyko's favorable reference to
them, but remain wary of Soviet intentions. Brezhnev followed up , the
speech in a few days by seeing the Yugoslav ambassador, whom the Soviets
had been holding at arms length for two weeks.
There were no attacks, but there was also no succor for the Romanians
in the speech, and the Czechoslovaks invited the Western press to mind its
own business regarding Gromyko's passage about "flaws in relations among
socialist countries."
The Belgrade consultative meeting of nonaligned countries last week
produced a compromise communique which barely suppressed the diversity
of opinion within the nonaligned movement. The communique said that
"views were exchanged on the possibility of holding a summit conference
after suitable preparations." Undaunted, the Yugoslavs probably will try to
begin another stage in the consultations, but the prospects for a nonaligned
summit remain bleak.
The government crisis continues in Italy. Tension eased somewhat with
President Saragat's request on 13 July that Mariano Rumor, premier of the
outgoing cabinet, try to reform a government. He is trying to put the
center-left coalition back together.
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MONNET COMMITTEE ARGUES CASE FOR EUROPEAN UNITY
Jean Monnet's Action Commit-
tee for a United States of Europe
is meeting this week to consider
four reports which suggest that
the problems of British member-
ship in the European Communities,
although real, are not insur-
mountable.
Last March, the Monnet Com-
mittee--a pro-European pressure
group which consists of leading
members of the trade unions and
all the major political parties
of the Common Market countries
and Britain minus the Gaullists
and Communists--asked several em-
inent Europeans to study the in-
stitutional, agricultural, mone-
tary, and technological issues
involved in British entry. The
committee's recommendations,
based on the views expressed in
the reports, may play an impor-
tant role in the coming debate
on the Communities' enlargement.
In his report on the insti-
tutional aspects of enlargement,
Walter Hallstein (former president
of the EEC Commission) reiterates
his long-held view that the Com-
munities' institutional structure
is the basis for the gradual de-
velopment of a European federal
state, and that enlargement must
be adapted to this evolutionary
process, not vice versa. Specif-
ically, he holds that the commis-
sion must be strengthened as the
"planning, driving and mediating
element" and that the parliament
must become the "reconciler" of
national interests, with directly
elected members and expanded
powers. He also thinks that the
council should apply the principle
of majority vote with more de-
termination and that all council
decisions should eventually be
taken in this manner as the coun-
cil develops into the upper cham-
ber of a bicameral legislature.
Robert Triffin (Yale profes-
sor and Communities consultant),
reporting on the monetary aspects
of UK entry, contends that mem-
bership would open up new solu-
tions to Britain's financial
problems. Triffin also claims
that British membership would
not mean an increased financial
burden for the Common Market
countries, inasmuch as they al-
ready supply a good share of the
financial aid Britain receives.
He proposes the creation of a
European Reserve Fund which could
help shore up sterling in the
short run and eventually make
possible a common European cur-
rency.
Another report on the mone-
tary aspects of UK entry, sub-
mitted to the Monnet Committee by
Guido Carli, Governor of the
Bank of Italy, comes to the same
general conclusion as Triffin,
except that Carli advocates more
flexibility in exchange rate
mechanisms.
Edgar Pisani, former French
agricultural minister, wrote on
the agricultural problems of en-
largement. He believes that
Britain, in entering the Communi-
ties, must agree to accept the
basic elements,of the Common Ag-
ricultural Policy (CAP). He rec-
ognizes, however, that the CAP is
in need of reform and that Brit-
ain's entry will necessitate a
change in agricultural financing
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arrangements. He recommends a
transition period of three to
four years for Britain and the
CAP to make adjustments.
The report by Lord Plowden
(former head of the UK Atomic
Energy Authority) on the techno-
logical aspects of enlargement
concludes that political and eco-
nomic integration are prerequi-
sites to real technological ad-
vancement in Europe.
While it is clear that the
Communities are still a long way
from agreement on opening talks
with the British, the Monnet
Committee reports will provide
a useful focus for discussion by
putting the technical problems
of British entry clearly in the
context of the Communities' fur-
ther development. Because all
the reports stress that these
problems can be solved by rein-
forcing and improving the pres-
ent structure of the Communities,
they are, in particular, a coun-
terweight to the current French
argument that enlargement of the
Communities could mean their
weakening.
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HUNGARY PUSHES AHEAD WITH ECONOMIC REFORM
Recent speeches by Hungarian
leaders indicate that the govern-
ment intends to continue its rel-
atively cautious program of eco-
nomic reform (the NEM); the new
targets set for the future are
modest and can be changed as the
situation demands.
Hungarian leaders appear gen-
erally satisfied with the results
of economic reform to date. The
ultimate aim of the NEM is to
free industry and agriculture
from detailed, compulsory plan
directives and to permit the op-
eration of incentives within the
enterprises. The government even-
tually hopes to reduce its admin-
istrative role to one of over-all
direction of the economy and to
that of an investor and a con-
Lroller of inflation. The party
hopes to withdraw fron day-to-day
supervision of such government
operations.
Deputy Premier Feher recently
indicated that future measures
will aim at increasing the pro-
duction of modern, competitive
products in order to bring about
greater effectiveness in foreign
trade. Ways must also be sought
to increase labor productivity
and to utilize enterprise funds
better. Price changes announced
in May and July are being imple-
mented and additional revisions
can be expected in the future.
Finance Minister Valyi has
stated that subsidies to enter-
prises are to be cut five percent
this year (ten percent in indus-
try) and will be further reduced
next year in an effort to dis-
courage inefficient plants. Min-
istries also are to make further
efforts to decentralize their re-
sponsibilities.
The Hungarian consumer ap-
pears to have fared well in many
respects under the NEM. Savings
grew markedly last year as did
retail trade turn-over, prices
have been kept in check, and in-
flation does not appear to be a
serious problem. Real wages rose
2-2.5 percent last year, and the
government plans to adjust favor-
ably the incomes of pensioners
and low-income, large families.
New programs are expected to ex-
tend profit-sharing to more in-
dustrial workers and to extend
the reduced work week of 44 hours
to additional workers.
Hungarian officials have
been interested in improving trade
relations with the West, recog-
nizing in particular the need to
improve the range and quality of
exports in order to earn more for-
eign currency. On 7 July Budapest
filed a formal application to ac-
cede to the General Agreement on
Tariffs and Trade, a move designed
to ensure more equitable treatment
for Hungarian exports in Western
markets.
As some features of the NEM
have been of concern to the USSR,
Hungary probably must continue to
move slowly so as not to antagonize
the Soviet Union. A recent Soviet-
Hungarian committee session, for
example, discussed the rather un-
usual subject of the "more correct"
application of material incentives.
Hungarian policy probably will con-
tinue to emphasize the cautious im-
plementation of reforms that can be 25X1
modified as necessitated in response
to either domestic requirements or to
pressure from the USSR.
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EAST GERMAN DELEGATION RETURNS FROM USSR
An eight-day visit to the
USSR by a party-government East
German delegation led by Premier
Stoph and Politburo member Hon-
ecker ended on 14 July. A joint
statement, issued after the dele-
gation left, stressed the unity
of the two allies and was a strong
expression of Soviet verbal sup-
port for East Germany.
The composition of the East
German delegation, which included
both top-ranking political and
economic officials, as well as
the chairmen of East Germany's
four satellite political parties,
suggests that the two sides cov-
ered the whole range of issues of
mutual concern. The joint state-
ment proclaimed "complete unity
of views" on a broad spectrum of
outstanding international inter-
ests. The only innovation from
this compendium of standard for-
mulations was a call for a "Con-
gress of the Peoples of Europe."
This proposal was not further
spelled out, but it may be part
of Moscow's effort to refurbish
its reputation as a practitioner
of coexistence.
Foreign Minister Gromyko's
recent foreign policy address to
the Supreme Soviet--delivered at
the mid-point of the East German
visit--was probably discussed at
length. The East Germans un-
doubtedly were skeptical about
Gromyko's cautious offer to begin
four-power talks on Berlin and
to resume bilateral negotiations
with Bonn. The reticence of the
East German visitors on this sub-
ject and the slanted coverage of
Gromyko's speech in the East Ger-
man party daily and other news
media seem to confirm this.
The joint statement seems in-
tended to meet any reservations
which the East Germans may have
harbored on these proposals, using
Pankow's pet phrases for describ-
ing the European situation. Al-
though the statement serves as a
paper guarantee that Moscow will--
as Gromyko stressed--keep in mind
the interests of the East Germans
in any dealings with the West,
the Soviets are unlikely to be
deterred from making any overtures
of detente to the West by any ob-
jections from Pankow.
The visit also produced
agreement to strengthen economic
and cultural ties. The statement
did not describe the economic
agreements in any detail, but
they appear to portend an even
tighter meshing of the two na-
tional economies and will probably
further increase the East Germans'
dependence on Moscow. In keeping
with the East Germans' apparent
preference, the statement placed
greater stress on improving bi-
lateral economic ties than multi-
lateral.
Left unexplained by the com-
munique or any activities in the
USSR is the question of why the
chairmen of the four satellite
political parties were included
in the delegation. Their pres-
ence, however, suggests that the
talks may have touched on East
Germany's internal affairs as
well as those topics mentioned
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CZECHOSLOVAKS ANNOUNCE ADDITIONAL PERSONNEL SHIFTS
The campaign in Czechoslo-
vakia to install more "realistic"
supporters of party chief Husak
on all official levels is in full
swing. With the top and middle
levels of the party under firm
control, the regime now is focus-
ing on the local party organiza-
tions and the trade unions. It
will soon fully turn to the fed-
eral and the Czech and Slovak
governments.
1usak and party secretary
Alois Indra, a hard liner, under-
scored their demand last week
with trade union officials that
"hostile elements"--meaning the
remaining outspoken liberals--be
removed from their posts. An
eight-man party watchdog commit-
tee was attached to the central
trade union council, perhaps to
intimidate union officials, but
ostensibly to protect the party's
interests.
Husak and Indra also met
with the leaders of the recalci-
trant metalworkers' union, warn-
ing them to remove or to silence
the dissidents in their ranks.
Husak is clearly incensed by the
independence of some unions. He
apparently believes that their
continued underground activities,
such as pamphlets urging public
manifestations of antiregime or
anti-Soviet sentiment, is jeop-
ardizing his position.
A sweeping reorganization in
the Foreign Ministry has led to
speculation that Foreign Minister
Marko is in trouble. Foreign
policy is completely in the hands
of pro-Soviet party conservatives,
who probably are pressing Husak
to replace Marko with someone
more closely oriented to Moscow.
A competent moderate and a Slo-
vak, Marko is cut from the same
cloth as Husak, who may be re-
luctant to remove him from office.
Jiri Hajek, foreign minis-
ter under Dubcek and one of the
Soviets' prime targets after the
invasion, has apparently made
his peace with Husak and returned
to Prague. Hajek will head the
about-to-be created Institute of
Politology, and could eventually
have a strong influence on polit-
ical theory and ideology.
The first personnel change
in the Czech state government
since its formation in January
was announced earlier this month
when a conservative ideologist
replaced a recalcitrant liberal,
Miroslav Galuska, as minister of
culture. Other shifts to elim-
inate the preponderance of lib-
erals in the Czech cabinet are
widely expected in Prague.
The regime last week forced
editorial board changes on sev-
eral prominent newspapers, and
announced the appointment of a
new chief of radio administration
in the Czech lands and a new
head of the Czechoslovak national
radio's still subtly outspoken
foreign broadcasting unit.
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51 UKJ 1
The rapidity with which the
regime is proceeding with the
personnel shuffles suggests that
it wants to batten down the hatch
in the shortest possible time.
The first anniversary of the So-
viet invasion is approaching,
and unless the party can unite
and impose its will, it may have
to face an adverse popular reac-
tion. Pessimistic progressives,
who favor a dignified and orderly
observance of the anniversary,
have expressed the fear that pro-
Soviet provocateurs may use the
occasion to generate anti-Soviet
demonstrations which would un-
doubtedly lead to a harsher rule
than now exists.
In an effort to bolster the
country's sagging economy, the
federal government has introduced
a temporary freeze on wholesale
prices, and prohibited bonus pay-
ments to workers until precise
limits on allowable increases
are decided. Prague also has
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Page 15 WEEKLY SUMMARY
announced a new ban on capital
construction. A number of gov-
ernment-enterprise agreements
were scheduled to be concluded
by 15 July, regulating produc-
tion, wages and prices. These
measures will further centralize
control of the economy, and mark
a further retreat from the lib-
eral economic reforms anticipated
under Dubcek. The austerity
measures will probably be fol-
lowed by others and will antago-
nize the people even more.
The invading Warsaw Pact
countries have done relatively
little to support Husak's regime
or to offer recognition of his
efforts to.solve the country's
political and social problems.
This glaring abstinence has added
to instability in Czechoslovakia,
contributing to popular fears
that the Soviets are playing one
leader against another in a
behind-the-scenes effort to cre-
ate a more repressive regime.
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GROWTH RATE DECLINES IN OUTPUT OF SOVIET FUELS
The growth rate in the pro-
duction of fuels in the USSR has
been declining for several years
and is unlikely to improve in the
near future without substantial
increases in investment. This
poor performance has led to a re-
duction in goals for 1970, the
last year of the current five-
year plan, but even the lower tar-
gets will be difficult to achieve.
The rates of increase in out-
put of the Soviet fuels industries
in 1968 were the smallest in re-
cent years. The annual plans for
the production of natural gas,
coal, and petroleum equipment as
well as for the construction of
oil and gas pipelines were not
fulfilled. Although the 1968
production goal for crude oil was
achieved, the increase was the
smallest in the postwar period.
During the first quarter of 1969,
moreover, production rates of
all fuels lagged behind that of
the first quarter of 1968, in part
because of severe winter weather.
The failure to meet annual
targets and to maintain past rates
Growth Rate Declines in Output of Soviet Fuels
Annual
Rate of Growth
(Percent)
CRUDE OIL
is
r
1960 61 62 63 64 65 66 67 68 69 70
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of growth is largely the result
of insufficient investment. Re-
cently the rate of investment
growth in the fuels industries
has declined, accompanied by ever
smaller rates of growth in output
per unit of investment.
A substantial rise in invest-
ment is required in order to mod-
ernize and re-equip the present
fuel industries as well as to ex-
ploit reserves found in new areas.
Current techniques and equipment
are becoming obsolete because of
increasing operating depths, the
great distances between centers
of consumption and the new pro-
ducing regions, adverse climate
and terrain in these areas and
changing patterns of demand.
Oil and gas will continue
to become an increasing share of
the Soviet fuel balance at the
expense of coal. Demand for oil
and gas probably will rise at a
more rapid rate than production
during the next five to six years.
The present program for parallel-
ing the Friendship crude oil pipe-
line system to Eastern Europe indi-
cates that the USSR intends to
continue supplying the lion's
share of the oil consumed in
this area, excluding Romania.
The USSR also plans to sup-
ply increasing amounts of natural
gas to Eastern Europe by 1975
after expansion of the pipeline
network. Some of the gas exported
to Eastern Europe, however, will
be replaced by low-cost gas im-
ported from Afghanistan and Iran
for domestic consumption.
In this situation, a signifi-
cant increase in Soviet exports
of oil to the free world does not
appear probable in the forseeable
future. In 1968--for the first
time since 1955, when the USSR
became a net exporter of oil--
there was little increase in such
exports. Continued stagnation in
Soviet exports of oil to the free
world would have far-reaching eco-
nomic implications inasmuch as
these exports have been the largest
single source of foreign exchange
during the past several years.
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India's Prime Minister Indira Gandhi appears to have lost a major test of
strength with her long-time antagonists in the Congress Party hierarchy. The
struggle erupted when old guard party bosses rammed through the nomina-
tion of one of Mrs. Gandhi's foes as official. candidate for the presidential
election set for 16 August. Although Mrs. Gandhi reacted sharply, she soon
realized that further contention could seriously threaten her hold on the
prime ministership and backed down. She did manage to chalk up a score,
however, by forcing the resignation of the deputy prime minister and finance
minister, Morarji Desai, an arch-rival and one of her strongest opponents in
the cabinet.
In the Middle East incidents along the Suez Canal and the Jordanian-
Israeli cease-fire line lessened during the past week, but the Egyptians are
still braced for an Israeli strike in retaliation for recent cross-canal raids. In
Israel, the Labor Party begins its convention on 20 July in a state of turmoil
that might end in a split-off of the Dayan faction.
Yemen, contrary to the latest trend in the Arab states, re-established
diplomatic relations with West Germany this week. The republican regime
has been attempting to strengthen ties with the West as relations with
Communist countries cooled, and Bonn's offer of economic assistance no
doubt made the move even more attractive.
In Africa, the Nigerian civil war drags on into its third year. Heavy
fighting continues along the southern front, but neither side has scored any
major territorial gains. The Biafrans are still receiving nightly arms fli is and
some relief supplies.
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ALGERIA'S REFORM PROGRAM CONTINUES SLOW PROGRESS
Colonel Houari Boumediene,
in the four years since he ousted
President Ben Bella in June 1965,
has grown in both stature and
self-confidence as he has moved
cautiously and methodically to-
ward his twin goals of restruc-
turing the country's administra-
tion and of industrializing the
economy.
The once enigmatic and dif-
fident Boumediene still eschews
most of the trappings of power,
but he appears more outgoing,
self-assured, and decisive. At
the same time, he continues to
pay lip service to the principle
of collegial rule established
during the 1954-62 rebellion and
to be surrounded by the same
clique of long-time associates
that immobilized the policy-mak-
ing Revolutionary Council and
set off the 1967 revolt by Col-
onel Zbiri, then his chief of
staff.
in the face of widespread
apathy and skepticism, Boumediene
is pressing to rebuild the Na-
tional Liberation Front (FLN),
the country's only political
party, and to develop a new sys-
tem that will decentralize the
Algiers-dominated administration
inherited from France. Reorgani-
zation of the FLN by Boumediene's
tough-minded and energetic aide,
Ahmed Kaid, is nearing completion.
The party played a dominant role
in the May elections of wilaya
(departmental) councils. These
councils, together with local
councils elected in 1967, form
the first two stages of a three-
part program designed to culmi-
nate in the election of a national
assembly and a revision of the
constitution.
Although Kaid has succeeded
in building up new cadres for
the party and in bringing the
party's youth, women, and labor
affiliates under his thumb, he
has failed to attract the support
of the country's educated and
professional elite. Kaid may
be about to force a showdown
with the student organization,
which has consistently resisted
FLN control. The students, know-
ing that the government could
crack down on them by withhold-
ing scholarships, have so far
posed few problems for the re-
gime.
Algeria's economic goal of
self-sufficiency is being pur-
sued with equal deliberation.
Except for petroleum production,
most businesses and industry have
been progressively nationalized
and these--together with all new
ventures--are operated as state
enterprises. Concentration is on
heavy industry, the key to which
is the country's iron and steel
complex and petrochemical industry.
Boumediene anticipates as a second
phase the creation of many allied
factories, which he expects even-
tually to resolve the country's
critical unemployment problem. The
regime still promises agrarian re-
form, but for the present insists
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on increased production and prof-
itable operations from the so-
cialized farms.
While dissatisfaction and
grumbling continue inside and
outside the administration, the
regime seems more stable than at
any time since Ben Bella was
ousted. Potential supporters
of the numerous exiled opposition
leaders are periodically rounded
up by the gendarmerie and police,
which are the backbone of the
regime's support. Exiled leaders
are unwilling to collaborate or
are unable to build up followings
strong enough to challenge Boume-
diene. Barring assassination
or a coup, Boumediene seems
likely to stay in power for some
PAKISTAN GOVERNMENT PROPOSES FAR-REACHING REFORMS
The Government of Pakistan
is attempting to attack primary
causes of social discontent
through recently announced bud-
getary measures, a liberalized
labor policy, and radical educa-
tional proposals.
On 5 July, Deputy Martial
Law Administrator Nur Khan pre-
sented a labor policy that so
far has met with general ap-
proval, although there are in-
dications that some firms may not
abide by all its provisions. The
new plan grants collective bar-
gaining rights and allows workers
to strike--except in "essential
services"--provided a 21-day no-
tice has first been given. The
policy raises moderately the mini-
mum monthly wage for unskilled
labor in firms of 50 or more work-
ers, and delegates the determina-
tion of rates for smaller busi-
nesses to provincial wage boards.
Other provisions include free med-
ical care for workers and depend-
ents at the employer's expense,
and the creation of a welfare fund
for workers, which will be init-
iated by a government allocation
Page 21
of approximately $21 million for
housing.
A new education policy, out-
lined on 2 July by Nur Khan, will
probably arouse considerable pub-
lic debate prior to final for-
mulation and adoption in Septem-
ber. As presented, the plan would
completely revamp Pakistan's edu-
cation system and would result
in widespread social changes. It
calls for the reorganization of
present lower level schools into
a single eight-grade system with
universal free primary education,
heavy emphasis on technical and
vocational education at the sec-
ondary level, decentralization
of educational administration,
and autonomy for universities.
English would be replaced by Urdu
in West Pakistan and Bengali in
the East as a medium of instruc-
tion. A compulsory national serv-
ice would be established to
bring functional literacy to
adults. Under the new policy,
financial allocations for educa-
tion would double by 1975, al-
though as a share of national
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resources they would still be
small.
The education and labor pol-
icies were announced after the
1970 budget was presented in late
June. This new budget includes
some measures for greater social
justice and a few provisions to
relieve the economic disparity
long suffered by East Pakistan.
New revenue is to be derived
largely from the West wing and
the wealthier classes in both
provinces. There is no substan-
tial shift in development expen-
ditures, however, and--if allo-
cations for the Indus Waters proj-
ects are included--West Pakistan
will continue to receive the
greater share. Although several
new measures are aimed at stimu-
lating private investment in East
Pakistan and in depressed areas
of the West, special incentives
for private investors in East
Pakistan have existed for years
and the new proposals will prob-
SECRET
ably not have much impact. Ben-
gali reaction to the budget seems
to be that although a step has
been taken to aid East Pakistan,
much more needs to be done.
Meanwhile, Admiral Ahsan,
another deputy martial law ad-
ministrator, recently said pri-
vately that the government was
thinking of establishing a
civilian council to oversee day-
to-day operations and prepare
for a return to normal political
life. Under this scheme, the
martial law administrators would
meet only periodically to con-
sider major policy matters. Al-
though the admiral may have been
overly positive about his col-
leagues' acceptance of the idea,
President Yahya Khan might sup-
port it in the belief that the
time has come to take some new
political initiatives to main-
tain the confidence of the pub-
lic.
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CRISIS ERUPTS WITHIN INDIA'S CONGRESS PARTY
Prime Minister Indira Gandhi
appears to have lost a major test
of strength with her long-time
antagonists in the Congress Party
hierarchy. She did manage to
even the score partially, however,
by forcing one of her strongest
opponents in the cabinet to re-
sign.
The stage for the current
struggle was set when the old
guard Congress bosses nominated
one of Mrs. Gandhi's foes as the
party's candidate in the presi-
dential election set for 16 Au-
gust. Mrs. Gandhi's initial re-
action was sharp and bitter, al-
most reaching the point of public
denunciation. Then, as a counter-
move, she supported the independent
candidacy of acting President V.
V. Giri--a man whose ideology and
personality are much more to her
liking.
Realizing that she had locked
herself into a conflict that could
seriously threaten her hold on
the prime ministership, Mrs.
Gandhi had second thoughts and
began to back down. Before her
final capitulation on the presi-
dential issue, however, she forced
the resignation from the cabinet
of her arch-rival, Deputy Prime
Minister Morarji Desai, by as-
suming his additional responsi-
bilities for the important Finance
Ministry.
Ostensibly, her action was
intended to make it easier to
implement her controversial pro-
posals to nationalize the coun-
try's major banks--a move strongly
opposed by the more conservative
Desai. It appears more likely,
however, that the move against
Desai was primarily intended as
a means of saving face in her
struggle over the presidency.
Later the same day, Mrs. Gandhi
virtually admitted defeat on the
presidential issue when she de-
clared unconditional support for
Sanjiva Reddy's candidacy--the
man earlier sanctioned by her
opponents.
The Indian presidency under
normal conditions is a ceremonial
position for the most part. It
has been very important, however,
for Mrs. Gandhi to have someone
in the job who could be counted
on to follow her cue in such im-
portant matters as asking her to
form a new government or even dis-
solving Parliament and calling new
elections. In the past, these have
been crucial potential weapons
for her to have available in or-
der to cope with any concerted
attempt to oust her from the prime
ministership. The-presidency
could become even more important
if, as expected, no single party
gains a clear majority in the next
general election, which must be
held by 1972.
Although Mrs. Gandhi's
stalking horse, V. V. Giri, is
still theoretically in the presi-
dential race, he appears unlikely
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to win without the prime minis-
ter's support. Nevertheless,
prior to her capitulation, he
indicated that under no circum-
stances would he withdraw, and has
announced his intention to resign
as vice president and acting
president. Should he carry
through with these plans, the
apolitical chief justice of the
Supreme Court will act as presi-
dent until the election is over.
Sanjiva Reddy, the apparent
favorite as the official Congress
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candidate, could still be upset.
The president is chosen by secret
ballot through a complicated sys-
tem of weighted voting by the
elected members of both houses
of the national Parliament and
the state assemblies. Congress'
strength within this electorate
has declined to the point where
a split in the party vote could
leave the final decision in the
hands of the opposition, despite
their expected inability to unite
behind a single candidate
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WESTERN HEMISPHERE
The spotlight in Latin America this week focused on the undeclared but
destructive war between El Salvador and Honduras. Although both countries
had agreed in principle to a cease-fire after four days of occasionally bloody
fighting, implementation of the accord could still founder.
In Cuba, Fidel Castro kicked off the 1970 sugar harvest with a two-
hour speech on 14 July. Although most of the speech dealt with domestic
agricultural matters, Castro did touch briefly on foreign affairs. He said Cuba
would not refuse a request for the resumption of relations with those Latin
American countries-specifically Peru-that adopted and maintained an
"anti-imperialist attitude" and explicitly and formally denunciated the OAS
sanctions against Cuba. In an interview after the speech, Castro made it clear
that he was not interested in resuming relations with the US unless basic
changes in US policy occurred.
Havana has thus far shown only moderate interest in the Soviet war-
ships that will be in Cuba for a one-week stay beginning 20 July. No special
welcoming ceremonies have yet been announced. Castro probably fears that
any massive celebrations honoring the visit will make him appear to be a
Soviet puppet and might also interfere with the early stages of the sugar
harvest.
Tensions between Peru and the US continued to ease this week. The
Peruvians are preparing to invite Ambassador Irwin to Lima to renew talks
on problems arising from Peru's expropriation last October of the US-owned
International Petroleum Company.
In Brazil, the terrorists who have been active in Sao Paulo have
apparently turned to arson in their campaign to discredit the government
and security officials. During the past week three radio and television
stations have been burned; one of them was completely destroyed.
The Argentine Government has appointed an official to supervise the
reorganization of the powerful General Labor Confederation. Leaders of the
Peronist-dominated bloc of unions formerly headed by the assassinated
Augusto Vandor are also attempting to unite organized labor, and they are 25X1
likely to oppose the government's efforts in this field.
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SALVADORAN-HONDURAN CONFLICT EVADES SOLUTION
The outbreak of hostilities be-
tween El Salvador and Honduras on
14 July has brought the machinery
of the Organization of American
States into motion to arrange a
cease-fire formula. The OAS sent
an investigative committee to the
two capitals, where its members
have attempted to work out an agree-
ment between the disputants.
The OAS team has encountered
difficulties because of the Salva-
doran Government's reluctance to
El Salvador-Honduras Military Actions
EI Po ~La Labor211
ueva Ocotepeque.
Valladolid Tegueigalpa
Langue
Honduran planes attack
POL storage facilities
on 15 July
accept a provision of the Rio Treaty
requiring conflicting parties to
suspend hostilities and restore
"the status quo ante bellum." Hon-
duras, on the other hand, seems un-
willing to agree to any settlement
that would leave the Salvadoran
military in control of part of its
territory. Salvadoran stalling on
the withdrawal is probably intended
as a bargaining counter to gain a
guarantee of safety for the more
than 250,000 Salvadorans who live
in Honduras.
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SECRET
El Salvador's rapid military ad-
vances following the beginning of
air and ground offensives on the
evening of 14 July diminished by 17
July, when the tide seemed to have
turned slightly in Horduras' favor.
If reports of Salvadoran aircraft
losses and ground reversals are con-
firmed, the Sanchez government may
come under greater pressure to ac-
cept the OAS cease-fire requirements.
In addition, Honduran bombing of oil
depots in El Salvador could result
in serious shortages of petroleum
products.
Thus far, the performance of
the Salvadoran armed forces appears
to have restored government pres-
tige--one of the original objectives
of the Salvadoran invasion. Mean-
while, the Honduran Government may
find itself under intense political
pressure to salvage at the confer-
ence table what it lost on the bat-
tlefield. Inability to satisfy the
demands of national pride could un-
dermine the Lopez government.
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Or-L.ic.C, I
COMMUNISTS HAVING MIXED LUCK IN COSTA RICA
Despite government efforts
to prepare the Costa Rican pub-
lic for increased contact with
Communist countries, the local
Communist party has been dealt
a serious setback in its bid to
participate in next year's presi-
dential election.
The government is consider-
ing a diplomatic exchange with
the USSR in order to ensure fur-
ther coffee purchases. In No-
vember 1968, when Costa Rica made
its first major coffee sale to
the USSR, all arrangements were
smooth and local sentiment was
favorable. Since then, however,
the USSR has reportedly made it
clear that there will be no fur-
ther deals unless it is allowed
to set up a commercial mission
and perhaps an embassy in San
Jose. Poland and Czechoslovakia
already have commercial missions
there, and Bulgaria has been
prodding for representation in
San Jose.
whose secretary general has been
involved in the negotiations with
the USSR.
The MCRL has vigorously
countered the local Communists'
well-financed and professionally
executed campaign to register a
front for the general elections
scheduled for February 1970.
The electoral tribunal recently
rejected the front group on tech-
nical grounds but requested a
ruling from the legislature on
whether the party should be out-
lawed on political grounds. The
tribunal and the legislature
have tossed the issue back and
forth for several months, creat-
ing a web of legal and jurisdic-
tional questions. If the Com-
munists can meet registration re-
quirements by the deadline on
1 August, the legislature, de-
spite its reluctance, may yet be
forced to take a stand on the
Communist issue.
The press has been playing
up predictions of a coffee ex-
port crisis next year and the
enthusiastic reception accorded
Costa Rican coffee in the USSR.
The campaign is clearly aimed at
molding public opinion and off-
setting the inevitable criticism
from some sectors if the Soviets
gain an official foothold in the
country. An influential anti-
Communist businessmen's organi-
zation, the Free Costa Rica Move-
ment (MCRL), has already indicated
its opposition and would probably
propagandize against trade that
it believes would fill the coffers
of the local Communist party,
The Communists have recently
made significant headway in
the labor field by leading a suc-
cessful though illegal dockworkers'
strike.
The increased visibil-
ity of the party, which--although
illegal--acts more and more openly,
will be sure to invite strong pro-
test from the anti-Communist groups.
This development may put a damper
on negotiations with the Communist
countries, at least until the
elections are over 25X1
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CHILEAN CHRISTIAN DEMOCRATS RESUME IN-FIGHTING
The national council of
President Frei's Christian Demo-
cratic Party (PDC) has opted for
a middle ground between members
who want to cooperate closely
with the Communists and Social-
ists in the presidential election
next year and others who prefer
to act alone. In announcing its
decision that the PDC will choose
its candidate at a national con-
gress beginning on 15 August, the
council refused to call explicitly
for joint action with other par-
ties but stated that the candi-
date would be free to approach
other parties following his nomi-
nation.
Former Ambassador to the US
Radomiro Tomic, who recently re-
turned from a trip to Western
Europe and the Soviet Union, re-
mains the most likely candidate.
Although the national committee
has supported neither his long-
standing desire for a "popular
unity" campaign nor his recent
advocacy of complete and immediate
nationalization of the copper in-
dustry, he would probably accept
the PDC nomination in view of the
Communists' continuing refusal to
support him as a joint candidate.
SECRET
Since returning to Chile,
Tomic has caused some controversy
by his criticism of the agreement
negotiated between the govern-
ment and the Anaconda Company
for the progressive nationaliza-
tion of Anaconda's properties in
Chile. This position, plus his
continued emphasis on the desir-
ability of cooperation with the
Marxist left, has alienated many
rank-and--file members of the PDC.
His national stature is such, how-
ever, that he seems likely to be
the first choice of the national
congress.
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SECRET
CUBA UNIMPRESSED BY SOVIET NAVAL VISI1
The Castro regime has thus
far demonstrated remarkably lit-
tle interest in the visit to
Cuba next week by units of the
Soviet Navy. The ships--a KYNDA-
class guided missile cruiser,
a KILDIN-class destroyer, a
KASHIN-class destroyer, two F?-
class submarines, a UGRA-class
submarine tender, and a tanker--
are scheduled to arrive on 20
July for a one-week stay.
Since the TASS announcement
on 6 July, the visit has rated
only two brief items in the Cuban
press. A two-sentence PRENSA
LATINA dispatch the same day re-
peated the TASS report, and a
short article in the Cuban Com-
munist Party newspaper on 9 July
described the event as a "cause
for great rejoicing by the Cuban
people." Castro himself failed
even to mention the visit in a
two-hour speech on 14 July. Al-
though both TASS and PRENSA LATINA
claimed that the visit was "at
the invitation of the Cuban Rev-
olutionary Government," Havana's
listless reaction suggests that
the idea originated in Moscow.
Because the visit coincides
with an important Cuban military
holiday--the anniversary of Cas-
tro's abortive attack on the Mon-
cada barracks on 26 July, 1953--
Havana would have been expected
to accord the naval delegation
a hearty welcome. Indeed, Cas-
tro could even treat the visit
as the pledge of military support
he has vainly sought since 1962.
There seems, however, to be no
preparation for special cere-
monies. Like holidays earlier
this year, 26 July will be a nor-
mal working day with a minimum
of celebration. Castro may even
choose to omit his traditional
speech.
SECRET
There are two likely reas-
ons for the reserved Cuban at-
titude. Although relations with
Moscow have improved consider-
ably since Castro gave a quali-
fied endorsement of the Soviet
invasion of Czechoslovakia,
Castro has no intention of giv-
ing the appearance of being a
Soviet puppet. Neither does he
wish to have :any mass celebra-
tion that might interfere with
the initial weeks of this year's25X1
sugar harvest and its all-impor-
tant goal of ten thousand tons.
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SECRET
BOLIVIAN POLITICAL MANEUVERING CONTINUES
The political situation re-
mains unsettled, with President
Siles and Armed Forces Commander
General Ovando continuing their
political maneuvering.
Siles, prohibited by the
constitution from succeeding him-
self in office, has been quietly
supporting the candidacy of the
popular mayor of La Paz, retired
General Armando Escobar. The
mayor is probably the only polit-
ical personality who could de-
feat Ovando in the presidential
elections scheduled for early
next year. As a result, rela-
tions between Siles and Ovando
are tense.
In a vulnerable position and
often at the political mercy of
the military, Siles has shown
remarkable aplomb and skill in
outmaneuvering Ovando despite re-
cent actions that have upset the
military. While Ovando still in-
tends to be the next president--
legally if possible--he is appar-
ently still pondering various
possible courses of action. A
decision by Escobar to enter the
presidential race would probably
force Ovando's hand. In the
meantime, he is putting his own
men into commanding positions in
the armed forces and filling va-
cancies in the national police
with loyal followers.
On 14 July, after a
brie t with terrorists in
Cochabamba, authorities uncovered
a collection of documents includ-
ing detailed plans for sabotage
and direct action against US of-
ficial installations and busi-
nesses. At the same time, au-
thorities rounded up several
leaders of former president Paz'
National Revolutionary Movement,
alleging some political parties
were linked with the terrorists.
The information uncovered
in the raid provides the most
detailed indication yet of ter-
rorist plans to resume guerrilla
activity with Cuban assistance.
The speed of the authorities in
following up this information by
raids and arrests will probably
force a delay in implementing
the plans but not necessaril
their abandonment.
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Secret
Secret
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