WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A008700050001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 21, 2016
• Document Release Date: October 14, 2008
• Sequence Number: 1
• Publication Date: April 30, 1971
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Navy review
State Dept. review
completed. completed
Secret
30 April 1971
No. 0368/71
Copy N4 50
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CONTENTS
(Information as of noon EDT, 29 April1971 J
Indochina: More Fighting Now and More to Come . . . . . . . . . . . . . . . 1
Cambodia: A Case of Political Paralysis . . . . . . . . . . . . . . . . . . . 2
Laos: The News Is Not All Bad . . . . . . . . . . . . . . . . . . . . . . 3
NATO Allies Probe Detente Prospects . . . . . . . . . . . . . . . . . . . . 7
Soviet Industry Off to Good Start . . . . . . . . . . . . . . . . . . . . 9
Close Finnish-Soviet Ties Reaffirmed . . . . . . . . . . . . . . . . . . . . 10
Bulgaria Stands Pat . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Eurodollar Feeds on Itself . . . . . . . . . . . . . . . . . . . . . 12
Indo-Pakistani Relations Deteriorate . . . . . . . . . . . . . . . . . . . . 13
Pakistan: Foreign Exchange Crisis Deepens . . . . . . . . . . . . . . . . . 14
Ceylon: Government Prepares for Guerrilla War . . . . . . . . . . . . . . . 15
Egypt: "The Guns Alone Will Not Speak" . . . . . . . . . . . . . . . . . . 16
Jordan: Fedayeen Exodus from Amman . . . . . . . . . . . . . . . . . . 16
Lebanon: New Fedayeen Base of Action? . . 17
Bahrain: Is Independence Imminent? . . . . . . . . . . . . . . . . . . . . 18
WESTERN HEMISPHERE
May Day Is Breaking Out All Over . . . . . . . . . . . . . . . . . . . . . 19
Haiti: President Duvalier Sets His Style . . . . . . . . . . . . . . . . . . . 20
OAS Assembly: A Polite Confrontation . . . . . . . . . . . . . . . . . . . 21
Argentina: President Lanusse and Juan Peron . . . . . . . . . . . . . . . . 22
Chile: Allende Maintains a Fast Pace . . . . . . . . . . . . . . . . . . . . 23
Cuba: Castro's Solzhenitsyn? . . . . . . . . . . . . . . . . . . . . . . . 25
NOTES: USSR; Yugoslavia; Austria; Malta; Ivory Coast; Uganda-Sudan; Guyana; Trini-
dad; Peru
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FAR EAST
Indochina: More Fighting Now and More to Come
As expected, the Communists began a new
round of attacks on 25-26 April; major emphasis
has been on the northern half of the country.
Most of the action has involved shellings, some of
which caused heavy material damage at a cost of
only a few mortar or rocket rounds. By midweek,
the enemy's campaign had wound down without
reaching the level of intensity of late March, when
the spring campaign began.
Unlike the March actions, the latest enemy
effort included no devastating ground attacks
similar to the overrunning of the town of Duc
Duc and Fire Support Base Mary Ann. There also
has been no sustained enemy ground action of the
magnitude that occurred in western Kontum
Province in early April, although a large number
of small ground probes increased casualties on
both sides.
The North Vietnamese may be planning to
intensify the war during the next year or so.
Some Communist propaganda commentaries in
the wake of Lam Son 719 strongly suggest that
Hanoi is moving in this direction. Two articles, in
particular, stand out because of the lessons they
draw from the fighting in Laos. Both make clear
that the Communists are to regard the Lam Son
719 action as a victory of strategic importance-a
major test in which Vietnamization was tried and
found wanting. One article asserts flatly that the
battles in Laos showed that the Communists can
defeat the allies militarily-a claim that has been
rare indeed in the past two years.
Both commentaries stress that in Lam Son
719 the Communists met and defeated their
adversaries in a "large, annihilating battle," and
they imply that more of this kind of heavy,
concentrated fighting lies ahead. Neither writer
claims that the war is to be won by large-unit
engagements alone or that a general switch to this
type of warfare is feasible or even desirable at the
moment. Both authors make clear, however, that
such battles are essential components of the strug-
gle, and both convey an impression that for the
first time in over two years the Communists be-
lieve occasions are coming soon in which they can
and should take on South Vietnamese forces
much more forcefully.
A continued high rate of military conscrip-
tion in North Vietnam is another reason to
believe Hanoi's war effort is to be increased in the
coming months. An upswing in military recruit-
ment may, in fact, be under way in the wake of
Lam Son 719. The North Vietnamese press has
been filled with articles of the kind noted during
past periods of increased inductions into the
armed forces. Several accounts have described
large numbers of youths "enthusiastically volun-
teering" for physical examinations and signing up
for service.
Many of those now coming into the army
clearly are earmarked for front-line duty outside
North Vietnam. Most of the press articles are
quite explicit that the new soldiers are joining for
the purpose of going off to fight the Americans.
Indeed, a Radio Hanoi broadcast on 15 March
said that a batch of recruits in one of the coun-
try's southern provinces is engaged in agriculture
"while waiting for the order to set out for the
battlefield." Nonetheless, because of training
requirements and the conditions of the infiltra-
tion trails during the oncoming rainy season, the
presence of the bulk of new recruits is unlikely to
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be felt elsewhere in Indochina before the second
half of this year, at the earliest.
The Thieu government is still getting con-
siderable criticism over its handling of the
economy. Labor unions and employees in the
private sector have been complaining ever since
President Thieu announced in February that civil
servants and the military would be exempted
from paying income taxes. Some workers in Sai-
gon staged a one-day sitdown strike last weekend
to demand that they, too, be exempted from
paying income tax.
Thieu has admitted privately that his action
was a political measure to strengthen his support
among the bureaucracy and the army-groups
which have been hit hard by inflation-in the
election next October. He had not anticipated
such a strong reaction from the private sector,
however. Government ministers recently ex-
pressed concern at a cabinet meeting that strikes
by private sector employees over the tax issue
could attract substantial support.
The income tax has provided only a small
percentage of government income in the past, and
exempting government employees alone would
not have much of an effect on revenues. Domestic
tax reform measures had been planned to increase
revenues and to distribute the tax burden more
evenly, however, and a decision to abolish the tax
would be a setback to any movement for reform.
Government officials have met with repre-
sentatives of the workers and have submitted the
issue to the National Assembly. The government
reportedly hopes that protests can be calmed and
that the passage of tax legislation can be delayed
until after the presidential election. If the strikes
continue, however, Thieu might again decide that
political considerations outweigh economic
factors and adopt measures to conciliate the
workers.
Cambodia: A Case of Political Paralysis
The political impasse in Phnom Penh has
entered its second week, with no early solution in
prospect. At last report Lon Nol's efforts to put
together a cabinet acceptable to the contending
factions had collapsed. The ailing prime minister
evidently has sent a letter to Chief of State Cheng
Heng withdrawing his name from contention and,
in effect, asking that someone else be tasked with
the burden of organizing a new government.
Lon Nol's latest flip-flop followed a meeting
with Deputy Prime Minister Matak, whose role in
a new government has been the subject of con-
siderable backstage maneuvering. Much of the
political betting was on the eventual selection of
three deputy prime ministers to direct most-if
not all-of the government's responsibilities. Sirik
Matak's name has been cited as Lon Nol's likely
choice to carry on as the first deputy, but he
balked at the prospect of participating in a gov-
ernment with reduced powers. He may also have
had apprehensions about Lon Nol's ability to
keep his brother Lon Non on a short leash. The
latter created a good deal of trouble when Matak
was acting prime minister during Lon Nol's ab-
sence. Matak may also have had trouble with the
idea of working with Son Ngoc Thanh, who was a
strong candidate for one of the deputy slots.
There evidently is a good deal of bad feeling
between the two men, although Thanh has stated
that he could work with Matak.
If Lon Nol has indeed bowed out of the
picture again, the political initiative once more
returns to Cheng Heng, who as chief of state must
pick another prime ministerial candidate. Unless a
dark horse compromise candidate emerges, Cheng
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Heng's choice would appear to boil down to
Matak or Son Ngoc Thanh. The latter apparently
sees himself as a potential prime minister, and he
is likely to view any high official post as a spring-
board for the future. His inclusion in the new
government would be especially appealing to
some political factions, because he has no ties to
personalities or policies held over from the
Sihanouk era.
Matak is dealing from a fragile power base.
He is not especially popular in the country, and
he has become something of a symbol of the "old
guard" to the students and elements in the Na-
tional Assembly. He is, however, capable and
energetic and has established some rapport with a
number of senior military officers. Whether the
latter will support Matak in a political showdown
is another matter. At Lon Nol's urging, all of the
country's top military commanders pledged sup-
port to Matak earlier in the week, but that was in
circumstances where it looked as if Lon Nol were
organizing a government.
Approval of any new government by the
legislature may be a difficult and lengthy process.
The National Assembly has served notice that
both it and the Senate will vote individually on
each minister once a proposed cabinet list has
been drawn up. It has also decreed that the prime
minister-designate must appear personally before
it to obtain a vote of confidence before the new
government is organized.
On the Military Front
In the southwest, government forces have
launched another attempt to clear a short stretch
of Route 4, near the Pich Nil pass. This latest
phase of the five-week-old operation is being led
by Khmer Krom reinforcements. In their first
sharp encounter with the Communists, they re-
portedly killed 57 of the enemy on 28 April,
while sustaining losses of nine killed and 45
wounded.
No significant fighting was reported in east-
ern Cambodia. The reduction in activity may be
due in part to the sagging morale of South Viet-
namese troops, who have been kept on the line in
this area since their dry-season offensive began in
early February.
senior South Vietnamese military officers are
concerned over the morale problem and fear that
many of the troops would desert if they were
rotated to Sai on.
/ one of the troops' main com-
plaints is their prolonged separation from their
families.
Communist forces in the area northeast of
Luang Prabang fell back this week as government
irregulars reoccupied much of the territory lost in
late March. One irregular task force consolidated
its hold on the high-ground positions overlooking
the Luang Prabang airfield, while a second moved
north on Route 4 along the southern bank of the
Mekong. A third task force hit elements of the
NVA 335th Regiment in the hilly terrain about
12 miles east of the capital, apparently inflicting
substantial losses on the enemy. The latter two
task forces eventually converged on Pak Suong, at
the junction of the Mekong and Nam Suong
rivers, reoccupying the King's farm, which had
been in enemy hands since 21 March.
The Communists offered relatively little
opposition to the government's advance. It is
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WrIu Kr. 1
$TATJTF MIL Long T l!
possible that their supplies were not adequate for
a prolonged fight with the government's ex-
panded force of irregulars, and that the steady air
and artillery attacks of the past two weeks had
already caused many casualties in North Vietnam-
ese ranks. It is also possible, however, that the
Communists had intended all along to pull back
at about this time, if pressed, having amply
demonstrated the vulnerability of the royal capi-
tal.
After a brief pause to regroup, the gov-
ernment plans to extend its clearing operation to
the north, with the immediate objective of re-
taking Pak Ou at the junction of the Mekong and
the Nam Ou rivers. The Nam Ou is the main
Communist supply artery into this area. It is
possible that the North Vietnamese will choose to
make a stand at or near this point, and it is by no
means certain that the irregulars-fatigued after a
prolonged advance and with their supply lines
extended-will be able to maintain their mo-
mentum.
Holding at Long Tieng
The situation in General Vang Pao's head-
quarters area southwest of the Plaine des Jarres
remained essentially unchanged during the past
week. The government retook some long-con-
tested high ground about four miles northeast of
Long Tieng, but neither side made major gains.
With the rainy season only a few weeks away, the
irregulars' ability to maintain the status quo in
this area is an encouraging sign for the govern-
ment. Earlier this month a rallier's report had
indicated that the Communists might attack Long
Tieng in force during the first week of May, but
so far there are no indications that the enemy is
preparing for a major push.
It is too early to tell whether the Com-
munists intend to finish this dry season as they
did the last, with one division returning to North
Vietnam and the second in place near Long Tieng
.to keep Vang Pao off the Plaine des Jarres. Else-
where in Laos the situation remained relatively
quiet.
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South Korea: Pak Wins Third Four-Year Term
President Pak Chong-hui easily defeated his
popular opponent Kim Tae-chung by about one
million votes in an essentially orderly and vio-
lence-free election on 27 April. Kim, a bright
young opposition party National Assemblyman
and a charismatic public speaker who had at-
tracted overflow crowds during the campaign, was
expected to run a close race. As it turned out he
only carried Seoul, a traditional opposition
stronghold, and his home region, Korea's popu-
lous southwestern rice basket.
Pak's victory was due in large part to wide-
spread satisfaction with South Korea's impressive
economic development, the administration
party's superior organization, particularly in the
provinces, and the incumbent's advantage of
having a government bureaucracy skilled in deliv-
ering the votes to the party in power. Pak's last-
minute promise not to run again also probably
swayed many voters in his favor.
~ I n
any event, there is widespread suspicion of gov-
ernment vote tampering, and the opposition pre-
dictably is calling foul, thus raising the prospect
of renewed and possibly more violent student
protest.
Pak's victory ensures the continuation of
strong central leadership emphasizing economic
development. The somewhat smaller voter turn-
out, however (an estimated 80 percent, compared
with about 85 percent in the last two presidential
elections), suggests a growing weariness with his
leadership. Some voters may have chosen to op-
pose him by abstaining, thereby avoiding the in-
stability they may have feared would follow a
change of government. Throughout the campaign
the administration encouraged the belief that the
military would not accept Kim as president. Pak,
in one of his last acts of the campaign, took to
the air to decry the opposition's unfitness to
govern and ominously warned that "the ruling
party for its part is not prepared to turn over
power."
With the presidential race over, the adminis-
tration now faces another political contest on 26
May when elections will be held for an enlarged
204-seat National Assembly. The present 175-
member house is controlled by Pak's party, which
has 112 seats to the opposition's 42. The majority
of the remaining seats are held by politicians
friendly to the administration. With the presi-
dency in hand, Pak's party is likely also to main-
tain control of the legislature because of voter
appreciation of the benefits to be derived from
support of the ruling party.
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SEUKE 1
EUROPE
NATO Allies Probe Detente Prospects
Although the prospect for movement toward
a conference on European security (CES) remains
nil in the absence of a Berlin agreement, many
Allies continue to hope that NATO will be able to
take a positive stance on detente at the ministerial
meeting in June. Italy, for example, has urged
that the foreign ministers move the Alliance be-
yond its past positions on CES and on mutual and
balanced force reductions (MBFR), and both Bel-
gian Foreign Minister Harmel and Canadian Minis-
ter of External Affairs Sharp apparently share
Italy's concern that NATO's position not remain
static.
The problem faced by advocates of this posi-
tion, however, is how to produce a sense of move-
ment without undermining NATO's insistence
that a Berlin accord precede preparations for a
CES. Although all the Allies favor retention of
this precondition, many seem increasingly in-
clined to drop the secondary NATO prerequisite
for a CES-i.e., progress in other "ongoing talks."
Paris apparently has convinced Bonn that the
second requirement is unnecessary and that its
removal might put more pressure on Moscow to
make concessions on Berlin.
The West Germans would also like the Allies
to seize on the opportunity presented by Brezh-
nev's and Kosygin's recent references to force
reductions to link any eventual CES to progress
toward MBFR. Bonn-traditionally a proponent
of mutual force reductions-has proposed that the
communique in June state that NATO desires
multilateral MBFR exploratory talks before or
during preparations for a security conference.
Paris, which has remained aloof from NATO work
on MBFR because of its "bloc-to-bloc" nature,
objects to such direct linkage and would not want
MBFR posed as a potential roadblock to a CES.
The French recently have become more interested
in the subject, however, and it is possible that
they would go along with some less specific state-
ment on the CES-MBFR relationship.
It remains unclear what effect CES consulta-
tions among members of the European Commu-
nities (EC) will have on their position at the
NATO ministerial. Although the French in these
talks have projected a far less extensive CES pre-
paratory phase than the two-stage approach that
the US supports, a French official has recently
insisted that Paris too would want CES prepara-
tions to provide sufficient opportunity for the
West to opt out if no significant East-West agree-
ments appeared in the cards. One official close to
the consultations has reported that even though
the six foreign ministers will meet prior to the
NATO ministerial, the EC members have agreed
that any policy statements on CES should come
from NATO.
As the ministerial approaches, the Warsaw
Pact powers probably will continue their attempts
to drum up support for their CES concept. At the
Geneva arms control talks, for example, the Poles
have stressed the potential importance of Brezh-
nev's statement on force reductions, and the So-
viet delegate has hinted at some further elabora-
tion of Soviet views. There are also signs that the
Pact may step up its efforts on behalf of some
kind of people-to-people European conference.
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Soviet Industry Off to Good Start
Soviet civilian industrial production in-
creased by seven percent during the first three
months of 1971. Although this increase is some-
what below that of the first quarter of 1970, it
matches the respectable gain posted for the year
as a whole. The good results may be largely attri-
buted to the substantial addition of new pro-
ductive capacity during the last part of 1970, to a
very mild winter, and to special efforts made "to
greet the 24th CPSU Congress in a worthy
manner."
Production of each of the three major
sectors of civilian industry-industrial materials,
machinery, and nondurable consumer goods-
grew at somewhat lower rates than registered in
the comparable period a year ago. The major
slowdown occurred in the industrial materials
sector, notably in certain fuels, metals, and con-
struction materials. Chemical output, however,
continued to grow at a rapid pace.
Civilian machinery remains the leading
sector in terms of growth, but there was a con-
siderable divergence between producer and con-
sumer durables. Production of television sets and
washing machines, for example, actually declined
by 17 percent from last year. Retail inventories of
these goods continue to pile up in the face of
buyer resistance to outmoded designs and poor
quality. Prices of unwanted TV sets were slashed
last month in an effort to move the glut, esti-
mated to have reached two million sets, an
amount equal to nearly two fifths of annual sales.
The consumer nondurable sector registered a
mixed performance. The food situation, at least
for urban dwellers, appears favorable for the near
future. Meat output was up an impressive 20
percent over the same period last year. This in-
crease, however, is more apparent than real be-
cause private owners of livestock, under the
impetus of favorable prices, are shifting from
home slaughtering to selling livestock to the state
and then purchasing the processed meat from
retail outlets. During the first quarter, the growth
in output of soft goods, such as knitwear and
leather footwear declined considerably from a
year ago.
Industrial support for agriculture remains at
the relatively high rates of growth posted in 1970.
This is particularly evident in the output of
mineral fertilizer, which grew by 17 percent. This
rapid increase combined with output from
recently completed new capacity should ensure
fulfillment of a somewhat ambitious plan for
deliveries of mineral fertilizer to farms in
1971.
USSR: Soviet naval units are conducting a multi-
phase ASW exercise in the Mediterranean. The
activity has centered around the helicopter carrier
Leningrad and two guided-missile units that left
their anchorages on 25 April and have been
operating since then in the eastern and central
Mediterranean. Two other groups of ships and at
least three submarines have been operating north
of Libya. These units, which evidently acted as an
attacking force against the Leningrad, have moved
eastward in the Mediterranean and may have con-
cluded their part of the exercise. Soviet surface
and submarine forces frequently exercise in the
central and eastern Mediterranean, and the cur-
rent operations appear to be a continuation of
this training.
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Close Finnish-Soviet Ties Reaffirmed
Helsinki has reaffirmed its close economic
ties with the USSR in a ten-year treaty on the
development of economic, technical, and indus-
trial cooperation. The two countries also signed
three protocols governing the supply of Soviet
natural gas in exchange for Finnish large-diameter
pipe, the construction of a second Soviet-designed
nuclear-power plant near Helsinki, and Finnish
participation in a forestry complex in Soviet
Karelia. Discussions are continuing on other proj-
ects in both countries in which the two sides may
collaborate.
The terms of the new ten-year treaty are not
sufficiently different from those in other existing
agreements to have warranted reformulation in a
new treaty. The new agreement, however, may
have been designed to ease Soviet apprehensions
Bulgaria Stands Pat
Events at the tenth Bulgarian party congress,
which lasted from 20 to 25 April, underscored
First Secretary Todor Zhivkov's domination of
the party, and the 1,553 delegates roundly en-
dorsed a continuation of his policies.
Zhivkov delivered the opening report and
the final invocation. Discussion of his report
brought only one alternate politburo member to
the podium; no other member of the ruling circle
delivered a major speech.
As expected, few significant personnel
changes occurred and the ruling politburo was
re-elected. Only alternate politburo member
Luchezar Avramov, responsible for foreign trade,
lost his party position, and he subsequently was
removed from his government job also. This was
probably because of last year's foreign trade
over future Finnish negotiations with the Euro-
pean Community (EC). Although the Finns have
no immediate plans to move beyond reaching a
simple commercial agreement with the EC, Soviet
acquiescence is necessary before Helsinki can take
this action.
As was the case with Finnish membership in
the European Free Trade Area, the USSR ap-
parently has recognized that Finland cannot re-
main isolated if the EC is expanded to include
most of Western Europe. The Soviets, however,
have committed the Finns in the new treaty "not
to apply discriminatory measures in trade and
economic relations" with the USSR, which
should provide the Soviets with the leverage they
presumably want in an Finnish negotiations with
the EC.
scandal and Bulgaria's huge trade deficit with the
West, built up in part under his tutelage. As a
result, the USSR has had to lend Sofia substantial
amounts of hard currency.
Despite the retention of the politburo's "old
guard" (four of the 11 full members are over 70
years of age), some emphasis on "youth" was
evident in the composition of the new 257-
member central committee. Thirteen percent of
its full and alternate members now are under the
age of 40, a significant increase over the five
percent at the last party congress in 1966.
A new party program, a new national consti-
tution, and the next five-year plan were approved
without meaningful discussion or changes. Even
the first secretary's report gave no fresh insights
into the significance of the three documents. As
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expected, Zhivkov expressed concern for con-
sumer welfare, and promised wage increases, price
stability, and more housing. If there is any sub-
stance to his remarks, it was not reflected in the
five-year plan.
Zhivkov pledged continuation of Bulgaria's
foreign policy, with maintenance of close ties to
the USSR given first place. Nevertheless, in line
with his policy of improving relations in the
Balkans, he made only relatively mild attacks on
the Albanians and their Communist Chinese allies.
Zhivkov ignored the absence of an official Yugo-
slav delegation, failed to mention his quarrel with
Tito over Macedonia, and assessed relations with
Belgrade positively. The congress passed Soviet-
style resolutions on the Middle East and Indo-
china, denouncing US actions there and pledging
support of "just" causes.
The congress apparently was also used to
launch as a trial balloon a Bulgarian proposal for a
multilateral Balkan declaration expressing respect
for territorial integrity and renouncing the use of
force. Several preprinted foreign-language versions
of Zhivkov's speech contained the proposal, but
Zhivkov omitted the passage in his speech. The
proposal may have been intended to signal a
readiness to talk on this basis if any interest were
expressed by the affected Balkan capitals.
Overall, the congress was a lackluster, pre-
ordained production, even though 89 foreign
delegations attended. Brezhnev was the ranking
visitor, and other notables included Hungary's
Kadar, Poland's Gierek, and East Germany's
Honecker, the man most like) to succeed UI-
bricht.
YUGOSLAVIA: The second national conference
on self-management will open on 5 May, offering
Yugoslavia's leaders the first significant reaction
from below to pending political and economic
reforms. The delegates will represent the enter-
prise managements, workers' councils, and local
economic administrators who will be most af-
fected by the proposed governmental decentrali-
zation and associated economic policies. Self-
management is a firmly rooted feature of the
Yugoslav economic system and it is acquiring
political importance as well, a trend that is likely
to be strengthened at the conference. Attesting to
this is the fact that 180 observers, largely trade
unionists, from 50 countries have acce ted invita-
tions to the conference.
AUSTRIA: The presidential election victory of
Socialist incumbent Franz Jonas on 25 April is
being interpreted in Austria as a vote of confi-
dence in Chancellor Kreisky's year-old, minority
Socialist government. It has also increased the
political clout of Kreisky's threat to call parlia-
mentary elections if Austria's other parties pre-
vent the passage of government-sponsored legisla-
tion, such as the controversial army reform bill
that comes before parliament later this month.
Some Austrian observers expect Kreisky to call
elections in any case, perhaps as early as the
fall.
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MALTA: Parliament was dissolved last week and
elections will be set for early June. They are
likely to be very close and the winner will prob-
ably have a margin of only one or two seats.
Prime Minister Borg-Olivier's Nationalist Party
will campaign on a platform that emphasizes
Malta's political stability and over-all economic
growth under Nationalist administration. The
Malta Labor Party and its leader, Dom Mintoff,
can be expected to accuse the government of
corruption and bureaucratic ineffectiveness and
call for Malta to take a neutral stand in the
Mediterranean. Labor will also cite Malta's in-
cipient inflation and mounting national debt as
products of the Nationalists' financial mismanage-
The Eurodollar Feeds on Itself
Concern by the international financial com-
munity over continued dollar flows recently has
been heightened by the disclosure that double
counting last year greatly exaggerated the dollar
holdings of European central banks.
holdings of $6 billion more than the US Treasury
estimated its liabilities to foreign central banks to
be. Thus, the Europeans are contributing to the
problem of dollar inflows from US payments
deficits by "creating" dollars themselves.
The central banks have, to a greater extent
than in earlier years, placed their excess dollars in
the Eurodollar market either directly, or indi-
rectly through deposits with the Bank for Interna-
tional Settlements in Basle, Switzerland, to obtain
an attractive rate of interest on these funds. Many
of these dollars are quickly returned again to
central banks. European businessmen borrow in
the Eurodollar market to avoid domestic anti-
inflationary, high-interest rates and convert the
dollars to local currency by depositing them in
their own commercial banks. These deposits again
become central bank reserves when the com-
mercial banks turn the dollars into their central
banks. In 1970 such double counting is believed
to have resulted in European central bank dollar
Dollar reserves of the European central
banks created by double counting are usable in
that any one central bank could ask to convert
these dollars for US gold. But if several banks
attempted simultaneous conversion of large
amounts of dollars, the credit-creation process
would work in reverse. To avoid what could be a
credit collapse it is unlikely that the foreign gov-
ernments will confront the US with such de-
mands. In the meantime, under the auspices of
the Organization for Economic Cooperation and
Development, the leading central banks are study-
ing ways to reduce the impact on their economies
of dollar double counting and continued dollar
inflows estimated at $5 billion during the first
quarter of 1971.
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MIDDLE EAST - AFRICA
Indo-Pakistani Relations Deteriorate
Over the past week, Islamabad and New
Delhi exchanged charges and countercharges re-
garding alleged harassment of their diplomatic
personnel. The dispute began after a majority of
Pakistan's Deputy High Commission in Calcutta
defected to the secessionist East Pakistani regime.
The defectors, including the deputy high commis-
sioner, continued to occupy their offices in Cal-
cutta in the name of "Bangla Desh."
When a senior Pakistani diplomat from New
Delhi was unable to reclaim the mission's prop-
erty in Calcutta and was the object of a hostile
demonstration in that city, Islamabad announced
the official closing of the installation effective on
26 April. At the same time, the Pakistanis re-
quested the simultaneous closing of the Indian
Deputy High Commission in Dacca. New prob-
lems arose, however, over Pakistan's insistence
that the personnel of the two missions be repa-
triated "simultaneously, on a reciprocal basis." It
remains uncertain whether this demand implies
the forced-if necessary-repatriation of the
Pakistani defectors from Calcutta.
Another dispute arose over the means of
transporting the Indians from Dacca. The Paki-
stanis insisted that they fly out to Karachi on
Pakistan's airline and then take another interna-
tional carrier to New Delhi, but the Indians
declined. This impasse has led to the virtual in-
ternment of the Indian diplomats in Dacca and to
an increasingly stringent exchange of restrictions
on the official representatives.
The diplomatic imbroglio has been ac-
companied by press reports of increasingly serious
clashes along the East Pakistan - Indian border.
Indian border patrols reportedly fired on Paki-
stani troops who crossed the border on 27 April
in pursuit of East Pakistani rebels. Several Indian
civilians were killed in this incident, according to
the press, and over a score more died when Paki-
stani troops raided a village in an Indian enclave.
Pakistan, meanwhile, continues to report that
Indian infiltrators, operating in East Pakistan with
the Bengali secessionists, are being killed or cap-
tured by Pakistani troops.
Indian support for the East Pakistanis is
continuing. the Indian
Army has set up three camps to train angla Desh
volunteers in guerrilla warfare. The Indians are
also said to be supplying the rebels with mortars,
small rockets, and anti-tank guns, in addition to
small arms. Nevertheless, the present situation of
the Bangla Desh forces is increasingly grim. The
Pakistani Army has continued to move more or
less at will through East Pakistan and has now
secured most all major towns and cities, although
it has yet to secure the lines of communication
between them.
The influx of refugees from East Pakistan
continues to pose major problems for Indian
officials. Well over half a million people are
reported to have arrived already and the number
jumps daily. Indian officials, recognizing that
their resources are inadequate to cope with the
problems of disease, food, and shelter, are turning
to international agencies and other governments
for assistance.
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Pakistan: Foreign Exchange Crisis Deepens
Islamabad is attempting to check a deterio-
rating balance-of-payments situation by delaying
debt repayment and b cutting back imports.
reserves, which reached 3 million in February
1970, have fallen to $130-140 million, an amount
equivalent to only two months' imports by West
Pakistan alone.
The government has informed major Western
creditors that it will declare a six-month "mora-
torium" on debt repayment next week. Such an
action is tantamount to default, although Is-
lamabad strongly objects to the word. The mora-
torium will apply to Pakistan's debt to major
Western aid donors. Smaller repayments on
credits from Communist nations and private
sources apparently will not be affected.
It is not clear if this decision was made in
despair of obtaining new aid or debt relief in the
Western world or in the hope of pressing creditors
to provide help. Western nations may still not be
very responsive, however, inasmuch as West Paki-
IVORY COAST: President Houphouet-Boigny
presided over a five-hour news conference this
week, during which he strongly reaffirmed his
plea for a black African dialogue with white-ruled
South Africa. Over the short run, his call is not
likely to result in many new converts to the small
group of states currently sympathetic to the pro-
posal. Houphouet said he was responding to re-
cent public gestures by South African Prime
Minister Vorster, who has indicated his willing-
stan's conduct in recent weeks has not enhanced
its international image. The UK, in fact, has pro-
posed that Western creditors jointly deplore the
unilateral Pakistani moratorium.
The government has also moved to reduce
the foreign-exchange drain by banning imports of
consumer goods manufactures and by increasing
restrictions on many other foreign purchases. The
revised import policy amounts to a partial de-
valuation of the rupee.
The internal economic picture also continues
to darken. The US Embassy estimates that in-
dustrial output in the year ending in June will
show a decline of 8 to 13 percent because of lost
production in East Pakistan and cutbacks in West
Pakistan caused by lost trade with the East. Al-
though small-scale unloading of foodgrains has
resumed at Chittagong, disruptions to the East's
transportation system make the food outlook
there quite grim.
ness to meet with black African leaders on the
basis of full equality. Houphouet noted it would
take considerable time and patience before any
such talks would lead to diplomatic ties, however.
The Ivorian President also warned that any effort
to change South Africa's "revolting" apartheid
policies by force were not only doomed to fail-
ure, but would lead to an endless cycle of wars
and big-power intervention in Africa 25X1
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Ceylon: Government Prepares for Guerrilla War
An anticipated major assault by dissidents
this week on Colombo and other locations failed
to materialize. The military now expects to wage
protracted but eventually successful guerrilla war-
fare in the island's jungle areas.
There had been a number of reports of an
insurgent buildup for a major effort on the night
of 27-28 April. Evidently surmising that the gov-
ernment and even the general public were aware
of the plan, however, the rebels carried out only
scattered small attacks. The military, which now
controls the towns and main roads, conducts oc-
casional patrols but otherwise is not yet pursuing
the insurgents.
rCey-
lonese officers estimate that the insurgents in
these five areas number 4,500. The rebels at pres-
ent do not appear to have a long-range plan and,
according to foreign observers, many are discour-
aged.
On 24 April, Prime Minister Bandaranaike
claimed publicly that over 3,000 persons had
been taken into custody. She indirectly exon-
erated the US of backing the insurgents, as
charged previously by some members of her gov-
ernment. Claiming that security forces are now
ready to take the offensive, she appealed to the
rebels to surrender between 1-4 May, promising
they would receive "reasonable" treatment. Re-
ports that numerous captives have been executed,
however, will probably deter many insurgents
from accepting her offer.
Neither the moderates nor the leftists within
the government seem to have made significant
gains recently in their struggle for power. There
are some indications that lower echelon leaders of
the Trotskyite party, one of Mrs. Bandaranaike's
allies, were involved in the insurgency. Mrs.
Bandaranaike told the UK high commissioner on
25 April, however, that she wanted to hold her
coalition together and therefore could not take
issue with her leftist ministers.
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Egypt: "The Guns Alone Will Not Speak"
President Anwar Sadat continues to act like
the man in charge in Cairo as the Middle East
peace-seekers look for another way around the
present impasse in the Jarring negotiations.
The past month has seen a slackening in
reports of immediate military pressures on the
President for another trial of arms with Israel.
Sadat's assiduous consultations with his military
chiefs and his earlier tours of military encamp-
ments appear to have paid off in a willingness to
let him plumb the diplomatic channels he has
established with the US while the de facto cease-
fire continues. Some observers see this willingness
as at least a partial consequence of Egyptian un-
easiness over the expanded Soviet presence in
their country and the inevitable chafing between
Soviet and Egyptian military personnel.
In the political sphere, too, Sadat seems to
have quieted his potential rivals and the back-
biters among Nasir's former comrades-in-arms.
Al-Ahram editor Haykal, who is publicly identi-
fied with Sadat's policies, has trimmed his sails on
the subject of Egypt's military deficiencies,
muting critics in the Arab Socialist Union before
they could become more than a temporary em-
barrassment to Sadat. Interior Minister Goma,
whose domestic position could be used to chal-
lenge the President, is believed to have lined up
with Sadat's chosen team. Ali Sabri, once a major
rival, has dropped into the background.
For the general public, the much-appreciated
absence of fighting has been accompanied by an
upturn in tourist revenues and an economically
promising oil strike in the western desert. Ex-
ternally, the opposition of other Arab leaders has
been reduced to occasional bursts of rhetoric,
while Sadat's diplomatic offensive abroad has had
the desired effect of calling into public question
Israel's unyielding position on a territorial settle-
ment.
Sadat thus has gained additional bargaining
time beyond the end of the formal cease-fire, and
so far military incidents have been virtually nil,
except for occasional Israeli firing on Egyptian
overflights.
Jordan: Fedayeen Exodus from Amman
Cordon and search operations by security
forces in Amman are continuing successfully into
the third week. Faced by a government ultima-
tum to move or be moved, the fedayeen have
been leaving the capital peacefully with the army
moving in behind them to search for arms caches.
The operation is expected to go on until the
authorities are convinced that the city is free of
armed commandos and that their major arms
depots have been confiscated or placed under
army control.
The scope of the movement is indicated by
the numbers of men and the amount of equip-
ment involved. Well over 1,000 fedayeen are esti-
mated to have left Amman, taking with them
more than 2,000 individual weapons-ranging
from Kalashnikov automatic rifles to Katyusha
rockets-as well as heavier weapons; some 130
twenty-ton trucks were needed to transport the
men and armament. Perhaps an equal quantity of
arms has been left behind, either in secret caches
for future clandestine operations or in militia
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depots under the guard of the army. Security
searches have already uncovered some of the
caches, many of them containing weapons in un-
usable condition as a result of improper storage.
Other caches are expected to be uncovered by
army patrols remaining in the areas and through
information received from informers.
The fedayeen militia in the capital, once
claimed to number as many as 25,000, are no
Lebanon: New Fedayeen Base of Action?
As their movement disintegrates in Jordan,
the fedayeen are likely to shift the center of their
military activities to Lebanon in an effort to keep
their movement alive.
With their position steadily deteriorating in
Jordan as the army continues its drive to neutral-
ize them, the commandos have begun moving into
sections of southern Lebanon along the border
with Israel. This gradual increase in man-
power-the number of guerrillas in this area now
approaches 4,000-has been accompanied by a
step-up of infiltration attempts into Israeli terri-
tory. Perhaps benefiting from their experiences in
Jordan, the three main fedayeen groups-the Pal-
estine Liberation Organization, Fatah, and
Saiga-have formed a unified command in south-
ern Lebanon under the leadership of Saiga's mili-
tary chief to deal with matters such as operations,
logistics, and training.
Thus far, no major difficulties have occurred
between the Lebanese Government and the guer-
rillas. Beirut remains committed to the Cairo
Agreement of November 1969, which allows the
fedayeen-within certain agreed-upon limits-to
longer regarded by the authorities as a significant
threat. They are poorly trained, part-time com-
mandos, deprived of trained support and of the
bulk of their weapons, and their organization is
riddled with spies and suspicion. The fedayeen
"regulars" elsewhere in Jordan, now reduced to
no more than an estimated 3,000-4,000, are ex-
pected to suffer further defections as a result of
the exodus from Amman
raid into Israel and to conduct other activities on
Lebanese territory. I n the past, actual or threat-
ened Israeli retaliatory strikes have forced the
Lebanese Government to restrict fedayeen activi-
ties. Lately, however, such actions have for the
most part received little publicity and have not
embarrassed Beirut into taking any steps that
could embroil it in an argument with either the
commandos or Israel. The fedayeen, for their
part, do not appear eager to provoke any confron-
tations with the government such as those that
took place in 1969. They have maintained regular
liaison with Lebanese security officials and have
not sought any publicity for their recent actions.
25X1
In an effort to apply pressure on Israel in the
presently deadlocked Middle Eastern peace talks,
Egypt and Syria have again given vocal support to
the fedayeen, urging them to continue their "war
of liberation" against the Israelis. The com-
mandos may therefore come to believe that Leba-
non constitutes their final fallback area of opera-
tions, and that they must maintain it at all costs
as a base for their anti-Israeli activi-
ties.
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Bahrain: Is Independence Imminent?
As the UK's withdrawal from the Persian
Gulf becomes more imminent, Bahrain has ap-
parently decided to go ahead with its plans for
independence and for subse uentl a I in for
membership in the UN.
FAA
last-minute effort by neighbors to induce Bahrain
to postpone independence may have some in-
fluence on the timing.
Although the British have been pushing for a
federation of the seven Trucial States plus Qatar
and Bahrain since London's decision in 1968 to
leave the gulf, traditional differences between the
states have made such a plan unworkable. In
1970, Iran cleared the way for Bahraini inde-
pendence by relinquishing its residual claims to
the island sheikhdom.
Recently, even the British have become
reconciled to the fact that at best a federation of
only the seven Trucial States is possible. They are
continuing their efforts to form such a truncated
grouping but, hampered by an unhelpful Iranian
attitude, they have little chance of success.
Apparently realizing this, the UK has already
selected its nominee for the future British am-
bassador to the gulf states, and negotiations over
relinquishin base ri hts are to start soon % 25X1
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UGANDA-SUDAN: Relations between the two
countries are deteriorating. The military govern-
ment that seized power in Uganda in January is
fearful that the leftist regime in Khartoum might
attempt to restore deposed president Obote.
Ugandan officials claim that the Sudanese are
providing training and other assistance to Obote
supporters, and President Amin has charged that
the Sudanese assisted the dissidents who clashed
with Ugandan troops near the border on 18 April.
No evidence was presented to support this allega-
tion, but the Sudanese representative was never-
theless expelled. Rumors have circulated that
other clashes have occurred, and some high
Ugandan civil servants fear that their military
might attack the Sudanese on their own.
The Sudanese have denied the Ugandan
charges.
they have
pu~ficTy protested only Amin s overt statements
of support.
WESTERN HEMISPHERE
May Day Is Breaking Out All Over
Latin Americans will celebrate international
Labor Day more widely and effusively-and per-
haps more violently-than in many years. Leaders
of at least four important countries will make
nationalistic addresses before mass rallies, and
Fidel Castro may use the occasion for his first
journey to a Latin American country in 12 years.
Chilean President Allende will address a large
crowd in Santiago, and if speculation is con-
firmed, he will be joined on the daises Castro
an official
Chilean communique denied that Castro "would
make a surprise visit." Castro has not been abroad
since 1964, and a trip now would come when he
has economic troubles and probably is in need of
an ego boost. He has a standing invitation from
Allende and would be greeted by enthusiastic
crowds in Chile.
Bolivian President Torres may announce the
long-rumored nationalization of US mining inter-
ests on or before May Day. He is scheduled to
speak in La Paz, and labor and student groups are
planning a massive demonstration to force the
President to announce "revolutionary" new ac-
tions. The Ministry of Interior, probably acting
independently of Torres, is encouraging an "anti-
imperialist" May Day theme and reportedly is
promoting violence against the US Embassy.
In Colombia, student unrest during the past
few weeks is likely to continue despite the state
of siege. The traditional May Day parade in Bo-
gota reportedly has been canceled, but these gov-
ernment actions may prompt workers to join stu-
dents in violent demonstrations.
Argentine President Lanusse will make "im-
portant announcements" in a May Day speech,
according to press reports. He may abolish the
death penalty and unveil other measures intended
to win support for his plan to return Argentina to
democratic rule within two or three years.
The Castro regime canceled the May Day
holiday last year so that the sugar harvest would
not be interrupted. This action may be repeated
this year, but it is more likely that a leading
government spokesman will address a Havana
rally.
General Torrijos is rumored to be consider-
ing a nationalistic May Day speech somewhere in
the provinces of Panama. Students and laborers in
other countries will take part in parades and prob-
ably in demonstrations, and some may turn to
violence.
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Haiti: President Duvalier Sets His Style
President Jean-Claude Duvalier's government
continues to try to project the image of a vigor-
ous, open, briskly businesslike, and solidly en-
trenched administration that breaks with the
precedents of secrecy and suspicion characteristic
of his father's rule. Neither discontent within the
country nor indications of intervention from
abroad have marred the picture so far.
In keeping with the new style of govern-
ment, President Duvalier met with his cabinet on
25 April and asked cabinet members to give him
ideas and projects involving their ministries to be
incorporated into his first policy address to the
National Assembly on 29 April. The following
day, in another first, the grounds of the National
Palace were opened to foreign journalists, who
were favorably impressed with the young Presi-
dent's free and friendly response.
Whether this honeymoon is the prelude to
an enduring marriage, or merely an interlude of
uncertain duration, is difficult to predict. The
new cabinet and the 13-member Council of Ad-
visers include the most important political figures
in Haiti. Three individuals upon whom Francois
Duvalier had depended rather heavily for the
smooth unfolding of his succession plans-
Minister of Interior and Defense Luckner Cam-
bronne, Secretary of State for Foreign Affairs
Adrien Raymond, and Chief of Staff of the
Armed Forces Claude Raymond-appear to enjoy
an edge, however. The President's sister, Marie-
Denise Dominique, who held the reputedly in-
fluential post of private secretary to her father,
holds the same job with her brother.
It is probable that a period of probing will
ensue during which potential strong men will test
their strength. Should a confrontation develop,
the immediate victor is likely to be a member of
the establishment. Violent conflict, although al-
ways possible, may be avoided because those in
power realize that they might lose more by blood-
shed than by settling their differences quickly and
peacefully. So far, no one in the military, in-
cluding General Raymond, appears to have the
unified support of the military that would be
GUYANA: A wildcat strike begun by workers of
the Demerara Bauxite Company (DEMBA) at
Linden on 20 April reflects considerable uneasi-
ness by the workers of the Canadian-owned firm
over their future prospects once the Guyanese
Government implements its decision to na-
tionalize the company. The main immediate griev-
ances of the workers concern wage and pension
issues, but they also lack confidence in the pro-
posed government corporation that is to take over
the firm on "vesting day," for which a date has
not yet been set.
Prime Minister Linden Forbes Burnham has
professed a lack of concern about the strike but
has attempted to pacify the workers by sending
Minister of Labor Winslow Carrington and black
militant leader Eusi Kwayana to talk with them.
Although these efforts now appear to have been
at least partly successful-a few workers had be-
gun returning to their jobs by 26 April-the strike
is bound to be politically embarrassing to the
Burnham government. Burnham's chief domestic
rival, Communist Cheddi Jagan, lost no time in
capitalizing on the strike by addressing the work-
ers at Linden on 21 April, reportedly receiving an
enthusiastic reception. The strike is symptomatic
of some of the deep-seated problems the govern-
ment will face in its efforts to run DEMBA suc-
cessfully.
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OAS Assembly: A Polite Confrontation
The first regular assembly of the OAS, al-
though occupied for the most part with admin-
istrative matters, furnished another indication of
the growing propensity of Latin Americans to
view the OAS less as an organization of states of
common interest than as a forum for highlighting
the conflicting interests of the US and the Latin
countries.
The keynote addresses of the ten-day confer-
ence, which ended on 23 April, reflected the
increased concern with trade in the hemisphere.
With the host, Costa Rican President Figueres,
setting a tone of polite confrontation, many
speakers scored US protectionism and emphasized
trade problems.
Some difficulties arose even in dealing with
perfunctory housekeeping chores. Chile voted
against the over-all program budget, and Bolivia
followed its lead in a protest over the existence of
a security commission that the Chileans termed
an "obsolete remnant" of the cold war.
Confrontation, polite or otherwise, is likely
to become increasingly common. Chile has
boasted publicly of its intention to create unrest
in the OAS and to use the organization to form a
TRINIDAD AND TOBAGO: The Peoples Na-
tional Movement (PNM) of Prime Minister Eric
Williams appears to be in a good position at the
outset of the campaigning for the 24 May general
elections that were announced late last week. The
brevity of the campaign period probably will
work to the detriment of the only opposition
group, the Action Committee of Dedicated Citi-
zens/Democratic Labor Party coalition, which is
poorly organized and has not yet completed its
slate of candidates for the 36 legislative seats to
be contested. Should the government decide to
use voting machines, coalition leader Arthur
Napoleon Raymond Robinson reportedly favors
withdrawing from the election on grounds that
united front opposing those US policies the
Latins find distasteful. Brazil's decision to assume
a more active role in the hemisphere and not to
leave the leadership on nationalistic issues to
leftist regimes also promises to promote discord.
In January, Brazil led an unprecedented OAS
walkout when its hard-line views on terrorism
were not adopted; during a meeting of an OAS
subcommittee on trade in March, it spearheaded a
vigorous attack on US tariff policies. The Brazil-
ian foreign minister, moreover, did not attend the
General Assembly last week in a show of dis-
pleasure with OAS performance to date.
Two issues that attracted considerable pre-
convention publicity-the Colombian arms pro-
posal and Cuba-created little stir. The polemics
over the possible lifting of sanctions against Cuba
were muted, at least temporarily, by Castro's
ringing denunciation of the OAS and his public
reaffirmation of support for revolutionary groups
while the meeting was in progress. Colombia's
proposal to limit arms expenditures was quickly
diluted and remanded to committee. Given the
firm opposition of states such as Brazil and
Argentina, as well as Mexico's insistence that any
accord be unanimous, an arms limitation agree-
ment is highly unlikely.
the government will easily be able to rig the
results, but there evidently are no plans now for
the coalition not to compete.
Principal electoral issues are likely to be the
government's performance during and following
last year's rioting by black militants, and the
opposition's lack of unity and inexperience.
Although 14 uninterrupted years in office have
somewhat dimmed the luster of both Williams
and the PNM, the government's superior organiza-
tion and the prime minister's political skill should
enable the PNM to emer a as the victor.
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Argentina: President Lanusse and Juan Peron
President Lanusse has no intention of hand-
ing over power to supporters of former dictator
Juan Peron, but public speculation on this pos-
sibility is growing rapidly, and strong anti-Peron
elements in the military are becoming alarmed.
Lanusse has expressed his willingness to dis-
cuss Argentina's political future with Peron and
has deliberately fostered public speculation that
barriers to the former dictator's return may be
dropped.
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If Lanusse is forced to reverse himself pub-
licly on the Peron question at this stage he will be
faced with problems in maintaining political sta-
bility and public order. If, however, the President
appears to be giving in to the strong Peronist
Chile: Allende Maintains a Fast Pace
The Allende government continues to come
up with a wide variety of moves that divert
attention from problems and give an image of
accomplishment.
On 20 April Chile and Communist China
signed a long-term trade agreement during the
visit of a Chinese delegation led by the vice
minister of foreign trade. Chile will ship copper,
nitrate, and iodine in exchange for unspecified
Chinese goods. In the past, the Chinese have
bought small amounts of Chilean copper for cash,
as well as larger amounts on the London Metals
Exchange.
Another economic response to Chilean dip-
lomatic recognition is the presence in Santiago of
34 East German specialists, led by a deputy
minister, who will study scientific and technical
sentiment, he will be courting trouble from
within the armed forces. Large segments of all
three military services are opposed to a return to
power either of the Peronists or the political
hacks of the post-Peron era, and there is increas-
ing concern that Lanusse is preparing to ac-
commodate one or the other.
The President is aware of the risks involved
but apparently is convinced that to bring political
stability to Argentina the Peronists, who have
been systematically excluded from political par-
ticipation since 1955, must be brought into the
system. To accomplish this, however, Lanusse will
need time to execute plans. The interior minister
apparently was trying to buy some of the needed
time this week by dampening, but not dashing,
Peronist hopes while reassuring the military. He
reportedly told newsmen last Monday that
"conditions for Juan Peron's return to Argentina
are not et at hand."
assistance projects. Chileans admire German tech-
nical expertise, and the recent West German
decision not to extend new aid after Allende
recognized the Pankow government offers the
East Germans opportunities. A "very high level"
Chilean trade and economic mission will leave
soon on a three-month tour of the USSR and
other Communist countries of Europe, according
to an official announcement. In a recent press
interview, President Allende said that Chile would
be looking for advice in drawing up its first
five-year plan, to be launched in 1972.
The Popular Unity (UP) government has
shown that it values propaganda in its search for
an expanded international role. Taking advantage
of widespread foreign interest in the Chilean
situation, more than 100 European intellectuals
and journalists have been entertained in an
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"Operation Truth" campaign to give them a
firsthand look and to talk with Chileans from
Allende down. Thirty visiting Colombian indus-
trialists also were given the red carpet treatment.
Allende reiterated to them his intention to accept
an invitation soon to visit Bogota in a noticeable
emphasis on close ties with a widely respected
Latin American neighbor. Even his opponents
have applauded Foreign Minister Almeyda's out-
spoken criticism of the OAS at the recent San
Jose meeting, particularly because it attracted
attention throughout the hemisphere.
Of special significance are the many plans
for a visit by Fidel Castro to Chile, which is
expected soon. Allende has been consistent in his
praise for his old friend Castro as author of the
first socialist revolution in Latin America, al-
though he maintains that Chile and Cuba and the
courses of their revolutions are very different.
UP efforts to manipulate the Chilean news
media continue to be generally successful, al-
though opposition elements are fighting for inde-
pendence where they can. Some of the weapons
being used by the administration-radio licensing,
a price freeze on advertising rates, new govern-
ment-subsidized publications-are proving effec-
tive, but public opinion sometimes tempers or
postpones other measures.
PERU: The government may gain some needed
business support by its removal of the leftist
minister of industries, Rear Admiral Jorge
Dellepiane, in a partial cabinet reorganization.
The administration has been trying to reassure
hesitant domestic and foreign investors; Del-
lepiane's replacement, expected for months, may
indicate a willingness by the regime to modify its
controversial requirements on the eventual
participation of labor in the ownership and
management of industry.
Pressures of various kinds are also being used
on US and other foreign companies that operate
in Chile. Attention will soon focus more directly
on the take-over of the large copper companies, as
both houses of the Chilean Congress have settled
on a common version of the constitutional
amendment enabling the government to complete
copper nationalization. The bill will not become
law for two months, however.
Some of the UP's populist measures, which
the coalition boasts have already resulted in a
major redistribution of income, have caused a
boom of sorts in the consumer goods sector. In an
attempt to offset the shortages that may soon
result, the government has ordered consumer
goods manufacturers to operate at full capacity
regardless of the existing profit squeeze. Demand
for capital goods and construction materials
continues to be very low, and private investment
has virtually come to a standstill. On 18 April
plans were announced for the creation of an
extensive steel and metallurgical industrial group
to be headed by the government-owned steel
company. The government said that the project
will involve about $300 million in investment and
that the bulk of it has already been financed,
partially through an $180-million credit from
Japan and "a European financial pool."// 25X1
policies.
The new minister of industries is Rear Ad-
miral Alberto Jimenez, a competent engineer who
has had lengthy US training and appears to be
pro-US. The ministries of education and public
health are now headed by highly regarded mili-
tary officers Gen. Alfredo Carpio and Gen. Fer-
nando Miro Quesada, respectively. These cabinet
shifts come less than a month after the naming of
an apparently more moderate minister of agricul-
ture, Gen. Enrique Valdez. Despite these changes,
there is no indication that the government is
considerin a com lete reorientation in its basic
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Cuba: Castro's Solzhenitsyn?
The arrest of a well-known Cuban poet,
Heberto Padilla, and the publication on 27 April
of his "self-criticism" is a sharp warning to Cuban
intellectuals that they must toe the revolutionary
line. Padilla was arrested, reportedly on Fidel
Castro's orders, on 20 March after a foreign press
correspondent with whom he was in contact had
been picked up by security officers and inter-
rogated regarding an alleged attempt to smuggle
manuscripts out of Cuba for publication in
Europe. The Padilla affair reflects Castro's in-
creased and apparently acute sensitivity to criti-
cism-much of it well founded-directed at his
regime and at himself personally. It is also a
further indication of the regime's willingness to
adopt measures aimed at stifling any evidence of
dissidence and at halting what seems to be a trend
toward decreasing revolutionary fervor in an
important element of the population.
The regime probably chose Padilla rather
than a more prominent literary figure to be the
scapegoat for much of the intellectual com-
munity because Padilla's revolutionary creden-
tials were already tarnished. Several years ago he
was vilified for publishing a collection of works
that were found to be lacking in "revolutionary
content." The regime probably calculated that his
arrest would appear less of a case of "martyr-
dom" than if an intellectual of unquestioned
loyalty were prosecuted. Nevertheless, it seems
clear that the repercussions of the affair will ex-
tend far beyond the Padilla case.
With Padilla's arrest, Castro may have started
a process of action and counteraction that could
cause him serious trouble. A good many impor-
tant Latin American intellectuals-some of whom
have cooperated closely with Cuban cultural or-
ganizations-have already openly protested Padil-
la's persecution to Castro, and intellectuals in
Cuba are likely to assume the same hostile atti-
tude des ite the sacrifices the ma have to
make
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