WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A008800060001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 60
• Document Creation Date: December 21, 2016
• Document Release Date: April 24, 2008
• Sequence Number: 1
• Publication Date: June 18, 1971
• Content Type: SUMMARY

Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
NAVY review
completed.
State Dept.
review
completed
DIA
review(s)
completed.
Secret
18 June 1971
No. 0375/71
Copy N?_ 49
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SkGRtT
CONTENTS
(Information as of noon EDT, 17 June 1971 )
Indochina: What's Hanoi Up To? . . . . . . . . . . . . . . . . . . . . . . 1
Back to the Drawing Board in South Laos . . . . . . . . . . . . . . . . . . 4
Cambodia: Enemy Pressure Continues . . . . . . . . . . . . . . . . . . . 6
Chinese Navy Puts In To the Paracels . . . . . . . . . . . . . . . . . . . . . 7
Japan: Maneuvering for Political Power . . . . . . . . . . . . . . . . . . . . 8
Trade Liberalization Japanese Style: Eight Steps Sideways . . . . . . . . . . . 9
South Vietnam's Dry-season Campaign in Cambodia: Aims and Unfinished Business
(Published separately as Special Report No. 0375/71A)
Soviet Foreign Trade Registers Sharp Rise . . . . . . . . . . . . . . . . . . 10
Profitable Discussions of International Trade Problems . . . . . . . . . . . . 11
East German Party Congress Provides No Big Surprises . . . . . . . . . . . . 15
Norway: The Crisis That Never Was . . . . . . . . . . . . . . . . . . . . 16
Italian Electorate Moves to the Right . . . . . . . . . . . . . . . . . . . . 17
Maritime Issues: US Positions Endangered . . . . . . . . . . . . . . . . . 18
YUGOSLAVIA: THE NEW REVOLUTION
(Published separately as Special Report No. 0:375/71 B)
Jordan: Iraqi Troops Go Home . . . . . . . . . . . . . . . . . . . . . . 19
Libya: Qadhafi Lashes Out Again . . . . . . . . . . . . . . . . . . . . . 21
Sudan: Ferment in Khartoum . . . . . . . . . . . . . . . . . . . . . . . 21
Pakistan: No End to Problems in Sight . . . . . . . . . . . . . . . . . . . 22
Iran: Increased Foreign Aid Needed . . . . . . . . . . . . . . . . . . . . 23
Mexican Government Defensive over Student Deaths . . . . . . . . . . . . . 24
Cuba and the US Spar over Fishermen . . . . . . . . . . . . . . . . . . . 25
Venezuela: Manifestations of Nationalism . . . . . . . . . . . . . . . . . 26
Bolivia: New Problems for the President . . . . . . . . . . . . . . . . . . 26
NOTES: Communist China - Peru; Philippines; IAEA; Netherlands; Iceland; Malta;
Fedayeen; Zambia-Portugal
SECRET
Page i WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SECRET
FAR EAST
Indochina: What's Hanoi Up To?
be accomplished by means of a large number of
small engagements rather than the large actions
But it may be worthwhile to examine
judge their military options in the next year or so
largely on the basis of potential short-term politi-
cal impact. Such considerations-particularly a
desire to influence the US elections through mili-
tary action-will certainly loom large for the
Communists, but Hanoi probably has other things
in mind as well. There are signs, in fact, that the
Communists have decided the time is at hand to
try to reverse the unfavorable trends that have
been generated over the past two years by the
pacification program. Hanoi may have come to
believe that, in the light of US troop withdrawals
(announced and prospective), the atmosphere is
militarily and psychologically favorable for more
vigorous pressure against Saigon's hold on the
countryside.
If this is one of the things Hanoi has set out
to do, the Communists might decide it can best
and with less preparation and can often make
better use of whatever local forces the Commu-
nists may have; moreover, even though the man-
power costs involved might be higher than those
prevailing in the last two years, they might be
lower than for a major offensive.
The Communists have in fact been keeping
up just this kind of pressure in South Vietnam
this year. In the central highlands they struck
harder this spring than they have in two years.
They have also maintained a substantial main-
force threat in the country's northern provinces.
They have mounted several surges of activity else-
where in the country, they have kept terrorism at
a high level, and they have overrun more than 60
South Vietnamese outposts in the delta.
All this adds up to more military pressure
than the Communists have applied in a good
while, and there is ample evidence from behind
the Communist lines that Hanoi plans to step up
the pace over the next year. It has increased its
military induction rate in North Vietnam and is
urging the populace once again to greater effort in
support of the war. As recently as 15 June in a
speech in Hanoi, Truong Chinh exhorted "the
comrades...to better carry out" the military re-
cruitment plan for the second half of 1971.
A recently available North Vietnamese ar-
ticle in an authoritative party journal suggests
that many of these moves were the result of a
decision early this year to raise the level of fight-
ing in Indochina in the months ahead.
Thus, it appears that the Communists may
25X1
25X1
have in mind two objectives for the next year or
so: 1) they will want to mount intensive action
keyed to US election-year politics
25X1
25X1
SECRET
Page 1 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
~rAjIC.r, 1. w
it could even involve targets in Laos or Cambodia
rather than in South Vietnam; 2) they may also
try to chip harder at Saigon's position throughout
South Vietnam. If so, they would tend to favor
extensive local operations in addition to any in-
tensive, coordinated push.
They may not hope to make much early
progress in the South Vietnamese countryside;
they know as well as anyone that their resources
in much of the country are extremely meager and
are not likely to grow quickly. But they seem to
have decided that now is the time to start work
on improving their situation. The months ahead
are thus likely to see more activity
Even though the bombing in North Vietnam
ended two and a half years ago, Hanoi has recog-
nized that economic progress at home must con-
tinue to take a back seat to the needs of the war
in the South. It has therefore concentrated on
near-subsistence food production and the provi-
sion of enough consumer goods to prevent a drop
in the already austere standard of living. With
Chinese and Soviet aid, it has been possible to
cover such needs, but to date efforts toward eco-
nomic recovery have been modest.
In 1970, the output of milled rice reached
some 2.8 million tons, about 90 percent of the
1965 prebombing level, making possible a re-
duction in food imports of some 100,000 tons.
The rice crop continues to do well in 1971, but
the rate of food imports continues at about the
600,000-ton level of 1970.
Over-all industrial recovery still lags. Gross
value of industrial output in 1970 was about 85
percent of the 1964 level. Most of the large plants
damaged or forced to disperse by the bombings
are still well below previous output. In the elec-
tric power industry, however, some 70 percent of
generating capacity has been restored, and the
Soviet-aided Thac Ba hydroelectric project is
expected to be completed this year, eliminating
the need for current restrictions on the power
supply.
Although the central committee of the Viet-
nam Workers Party apparently concluded last
December that a three-year "plan of reconstruc-
tion" was both possible and desirable, the North
Vietnamese subsequently have given no hints of
any policy departures. Priority for the war cer-
tainly will be maintained. In negotiations with
Communist countries no special emphasis has
been placed on reconstruction. Hanoi, however,
may pay more attention to rehabilitation of
industrial facilities on which little work has yet
been done. At the present slow rate of progress, it
will be two or three years before North Vietnam
can regain its prebombing economic status.
North Vietnam's rubber-stamp legislature,
the National Assembly, last week held its first full
session since the national elections in April. As
usual, the assembly heard and duly approved
reports from leading government officials on the
country's economic, military, and political
achievements since the last plenary session in
March. It further exercised its constitutional role
and chose-by unanimous vote in all cases-a state
president, a cabinet, and the assembly's own
standing committee to perform legislative func-
tions between plenary sessions.
There were few changes in the line-up: the
aged figurehead Ton Duc Thang was continued as
president, Premier Pham Van Dong and most of
his ministers were reappointed, and Truong Chinh
was retained as head of the standing committee.
Pham Hung, who has been directing the war in
the South since the autumn of 1967, was dropped
as vice-premier, obviously because of his extended
absence from the Hanoi scene.
SECRET
Page 2 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET
One change in the leadership does appear
noteworthy. The National Defense Council,
which falls under the executive, added party chief
Le Duan (his first high government post), Truong
Chinh, and the leading economic planner to its
membership. The council already included Pham
Van Dong, General Giap, other leading military
figures, and the minister of public security. Many
of these men are also members of the party polit-
buro, but the only body to which all belong is the
amorphous central committee.
The new council thus brings together nearly
all North Vietnamese leaders that count in mat-
ters having to do with the war. This move could
have been made only for appearance's sake, be-
cause the same men presumably could have gone
on operating without a new institutional base.
The fact that the regime did take this step, how-
ever, suggests that Hanoi's leaders saw a need to
improve their management of the war effort,
perhaps in anticipation that the demands of the
war will grow in the months ahead. In addition,
of course, the change in the council's membership
sharpens the leadership's image as a functioning
collective, and strongly suggests that in the mat-
ters that count most, no one man calls the tune.
Much of the rhetoric surrounding the elec-
tions and assembly session reinforces the view
that the whole exercise was meant in part to
freshen the mandate of Hanoi's post-Ho leader-
ship and to drum up enthusiasm for its policies.
The party's daily newspaper editorialized on 14
June, for instance, that the assembly session gives
testament to the country's "complete con-
fidence" in the party's leadership and its line on
the war and domestic affairs.
Politics in Saigon: A Helping Hand
Big Minh's camp has confirmed that it will
try to help Vice President Ky qualify to run for
president.
Ky had previously indicated that he would be
unable on his own to gain endorsements from
more than 50 to 75 of the necessary 100 coun-
cilors.
Minh presumably will benefit if Ky runs,
because the vice president probably would draw
votes away from President Thieu.
Thieu Shuffles His Line-up
The long-pending cabinet changes that were
finally announced last week are designed mainly
to improve the performance of the ministries in-
volved and has not greatly affected the Saigon
political scene. The new ministers of information
and ethnic minorities are regarded as capable
administrators and they have replaced men who
had gained reputations for inefficiency. The out-
going information minister, a prominent political
supporter of President Thieu, has been shifted to
the less sensitive post of education minister. An-
other major change, the appointment of a new
finance minister, probably will have little effect on
the conduct of the ministry or on the country's
economic policies.
A new Ministry of Planning also has been
established, reflecting the increased thought the
South Vietnamese have been giving to the prob-
lems of economic reconstruction as the war winds
down. One of the problems that most concerns
them is the need for substantial US economic
assistance to help rebuild after the war to help
provide the economic basis for political stability.
The new ministry will help the government over-
see and control this reconstruction.
Coasting Past the South Vietnamese Navy
The Communists appear to be moving more
supplies in from the open sea and along the coast,
SECRET
Page 3 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
particularly in the delta area, than they have for
many years. Following more frequent reports of
such enemy supply movements and observations
of shortcomings in South Vietnamese coastal
patrols, US naval analysts in South Vietnam have
concluded that the effectiveness of Vietnamese
surface patrols in preventing small enemy vessels
from moving close to shore has dropped substan-
tially. They have further concluded that, if the
larger trawlers are able to evade the notice of US
air patrols, the probability that South Vietnamese
surface patrols will detect them is only one in
four.
The enemy has apparently been assigning
more of his assets to the sea supply routes par-
tially to compensate for the loss in early 1970 of
the Sihanoukville route into the delta. It has been
the Communists' good fortune that the naval ef-
fort designed to stop these movements has grad-
ually been becoming less effective as the South
Vietnamese Navy has assumed most of the opera-
tional responsibility. According to the study,
South Vietnamese patrol boats are poorly main-
tained, and there is inadequate supervision of
crews by younger officers. Many patrols are not
carried out aggressively, and some patrols are not
carried out at all. Some stations are left un-
manned, operations commanded by inexperi-
enced junior officers are not monitored, and some
patrols are not carried out to the boundaries of
the assigned areas.
In view of this deterioration in coastal pa-
trolling, it seems likely that the North Vietnamese
will attempt more frequent seaborne infiltration
in the coming months to replenish depleted stock-
piles in the South.
Back to the Drawing Board in South Laos
The government suffered new reverses in
south Laos last week when troops engaging in a
multibattalion operation to retake key portions
of the western Bolovens Plateau were badly
mauled by the North Vietnamese. The operation
was launched on 9 June and immediately ran into
trouble when two key battalion commanders
were killed, stopping the government advance
short of its first goal, Ban Phak Kout. On the
morning of 11 June, NVA units supported by
four tanks overran the Lao Army task force com-
mand post, capturing three 105-mm. artillery
pieces. Four government battalions that had been
in positions to the east of the command post were
cut off and scattered.
The government committed all of its remain-
ing units earmarked for the operation, as well as
all of the mobile reserve from Military Region 4,
and took up new defensive positions along Route
23 and at the key junction of Routes 23 and 231.
At the same time, the bad weather, which had
curtailed air support, lifted somewhat, permitting
SECRET
Page 4 WEEKLY SUMMARY
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET - _-R
numerous tactical air strikes that blunted the
North Vietnamese counterattack.
As of 14 June, the government estimated
that 465 of its nearly 1,600 troops committed to
the abortive operation were still missing. In addi-
tion, at least 175 soldiers and irregulars were
wounded and incomplete figures indicate that
more than 25 were dead. There are no definitive
estimates of North Vietnamese casualties; air
observers and army commanders on the ground
believe that as many as 500-600 of the enemy
were killed or wounded by air and artillery at-
tacks.
The North Vietnamese have long coveted the
plateau, which overlooks portions of the southern
infiltration corridor. The current phase of North
Vietnamese gains in this area began in 1968, when
the Communists re-entered the Se Done Valley
and cut off the provincial capital of Saravane. The
Communists then took Saravane, Attopeu, and
other government positions around the edge of
the plateau, while eroding the government's once
firm control of the plateau itself. One assault on
the plateau in early January was turned back, but
since then the North Vietnamese have moved
steadily, capturing the eastern rim in March, and
the central portion in mid-May. Considering the
plateau's importance to them and the high price
they have paid in men and supplies, the North
Vietnamese presumably will fight hard to hold
their recent gains.
The North Vietnamese are already giving
indications that they plan, probably during the
next dry season, to increase the use of the west-
ern infiltration corridor-Routes 23/16. Recent
aerial photography shows that they have begun
improvements on the long-unused section of
Route 16 between Ban Phone and Attopeu and
are building a new road to link the staging areas at
Ban Bac with Route 16.
Units of an irregular task force have entered
the abandoned town of Dong Hene on Route 9 in
the western panhandle and have occupied some
enemy positions east of the town. The irregulars
so far have encountered little enemy resistance,
tending to confirm reports that enemy units have
pulled back toward Muong Phalane. The irregular
task force plans to sweep toward Muong Phalane
in the next few days, after regular army units are
in position to protect Dong Hene, Keng Kok, and
Seno.
In northern Laos action has consisted prin-
cipally of small-unit clashes and shelling attacks
on irregular positions near Bouam Long and on
the southern and western edges of the Plaine des
Jarres. No major Communist attack has been
launched in either location.
Nothing Doing Politically
Prime Minister Souvanna Phouma and the
Pathet Lao (PL) continue to toss verbal brickbats
at one another, but have made no further progress
toward the opening of peace talks. On 8 June the
PL broadcast a response to Souvanna's letter of
26 May, charging the prime minister with "beat-
ing around the bush." They did not, however,
reject his proposals, any more than he had earlier
rejected the PL call on 27 April for a bombing
halt in return for a cease-fire. The Communist
emissary in Vientiane, Souk Vongsak, meanwhile
has continued to make the rounds; he appears
relatively undiscouraged by the cold shoulder
given him by Souvanna and other Lao officials.
Another PL broadcast also addressed
Souvanna's letter of 26 May, commenting that
the Lao people are displeased with him for not
specifically answering the PL proposals. The
broadcast went on, however, to make a veiled
threat of further military action unless Souvanna
SECRET
Page 5 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
moves toward talks. It said that the people of
southern Laos, aware of recent Communist gains
on the Bolovens, are calling for new attacks in
that region to punish the government for dragging
its feet on the talks. This is the first time the
Communists have publicly linked their recent of-
fensive in the south with their peace proposals.
Cambodia: Enemy Pressure Continues
The government's military attention re-
mained focused on the area northeast of Phnom
Penh, where the Communists are continuing to
harass several Cambodian Army positions. South-
west of the capital, the enemy dealt government
forces a sharp setback when they tried to regain
control of the town of Srang, near Route 3.
Government forces east of the Mekong River
were preoccupied with their preparations for
launching another drive from their staging base at
Vihear Suor toward positions at Kompong Cham-
lang and Kompong Ampil, which were still en-
circled and harassed by the Communists. Nine
battalions, consisting chiefly of Khmer Krom
troops, are to participate in this latest push east-
ward. The government campaign in the northeast-
ern sector now involves some 28 battalions,
totaling approximately 13,000 troops. Aerial
resupply of these forces, as well as those defend-
ing Kompong Chamlang and Kompong Ampil, has
been difficult at times because of poor weather
conditions and heavy enemy ground fire.
Phnom Penh's hopes for the commitment of
some South Vietnamese ground troops to the
threatened sector were quickly dashed when Sai-
gon refused to carry out a diversionary operation
there. Consequently, Lon Nol was obliged to send
some Cambodian units from the Route 6 area in
Kompong Cham Province and from the Mekong
River Defense Command to shore up the area
around Vihear Suor. The prime minister appeared
to be taking personal command of the effort to
push the enemy away from the northeast. Al-
though it is not clear how hard or long Lon Nol is
working, it has been feared that even a partial
resumption of his duties could lead to another
stroke.
In the southwest, the Communists again held
Srang, in Kompong Speu Province, following its
abandonment by Cambodian Army troops early
in the week. Several government battalions sub-
sequently launched a drive from Route 3 to
retake the town. They quickly ran into strong
enemy resistance, however, and suffered six killed
and 30 others wounded in the ensuing fighting.
That attack, as well as other Communist actions
that have occurred recently in the same general 25X1
area, apparently was carried out by elements of
the Communist Phuoc Long Front- ossibl to
mask enemy supply movements.
SECRET
Page 6 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRE'l'
COMMUNIST CHINA - PERU: The Peruvian
trade mission that arrived in Peking last week has
obtained Chinese agreement on a major commer-
cial transaction. China will buy 150-200 thousand
tons of Peruvian fishmeal as well as other fish
products and 40 thousand tons of copper before
the end of 1972. Permanent offices will be estab-
lished in Lima and Peking to facilitate this in-
creased trade. While in Peking the Peruvian trade
mission received lavish treatment and high-level
attention, including a meeting with Premier Chou
En-lai. Despite such broad hints to the Peruvians
as Chou's statement that he hoped that Sino-
Peruvian relations would "grow with each passing
day," there is as yet no evidence of substantial
progress toward the establishment of diplomatic
relations.
Chinese Navy Puts In To the Paracels
Peking is expanding its naval activity in the
Paracel Islands in the South China Sea. Naval
convoys from Yu-lin on Hai-nan Island frequently
visit the Paracels, particularly Woody Island, one
of the largest in the group, which lies some 200
miles southeast of Hai-nan. Security for the con-
voys is being provided primarily by destroyer
escorts, the largest warships in China's South Sea
Fleet.
Recent aerial photography of Woody Island
shows that the Chinese are building a berthing
area, dredging a channel, constructing a jetty, and
erecting new buildings on the island. The convoys
are bringing construction materials and supplies
for the operation. Over 50 buildings of various
sizes are located on the island,
The Paracels consist of a large number of
coral reefs, but only a few are large enough to
support habitation. Sovereignty of the islands is
in dispute, and claims are made by at least three
other nations-South Vietnam, Nationalist China,
and the Philippines. Peking has maintained a naval
communications and observation post on Woody
Island for years and the island has long been used
by the Chinese as a source of guano and as a
fishing base. A Chinese presence also has long
been maintained on Lincoln Island, some 30 miles
southeast of Woody. The South Vietnamese have
a small military force on a few islands some 50
miles southwest of Woody.
Communist China is sensitive about the pres-
ent operation in the Paracels and most of Peking's
"serious warnings" to the US in the last six
months for violations of its sovereignty have in-
volved overflights of the islands. The reason for
the increased naval activity and construction pro-
gram is not entirely clear, but it strengthens Pe-
king's claim to the islands. The Chinese may want
a new naval facility in the Paracels to provide
limited support for the expanding naval opera-
tions of their growing South Sea Fleet.
SECRET
Page 7 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Japan: Maneuvering for Political Power
Prime Minister Sato apparently will make a
major cabinet reshuffle following the upper house
elections late this month. Foreign Minister Aichi,
according to the US Embassy in Tokyo, may be
one of the few incumbents retained. He would be
kept on to present the government's case when
the Okinawan reversion agreement comes before
the Diet this fall. Defense chief Nakasone report-
edly is virtually certain to leave his post, but he
may get either a top party position or a major
ministry. Either would enable him to get closer to
the sources of campaign funds that he needs to
keep his large, restless faction in line, as well as
facilitate his efforts to build support for a future
try at the prime ministership.
A reshuffle would be most likely to occur
immediately after Sato returns from the inaugura-
SOUTH
CHINA
SEA
Construction activity
on Woody 1.
Paracel
Islands
tion of South Korean President Pak on 1 July.
Although Sato confounded observers by deciding
not to reshuffle the cabinet following his re-elec-
tion last fall, he is now under considerably greater
pressure to bring new blood into the cabinet. This
pressure results partly from the realization, par-
ticularly from members of his own faction, that
i:his is their last chance to gain a cabinet post
before the expiration of Sato's term of office
next year. In the process of reshuffling the cabi-
net, Sato will face the delicate task of maintaining
a balance among the other major rival factions, if
he is to retain his dominant role in naming his
successor. Sato's power and control over intra-
party forces have already declined somewhat be-
cause of an inevitable growth of restiveness
among the rank and file resulting from his un-
usually long tenure in office.
SECRET
Page 8 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
Trade Liberalization Japanese Style: Eight Steps Sideways
Tokyo's recent announcement that it will
"drastically" revise its highly restrictive import
policies and modify its aggressive export activities
is largely a restatement of promises made over the
past decade. Despite past assurances and mount-
ing foreign criticism, trade practices have not
been markedly altered, and there is considerable
domestic opposition to making any significant
changes.
The most significant aspect of the proposed
eight-point liberalization program is that it ap-
pears to reflect a growing awareness by some
elements at the top leadership that greater efforts
should be made to modify the old restrictive
policies. Some officials, particularly in the For-
eign Ministry, probably would like to remove the
barriers somewhat more quickly than now antici-
pated to reduce friction, especially with the
United States, Japan's major trading partner.
They have been strongly opposed, however, by
other elements in government, particularly the
Ministry of International Trade and Industry and
the Ministry of Agriculture. These ministries are
strongly inf, fenced by agricultural interests and
by major segments of the business community
who have benefited from restrictions and who are
backers of the ruling Liberal Democratic Party.
Among the measures included in the pro-
gram is a pledge to remove most of the quantita-
tive restrictions on imports. This repeats Tokyo's
promise made in the early 1960s to the Organiza-
tion of Economic Cooperation and Development
to eliminate "illegal" restrictions. Most of these
have been gradually removed over the years, and
Tokyo now states they will be reduced to 40 by
September compared with 262 in 1962. Most of
the program deals largely with studies that are to
be undertaken rather than with any meaningful
action. For example, Tokyo promises to look into
the orderly marketing of its exports and to con-
sider tariff reductions beyond those already
agreed to under the Kennedy round.
Liberalization measures already adopted
have not lessened Japan's trade restrictions sub-
stantially. Some quantitative restrictions have
been nullified by "temporary" increases in tariff
rates and by a quota on imports based on value.
Moreover, the retention of highly subtle nontariff
barriers, including government purchasing mo-
nopolies and informal allocations of import li-
censes through administrative guidance pro-
cedures, has significantly reduced the effective-
ness of liberalization measures. Until these are
eliminated, meaningful movement toward liberali-
PHILIPPINES: The sudden death of the constitu-
tion convention president three days after his
election is a setback for President and Mrs.
Marcos, who had actively lobbied for him. They
are probably for the moment undecided on a
successor who could be depended on to do their
bidding.
The convention has been preoccupied since
it opened on 1 June with getting organized and
choosing officers. A resolution calling for a com-
mitment to "perpetual neutralization" has ex-
cited considerable delegate interest since it was
introduced. Discussion of neutralism is becoming
somewhat fashionable in the Philippines in con-
nection with increased involvement in regional
affairs and a relaxation of its traditional aloofness
from the Communist world. At this juncture,
however, it does not appear that the Philippines,
which depends on the US for external defense,
would adopt a neutralization formula that would
preclude continuation of US military bases in the
country.
SECRET
Page 9 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SECRET lftlllp~
EUROPE
Soviet Foreign Trade Registers Sharp Rise
Initial foreign trade data released by Moscow
indicate that the greatest growth in a decade
occurred last year with a 12-percent rise to $24.5
billion. Imports rose by 14 percent to almost
$11.7 billion, and exports, which increased by 10
percent, amounted to $12.8 billion.
Soviet trade with other Communist coun-
tries totaled $16 billion, a rise of 11 percent over
the 1969 level. Trade with Cuba, however, in-
creased by more than one third, reflecting sub-
stantially increased imports of sugar. Exchanges
with Hungary, Poland, and Yugoslavia also were
up considerably, largely because of increased
Soviet exports. The Soviet figures indicate that
trade with North Vietnam fell off slightly in
1970.
Soviet Foreign Trade by Area, 1970
Soviet Foreign Trade, 1969-70
(Million US Dollars)
Industrialized
Free World
21%
Less--
Developed
Countries
11%
SECRET
Communist
Countries
65%
Soviet trade with the free world rose 12
percent to $8.5 billion; exchanges with the less
developed countries accounted for the greatest
rise among non-Communist areas. Exports un-
specified by the Soviets as to destination but
believed to represent military-related goods de-
livered to less developed countries rose by more
than $200 million to almost $800 million.
Trade with the industrial West increased 8
percent to $5.1 billion. The growth in exports
was less than half that registered by Soviet im-
ports from this area, leaving a deficit of $435
million. Large increases in imports occurred in
trade with Japan and Canada, but trade with
Western Europe failed to show any significant
change.
Import
Export
Page 10 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
Profitable Discussions of International Trade Problems
The ministerial meeting last week of the
Organization for Economic Cooperation and De-
velopment (OECD) and bilateral talks between
the Commission of the European Communities
(EC) and US officials have enhanced prospects for
constructive international discussions of trade
problems, including those which the US may en-
counter as a result of the enlargement of the EC.
The 23 members of the OECD, meeting in
Paris, agreed to establish a special high-level, inter-
governmental committee to explore ways of re-
solving some of the economic problems currently
plaguing the international community. The group
will concentrate on trade and "related problems,"
a term not yet clearly defined. The committee
will be kept relatively small-eight to ten mem-
bers-probably including the US, Japan, West
Germany, France, Italy, the UK, and some repre-
sentative of the EC as an organization. The
venture should help to ameliorate the differences
over trade practices that have recently clouded
relations between the US, Japan, and the EC. It
will also enhance the role of the OECD as a forum
for discussion of the broad range of differences
on economic policy among those countries.
There is a variety of opinion within the
OECD on what poses the greatest problems for
the international economy. Some of the OECD
countries who are not members of the EC, al-
though supporting the new trade committee idea,
believe that ultimately the effects of the enlarge-
ment of the EC will require another world-wide
round of trade liberalization. Most of the EC
members, however, would be reluctant to commit
themselves to such wide-ranging negotiations
while they are caught up in the process of enlarge-
ment. Moreover, there is sentiment within the EC,
particularly on the part of the French, that US
balance-of-payments deficits and the large volatile
Eurodollar market were responsible for most of
the recent ills of the international economy, and
that these problems require the immediate atten-
tion of the OECD if the world is not to revert to
protectionist trade and monetary practices. Even
so, all the EC members supported establishment
of the trade group.
Following the generally favorable outcome
of the Paris session, a high-level US delegation
met with representatives of the EC Commission in
the second of a series of consultations informally
established last July. The meeting was judged by
both sides the most useful and constructive ex-
change of views yet between the two sides. The
commission indicated its intention to promote
trade liberalization and to maintain good relations
with the US during the difficult period after the
UK and other countries join the EC. For example,
the commission suggested that before the EC's
arrangements with the Commonwealth countries
are definitely determined, a further hearing of the
US attitude might be possible.
The commission representatives explained
that their recent offer to improve the access of
US oranges to the EC market was designed to
help end what was becoming a dangerous round
of recriminations. The commission said that the
offer, which could be approved by the EC
Council in July, requires no reciprocal US action,
although the EC would hope for a gesture in
return. A number of other specific trade problems
remain on the agenda for future discussions, but
the current positive attitude of the commission
should help assure consideration for US interests
in the course of the EC's probable enlarge-
ment.
SECRET
Page 11 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET
A New Soviet Disarmament Proposal
Soviet party leader Brezhnev presented yet
another arms control proposal in his election
speech on 12 June. Following up on his presenta-
tion on 30 March to the 24th party congress, he
publicly put the USSR on record as favoring some
limitation on the naval deployments of great
powers "far from their own shores." Brezhnev
said that Moscow is ready to discuss "any pro-
posals" for "solving" this problem provided that
the discussions take place "on an equal basis."
Brezhnev's comments seem designed, in part,
to maintain the momentum of Moscow's "peace
offensive" with another gesture it hopes will be
interpreted as a new Russian initiative aimed at
reducing East-West tension. Moscow probably
also sees the offer as a useful counter to Western
charges that increasing Soviet naval activity points
to expansionist aims. Moscow's sensitivity to
these charges is evident in the context in which
Brezhnev's offer was made. He alluded to US
naval deployments in the Mediterranean-"next
door to the Soviet Union"-and in the Far East,
and he complained that, although the US con-
tends these are "normal and natural," Washington
has launched a propaganda campaign against the
mere appearance of Soviet ships "in the Mediter-
ranean, the Indian Ocean, and other seas."
Although Moscow has a clear interest in seiz-
ing the public initiative and in trying to put the
US on the defensive in this area, the Soviets are
probably motivated by more than a mere tactical
desire to engage in grandstanding.
The Soviets are no doubt aware of press
speculation that the US, having reviewed its
policy options in the Indian Ocean, may propose
some kind of regional arms control arrangement.
Brezhnev's remarks may have been timed in part
to pre-empt and upstage any such initiative and at
the same time increase the pressures against pos-
sible US plans to strengthen its naval presence in
the area.
Moscow is particularly sensitive to the pos-
sibility that the US might be considering deploy-
ing ballistic missile submarines on regular patrol
in the Indian Ocean. The US decision, announced
last December, to begin building a communica-
tions facility on Diego Garcia has probably
strengthened Soviet fears on this score. Moscow's
desire to prevent this, therefore, may eventually
prompt the USSR to flesh out its earlier sugges-
tion for mutual restraint in the Indian Ocean.
Alternatively, the Soviets might also be plan-
ning to propose some kind of trade-off, whereby
the USSR would undertake to exercise some re-
straint with respect to its naval activity in the
Caribbean in return for limitations on US deploy-
ments in other waters closer to the Soviet Union
such as the Barents and Black seas and the Sea of
Okhotsk or possibly even in the Indian Ocean.
Moscow's growing naval presence in the Mediter-
ranean and its appreciation of the US stake there
argues against any serious move in this area. In his
March address to the party congress, Brezhnev, in
fact, made further steps "toward reducing war
tensions" in the Mediterranean conditional on a
settlement of the Arab-Israeli conflict.
SECRET
Page 12 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET '"""%
IAEA: The recent meeting of the board of gover-
nors of the International Atomic Energy Agency
(IAEA) proceeded smoothly, with no controversy
over the safeguards accords reached in April.
Thus, the next few months should produce much
greater activity in negotiations on safeguards
agreements between the IAEA, the enforcement
agency designated in the Nonproliferation Treaty
NETHERLANDS: Seven weeks after the national
elections, Professor Steenkamp's strenuous efforts
to see if a government could be formed have
finally produced agreement among the five pros-
pective coalition partners on an over-all draft pro-
gram. On 9 June, the five parties had negotiated
an economic program providing that any new
government expenditures will be financed by
economies elsewhere in the budget and that tax
increases will be tied to real income gains. With
this general compromise on the major obstacle of
(NPT), and NPT adherents. It is not yet clear,
however, when-and in what manner-EURATOM
will be prepared to negotiate with the IAEA.
France, an NPT nonsignatory, has been holding
up agreement among the Six on the EURATOM
position, seeking a loosening of EURATOM safe-
guards on its civil atomic energy pro-
grams.
fiscal policy completed, Steenkamp has appar-
ently had little difficulty in discovering a con-
sensus on such issues as housing and defense
spending. Although specific recommendations for
cuts in ensuing government expenditures and the
details of portfolio arrangement remain for con-
sideration, the postelection negotiations will now
move toward the formateur stage, with Barend
Biesheuvel, a popular Protestant party leader, as
the most like) candidate for the prime minister-
ICELAND: The voters tipped the political bal-
ance leftward in last Sunday's parliamentary elec-
tions, augmenting the number of seats held by the
Communist-dominated Peoples Alliance and the
splinter Liberal Left Party. As a result Prime
Minister Hafstein submitted his government's res-
ignation on 15 June, ending nearly 12 years of
coalition rule by the conservative Independence
and Social Democratic parties. No decisions have
yet been made as to the composition of the new
government. The Social Democrats, confronted
with the lowest show of support in their history,
have apparently decided not to agree to reshaping
the old coalition by expanding it to include the
Liberal Left Party. If their decision to remain on
the sidelines is irrevocable, an alternative com-
bination may be an all-bourgeois coalition of the
Independence and agrarian Progressive parties,
provided they can bury their long-standing an-
tagon isms.
SECRET
Page 13 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SECRET
East German Party Congress Provides No Big Surprises
The smooth transfer of power from Walter
Ulbricht to Erich Honecker, begun six weeks ago,
continued at the eighth congress of the East Ger-
man party (SED). The conclave opened in East
Berlin on 15 June. Major speakers have adopted a
low-key approach to foreign policy, indicating
that domestic matters are still of primary impor-
tance to the party in the transition period, and
Soviet party chief Brezhnev warmly endorsed
Honecker's leadership. Nevertheless, Honecker
promised even closer East German - Soviet ties
and hinted at a more conciliatory attitude toward
the Berlin negotiations.
Both Honecker and Brezhnev formulated
their remarks on the Berlin and East - West Ger-
man talks in a manner designed to elicit hope for
progress, while at the same time veiling their
specific intentions. Honecker made a public
avowal that he would follow the Soviet lead on
Berlin talks. In return, Brezhnev undercut rumors
of differences between the two countries by
promising that he would accept only an agree-
ment that included "due consideration of the
lawful interests and sovereign rights of the Ger-
man Democratic Republic." Honecker rejected
again Bonn's idea that there could be a "special
relationship" between the two Germanies and in-
dicated no change in his demand for formal recog-
nition from the West Berlin Senat.
No abrupt shifts in domestic policy have
been suggested. Above all, the congress is busy
making formal the changing of the guard within
the party hierarchy. Honecker's report carefully
cited Ulbricht's "great and historic contributions"
to the SED, a sentiment echoed by Brezhnev. The
S E D's new era was further emphasized by
Ulbricht's failure-because of an unexpected ill-
ness, according to East German announcements-
to address the congress.
Honecker's remarks on party matters
stressed the concept of collective leadership, an
idea that he has cultivated since taking over the
party reins. His statements on "collectivity,"
however, clearly were not formulated either as
direct or indirect criticism of Ulbricht. Rather,
they seem aimed at middle and lower party
echelons, where the SED most often encounters
bureaucratic stagnation.
Honecker spent a good portion of his
address on economic policy, as embodied in the
1971-75 economic plan. He continued to empha-
size the need to expand industrial output, but this
was presented in a more realistic framework.
Mindful of the events of last December in Poland,
his speech also called for a slight increase in
attention paid to the consumer. 25X1
SECRET
Page 15 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
~.C,l..r1Cr, .'i e
Norway: The Crisis That Never Was
A flurry of press speculation, prompted by
political party grandstanding, created during the
last month the illusion of a government crisis in
Oslo, but the specter vanished once serious debate
began in parliament.
The Norwegian shadow play revolved around
the minor issue of contributions to the national
pension fund. The minority Labor government
had called for a one-percent increase in employer
contributions and a one half - percent increase in
employee contributions. The four opposition
parties were divided in their response to this pro-
posal. The Liberal and Christian Peoples parties
wanted only a moderate increase, while the Con-
servative and Center parties opposed any increase
whatever. Each of the parties insisted that no
compromise was possible on this question, but on
the eve of parliamentary consideration of the
issue Prime Minister Bratteli announced a com-
promise with the Liberal, and Christian Peoples
parties, thus avoiding a test of strength for his
government.
There are several reasons for the Norwegians'
oversensitivity to normal political maneuvering.
The public has yet to recover from the shock of
the collapse of the four-party bourgeois coalition
last March. Such instability was long believed to
have no place in Norwegian political practice, but
once confronted with the fact that governments
can collapse, even in Oslo, the Norwegians swung
over to expecting new crises momentarily. Even
while expecting them, however, the public
anxiously hoped that none would occur, and the
leaders of the various parties, aware of the low
morale of the rank and file, spread the word that
a crisis at this time made no political sense.
Despite this stand the leaders of the parties
were also aware that parliament was ending its
spring term and that some issues would have to be
presented to the voters by next September's na-
tionwide local elections. The overriding issue
facing the nation-Norway's application for
membership in the European Communities
(EC)-is so explosive that none of the parties
cares to drag it into the cross fire of public
debate. Nearly all the other Labor government's
bills in parliament were carry-overs from the
bourgeois government's stewardship. Thus, only
on the minor pensions proposal could the various
parties safely puff and posture. Once each of
them established a distinct position on this pro-
posal in the minds of the voters, the normal
processes of political horse trading ensued, and a
bill approximating the government's original pro-
posal was passed.
Now that the dust has settled on the pension
fund issue, the realities of Norwegian politics have
once again emerged. The minority Labor govern-
ment is in office because of the collapse of
bourgeois unity on Norway's pursuit of EC
membership. All of Norway's political parties
have adopted varying stands on this issue, and
except for the Conservatives, each of the
country's political parties has a vocal minority
opposing the position of its party leadership. In
such disunity, the Labor party has the responsi-
bility for guiding the nation through its greatest
controversy since the 1905 separation from
Sweden, and if the EC issue can be resolved
without further dividing the party or nation,
Labor can expect to reap political benefits not
only in the 1973 parliamentary elections but
beyond.
SECRET
Page 16 WEEKLY SUMMARY
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SECRET AMR
Italian Electorate Moves to the Right
Results of the off-year local and regional
elections on 13 and 14 June show a popular shift
to the right. The neo-fascist Italian Social Move-
ment (MSI) and the outspokenly anti-Communist
Social Democrats gained at the expense of the
heterogeneous Christian Democrats, and the
Socialists took votes from the Communists. These
results may aggravate interparty tensions in Prime
Minister Colombo's coalition but do not appear
to threaten the formula for government by a
center-left alliance.
Election successes for the MSI are a partic-
ular victory for Giorgio Almirante, who has
headed the party only since 1969. Almirante,
who often criticized his predecessor for being too
moderate, has himself enforced extremism as the
party line.
The MSI increased its vote from 7
to 1 percen of the total in Sicily and from 9 to
12 percent on the mainland. The increase prob-
ably came from the Christian Democrats' total in
Sicily, but from minor right-wing parties on the
mainland.
The vote given the two relatively conserva-
tive coalition members, the Social Democrats and
the Republicans, remained steady in Sicily but
rose 2.4 percent on the mainland. This rise ap-,
pears to have been partly at the expense of the
Christian Democrats, who lost only fractionally in
this area. The shifts, which seem to reflect popu-
lar interest in a more ordered society, are likely to
push these three parties toward a more conserva-
tive policy orientation.
The Socialist Party, on the other hand, may
be strengthened in its leftward policy by its
moderate electoral success. It has been advocating
legislative cooperation with the Communists.
Resulting interparty strains could cause a
rejuggling of the coalition or even bring about a
Christian Democratic caretaker regime for the rest
of the year. Serious pressures on the center-left
formula will be minimized, however, by the im-
minence of the "white semester," a six-month
period preceding the presidential election next
December during which the President cannot dis-
solve Parliament
MALTA: The narrow victory of the Malta Labor
Party in the parliamentary elections of 12-14
June indicates that it will have to move cautiously
before altering Malta's traditional ties with the
West. The latest returns show Labor winning by
one seat, but the defeated Nationalist Party may
contest the outcome.
Dom Mintoff, who will be the new prime
minister, is likely to pursue a foreign policy that
will attempt to play off the East against the West
in the hope of getting increased financial benefits
for Malta. During the campaign the Labor Party
indicated that it was prepared to sign an eco-
nomic agreement with Libya, and Mintoff may
try to use the possibility of such aid to squeeze
additional assistance and investment from West-
ern countries. As one of his first acts as prime
minister, Mintoff will probably seek to rene-
gotiate the defense and financial agreement with
the UK in an attempt to pare down London's
vital role in determining Maltese foreign policy
and to increase significantly British develop ment
aid.
SECRET
Page 17 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
Maritime Issues: US Positions Endangered
Several recent developments have dimmed
any expectation that the 1973 Law of the Sea
(LOS) conference will readily produce meaningful
international agreements on the vital issues-
control of the seabeds, rights of passage through
international straits, territorial waters claims, and
fishing privileges. The Latin American states that
claim a territorial jurisdiction of 200 miles in
particular have maneuvered adroitly in the cur-
rent preparatory work of the UN General As-
sembly's 86-member seabeds committee to secure
an outcome favorable to their interests.
The US has been urging a new LOS princi-
pally because the vaguely worded maritime con-
ventions produced by UN-sponsored meetings in
the late 1950s have seemed increasingly inade-
quate to protect the vital security interests of the
superpowers. In the late 1960s, moreover, many
of the less developed countries have been pressing
for a comprehensive oceans regime to regulate
and divide the revenues from the exploitation of
the potentially vast riches of a wide variety of
maritime resources. The upshot of these parallel
pressures was the 1970 Assembly decision to con-
vene the LOS conference, subject to confirmation
by the 1971 and 1972 assemblies.
A major threat to the conference is the
efforts of several Latin American states to nail
down their objections to the major powers' deep-
sea fishing off the Latin Americans' coasts and
their rejection of the US proposal last year that
national sovereignty over the ocean floor end at a
water depth of 200 meters and that international
controls apply to the seabeds beyond that point.
Last March these nations prevented the convening
of a seabeds committee meeting for two weeks,
seeking agreement that the subcommittee prepar-
ing the recommendations on territorial waters be
chaired by a 200-mile advocate.
Unsuccessful on that occasion, the Latin
American states have since sought other ways to
enhance their leverage. Vis-a-vis the Soviet Union,
they are seeking priority consideration in the
meeting of the seabeds committee next month for
the outline of a world-wide oceans regime, a con-
cept that troubles Moscow because of its con-
servative view of international organizations. The
US, moreover, has been warned by a Chilean UN
delegate that the Latin Americans may urge re-
consideration at the committee session of the
subject of "peaceful uses" of the ocean floor, a
move designed to focus attention on the activities
of intelligence-gathering ships and on the use of
electronic devices on continental shelves for mon-
itoring purposes. Presumably, the Latin Ameri-
cans could be induced by the superpowers not to
raise these delicate issues if a concession were
made on procedures for handling the territorial
waters proposals.
A two thirds majority probably will be re-
quired for adoption of agreements at the 1973
conference. Despite their recent. successes in win-
ning some African support for 200-mile claims,
the Latin Americans may not yet have a blocking
third to prevent decision on a lesser limit. There is
potentially substantial Afro-Asian support for
sharing revenues from resources nearer to coasts.
A major 1973 objective of the superpowers
is to ensure rights of passage through interna-
tional straits. These rights-at stake in over 100
straits-have been jeopardized both by expansive
territorial waters claims and by the growing con-
troversy over what constitutes "innocent pas-
sage," the key term in present international law
on the subject. Spain has been assiduously
courting support-successfully in the case of
Ethiopia and Brazil-for its view that "dangerous"
vessels and cargoes should not be accorded the
privilege of free passage. By playing on the con-
cern over nuclear and oil-polluting accidents,
Madrid probably hopes to gain bargaining points
with the US on a NATO link and compensation
for US bases in Spain. 25X1
SECRET
Page 18 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
MIDDLE EAST -AFRICA
Jordan: Iraqi Troops Go Home
The Iraqi troop withdrawal from Jordan is
still incomplete, but the force level has declined
to about 1,800. These forces consist of a light
AAA battalion, an infantry battalion, and a logis-
tics unit, all located around the former H-4 pump-
ing station in eastern Jordan, according to the US
defense attache in Amman. The Iraqis also have
maintained a few aircraft and air force personnel
at the H-4 airfield.
The Iraqi withdrawal has been under way
since last fall and the number of troops has de-
clined from a total that ma have been as hi
25,000 at that time.
The Iraqis maintain that
they are prepared to withdraw if Jordan insists
and will reimburse them for the move.
Whatever the precise number of Iraqi troops
remaining in Jordan, it is now so low and the
force so isolated that any meaningful military
intervention by Baghdad in Jordanian affairs will
be difficult. If Amman chooses to press for the
complete departure of the Iraqis, it could do so
successfully. Even if the present small contingent
were allowed to remain at H-4, it would not
provide much of a lever should Iraq decide to try
to rebuild its forces in Jordan.
King Husayn was instrumental in the col-
lapse last fall of the Eastern Front Command-a
vehicle that was never effective in achieving its
Beirut,, /LEBANON
!'We4ttc rranean
SECRET
Page 19 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
-move Z)rlUtCL R
purpose of coordinating the forces of Iraq, Syria,
and Jordan, but through which Iraqi forces were
introduced into Jordan after the 1967 war. He
has remained adamantly opposed to its revival
unless the Jordanian Army could exercise com-
plete command of the foreign troops stationed in
Jordan.
FEDAYEEN: On 11 June the Popular Front for
the Liberation of Palestine (PFLP), the Palestin-
ian commando group most noted for flamboyant
anti-Israeli activities, attacked the Israeli charter
tanker "Coral Sea," under Liberian-flag, near Bab
al Mandab at the mouth of the Red Sea. The
attackers apparently fired bazookas at the tanker
from a small pleasure boat, starting several small
fires aboard the tanker. These were quickly put
out and the ship proceeded on its course to the
Israeli port of Elat. The PFLP has taken public
credit for the incident and has appealed to the
Government of Yemen (Sana) to release four
ZAMBIA-PORTUGAL: A five-month-old dispute
between the two governments has been settled,
but fresh difficulties may well arise. Under a
secret agreement recently reached in New York,
the Portuguese will again allow Zambia's grain
imports to move over Portuguese African rail-
roads and will release two Zambians they have
been holding in jail. Lisbon had suspended the rail
traffic and had arrested the Zambians to press
Lusaka into punishing a Zambia-based guerrilla
Any significant alteration in the King's at-
titude or the prevailing mood of cool toleration
between Baghdad and Amman seems unlikely.
Consequently, the withdrawal of the Iraqi troops
probably has had the effect of isolating Iraq from
effective military participation in Middle East
skirmishes and councils.
persons reportedly involved who are now being
held by the Yemenis.
The Coral Sea is one of several ships engaged
in carrying oil from Iran to Israel. The Israelis are
particularly sensitive to such encroachments on
their commercial lifeline and have warned the
Arab states and the international community of
the gravity of the incident. They have announced
that they will take unspecified precautions against
similar attacks in the future, and they may yet
take some kind of retaliatory action.
organization that had earlier abducted and ap-
parently killed six Portuguese civilians.
According to a Portuguese official, Zambia
has promised to restrict the activity of Zambia-
based organizations, but Lisbon doubts Lusaka's
willingness to crack down hard or for long. The
agreement apparently did not resolve the question
of Zambian support for anti-Portuguese guerrillas
borders flare up again.
and it probably is only a matter of time before
incidents along the Zambian - Portuguese African
SECRET
Page 20 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET
Libya: Qadhafi Lashes Out Again
Premier Qadhafi has once more castigated
friend and foe alike for deviating from pure Arab
nationalism and socialism as he conceives them.
The recent attacks contrast sharply with the more
or less reasoned speeches he made earlier this year
and may have the effect of moving Libya further
into political isolation.
Qadhafi's speech on 11 June-the first anni-
versary of the US evacuation of Wheelus Air
Base-was tailored to the local audience and at-
tacked both the big powers ind Arab states. The
US was again the main target, and Qadhafi reit-
erated that relations cannot be maintained if the
US continues to supply Israel with arms. An
ominous reference to "action" by the Libyan
people was not spelled out, but given Qadhafi's
sense of frustration with Libya's sideline role in
the Arab-Israeli confrontation, he may well in-
dulge in some anti-American gesture.
The Premier also dealt harshly with the So-
viet Union, accusing it of acting in a way that
could lead to imperialistic domination of the
Arab countries and boasting that in Libya there is
"not a single Russian other than members of the
embassy." Libyan friendship, he said, remains
dependent upon Moscow's dealing with Arab
nations as equals. Qadhafi commented that rela-
tions with the British might still be worked out if
they withdraw quickly from the Persian Gulf and
settle the current squabble over completion of
Libyan arms contracts. France was not mentioned
at all.
The Premier announced recognition of Com-
munist China in an almost contemptuous manner.
The chief reason for this statement appears to
have been Qadhafi's belief that, under the former
regime, the US had always forced Libya to vote
against Communist China's admission to the UN.
He claimed that atheism had been "imposed"
upon the Chinese, but he warned them that some
day China would need God. The speech may have
caught the Chinese unaware; Peking radio re-
ported the recognition offer without comment.
Qadhafi's comments on Arab states were in
much the same vein. King Husayn was termed a
"butcher," and even Egypt, Libya's partner in the
Federation of Arab Republics, was condemned
implicitly for signing the 15-year friendship treaty
with the USSR and falling under Soviet influence.
The Premier also argued that Egypt is so preoc-
cupied with Israel that it has dropped the torch of
liberation in the Persian Gulf.
Sudan: Ferment In Khartoum
The Numayri government is apparently re-
considering both its domestic and foreign policies
and may soon adopt a more flexible attitude
toward the West.
As a first step toward broader political goals,
Revolutionary Command Council (RCC) Chair-
man Numayri has sought firmly to establish his
own base of power while neutralizing potential
centers of opposition. The formation in late May
of the Sudanese Socialist Union, which is likely to
consist largely of Numayri's followers, was the
beginning of this process. The Sudanese leader
then arrested a number of leading Communists
and exiled them to a provincial capital some dis-
tance from Khartoum.
The trade union movement, which has
largely served as the power base for the Sudanese
Communist Party, has been restructured. Some
50 union leaders with the potential for chal-
lenging Numayri were arrested and their
SECRET
Page 21 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
..~ StAKE; l'
supporters in the government fired. Government
plans for the trade unions now provide for a
restructuring along occupational lines and in-
corporation into a new federation that is to be
part of the Socialist Union.
Numayri has apparently already decided on
one important and positive change. The nationali-
zation and confiscation of foreign properties has
been recently limited by law, and the government
is making a conscious effort to attract fresh
Western, especially US, capital. The mininster of
treasury and planning has indicated that Khar-
toum would welcome US investments in the
industrial, mining, and petroleum fields, as well as
American technical assistance in cotton marketing
and industrial management. Private Sudanese
businessmen believe that Numayri's change of
course is basic and not a passing phase, but the
Sudanese leader has had a history of making
mercurial policy shifts and could again reverse
himself if too much opposition to his ideas de-
velops.
Pakistan: No End to Problems in Sight
In East Pakistan, low-level guerrilla activity
continues clashes with army units have/
resulted in the wounding of 50 to 60 West
stani troops a day. Insurgents have also blown
up many small bridges, especially in areas near the
Indian border. So far, their most effective tactics
appear to be assassinations and threats directed
against those collaborating with the army. These
have probably contributed significantly to the
difficulty the military is encountering in its ef-
forts to organize local political support.
Unsettled conditions in the province and the
continuing campaign against East Pakistani
Hindus have prolonged the flow of refugees into
India, but the number crossing the border has
decreased recently. The immediate threat of
cholera among the refugees appears to be sub-
siding both because of international help and
because epidemics of this particular strain are
relatively short-lived. Residual foci of cholera will
probably remain in the area. The refugees, how-
ever, live in conditions conducive to the outbreak
of disease and officials now fear that typhoid and
other enteric diseases and pneumonia will also
become a problem.
India, aided by US and Soviet aircraft, has
begun moving refugees out of border areas, but
the number of people to be moved-2.5 million-
will limit the immediate benefits of this program.
The UN High Commissioner for Refugees
(UNHCR), Sadruddin Aga Khan, has completed
his visit to India and Pakistan. International relief
continues to build up to massive proportions, but
there is concern now as to whether the UNHCR
will have enough authority to ensure efficient
delivery of the aid to the victims.
Swaran Singh Seeks Support
Since 5 June, Indian Foreign Minister
Swaran Singh has talked to government leaders in
Moscow, Bonn, Paris, Ottawa, and Washington.
He apparently argued that India alone cannot care
for the refugees indefinitely and asked that pres-
sure be brought to bear on Pakistan to create
conditions that will allow them to return home.
SECRET
Page 22 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
51,UKL1
He received some satisfaction in Moscow,
where the Soviets expressed their concern about
the "grave situation" resulting from the flow of
refugees into India. Both the joint communique
issued at the end of Singh's visit and an election
speech by Premier Kosygin on 9 June contained
calls for prompt measures to stop the refugee
flow and urged that proper conditions be created
without delay so that they can return home
safely.
Iran: Increased Foreign Aid Needed
Despite the anticipated substantial increase
in oil revenues, Iran will have to rely on addi-
tional foreign assistance from both the East and
West to finance its near-term economic develop-
ment. Tehran will continue to walk a financial
tightrope because of the Shah's program of rapid
expansion on both the economic and the military
fronts.
Iran will have to use some $800 million in
foreign loans this year, or about twice as much as
last year, to pay its planned total development
costs, including large foreign debts. This is true
even though the budget for 1971-72, which be-
came effective on 21 March, projects oil revenues
at about $1.8 billion, 80 percent of which will go
for economic development.
Although the West is expected to provide
most of the needed funds, the USSR and East
European countries will undoubtedly play an im-
portant role. Since 1963 the USSR has been a
major source of foreign development funds: it has
extended nearly $600 million in credit, largely for
project assistance. The most important projects
include the construction of a gas pipeline from
southern Iran to the Soviet border, completed last
year, and the construction of a steel mill and a
machine tool plant, both of which are nearly
The USSR's decision to speak out reflects its
concern that the situation is deteriorating rapidly.
The Soviets probably hope that their public criti-
cism of Pakistani policy will put further pressure
on Yahya to move rapidly toward some form of
accommodation with the East wing. More im-
portantly, however, the Soviets are probably con-
cerned that India might follow through on its
threats to take drastic action if the international
community is not sufficiently responsive to its
pleas for aid in coping with the refugee prob-
finished. Repayment is to be made principally by
deliveries of about 140 billion cubic meters of
Iranian natural gas valued at $1 billion over the
next 15 years. Gas for the Soviet Union began
flowing through the line late last year, and despite
a few periods of interruption Iran appears to be
meeting its supply commitments.
Moscow last year agreed in principle to
study the feasibility of a second pipeline that
could double its imports of Iranian gas. It also
agreed to expand Iran's steel capacity, and to
share in joint exploration programs for gas and oil
as well as to participate in joint petrochemical
projects. Furthermore, the Soviets extended $54
million in two credits to finance the delivery of
Soviet capital goods and the construction of voca-
tional schools.
Several East European countries have pro-
vided more than $400 million in foreign aid to
Iran, most of which is repayable in oil. As with
the USSR, this barter arrangement is attractive to
Iran because of its chronic balance-of-payments
difficulties. Drawings on East European aid,
which in the past have not been as rapid as those
on Soviet assistance, are expected to pick up over
the next few years as studies for the projects are
completed.
SECRET
Page 23 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Sr;UK.t 1
Most of the Western funds of about $1.1
billion utilized by the end of March 1970 came
from private foreign sources, primarily from West
German, Italian, and Japanese firms. They are
providing short- and medium-term credit largely
for industrial and power projects. These credits,
however, contribute to Iran's balance-of-pay-
ments problems because repayments must be
made in hard currency. Such payments to West-
ern creditors, which amounted to more than $250
million last year, are expected to rise by about 40
percent during this fiscal year. Nearly half of all
new borrowings in the free world will be used to
discharge old debts.
the crisis. A government-imposed "settlement" of
a university controversy in Nuevo Leon led to the
protest resignation of the state governor and to a
spillover of the affair to the Mexico City schools.
Then, the use of officially sponsored goon squads
(halcones) to break up a peaceful student demon-
stration resulted in about 50 student deaths,
placing the government in a highly defensive and
embarrassing position. The chief executive of the
federal district, Alfonso Martinez Dominguez, and
his chief of police have been made scapegoats, but
Halcones chase student demonstrators
SECRET
WESTERN HEMISPHERE
Mexican Government Defensive over Student Deaths
The careers of three major figures have been
sacrificed and an undetermined number of lives
lost in a political drama that remains highly
charged with potential fallout. Divisions in the
outwardly unified ruling party may have seriously
deepened, and President Echeverria may have to
contend with increasingly tumultuous political
byplay as a result of the current crisis.
Roughshod government intervention was a
major contributor to the rapid development of
Page 24 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET
their resignations may not serve to turn off the
continuing heavy criticism over the employment
of armed, government-trained toughs, whose
existence the government continues to deny.
The administration apparently set in motion
or at least sanctioned speculation that Echever-
ria's political enemies orchestrated the student/
halcones encounter and that the President was the
victim of a right-wing plot. If this thesis gains
wide acceptance, it will not warm the relationship
between the President and conservative groups,
including the important business community,
who are already mildly suspicious of Echeverria's
"equal distribution of wealth" rhetoric.
In any event, the President's handling of the
affair is likely to be the subject of very mixed
opinion in the varying political and social circles.
The image he will most want to avoid is one of
weakness and misjudgment. The outbreak of a
student problem so early in his term is a par-
ticular negative note for Echeverria, who in his
seven months as President has unabashedly
courted liberal youth. Even the official party
youth group has come out condemning the vio-
lence last week and is initiating dialogues with the
youth leaders of other political parties to analyze
the present situation of young Mexicans.
A government investigation of the violence
of 10 June so far shows signs of whitewash, with
hints that some alien ideology or "'foreign devil"
will be blamed. If it continues to evade the
question of police inaction during the attack on
the students, the aroused public, and especially
the students, will probably be out in the streets
a ain to challen a the administration.
Cuba and the US Spar over Fishermen
The impasse resulting from the US detention
of four Cuban fishermen is still unresolved. The
Cuban Government has not yet paid the fines
imposed in a US Federal Court upon the four and
has responded instead by fining five US citizens
$20,000 each and detaining eight others in Cuba
pending an "investigation."
The four Cubans were arrested on 26 May
for fishing within 12 miles of the US-owned Dry
Tortugas islands west of Key West. Before their
trial began the Cuban Government initiated a
massive domestic propaganda campaign, which is
still in progress. Cuban media have carried stories
describing the activities of more than 50 Cuban
fishing boats defiantly operating "in the same
area" where the original fishermen were captured.
On 9 June the four were sentenced to six months
in jail and fined $10,000 each. Castro thus found
himself obliged to make a strong response or
suffer an apparent defeat in the eyes of the Cuban
people.
The following day Havana announced that
the five crewmen of two privately owned US
boats that had recently arrived in Cuba would be
tried for violating Cuban territorial waters. The
broadcast also stated that the case of a US tug,
which had lost power and drifted into Cuban
waters, would be "carefully investigated." Five
days later, Havana announced that the five had
been fined $20,000 each.
As yet, Cuba has made no move to pay the
fines imposed on the four Cubans. Havana may
eventually be willing to pay them in exchange for
US payment of the fines of the five Americans.
Such a settlement would be portrayed in Cuba as
a victory for Castro in this latest confrontation
with the US.
SECRET
Page 25 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
Venezuela: Manifestations of Nationalism
Venezuelan political parties are backing
legislation that, if passed, will cause foreign pri-
vate investors to reconsider the advisability of
undertaking new activity in that country. As a
corollary, relations with the US could become
strained, as most of the companies directly af-
fected are primarily US-based.
One proposed bill reserves to the govern-
ment the development of the natural gas industry.
Much of Venezuela's gas lies in areas granted to
oil companies as concessions. If, as the firms fear,
the proposed bill expropriates the gas without
"just compensation" to the companies, they may
initiate action against Venezuela, such as request-
ing an embargo on Venezuelan gas.
Another law, referred to as the "reversion of
assets bill," apparently would require foreign
petroleum companies to set aside each year ten
percent of their depreciation of all physical assets.
This fund would ensure that when the companies
begin terminating their concessions in 1983, their
assets will be turned over to Venezuela in good
Bolivia: New Problems for the President
The reconvening of the unofficial "popular
assembly" by labor- and student-dominated ex-
treme leftists on 22 June threatens to upset the
precarious political balance that has enabled Juan
Jose Torres to maintain his tenuous hold on the
presidency.
condition. Make-up payments for past deprecia-
tion would also be required. Another provision of
the bill would oblige the companies to explore
marginal areas within their concessions or return
them to the state before the end of the conces-
sion period together with areas the companies no
longer consider economical to operate.
A third bill would put the domestic sale of
petroleum products wholly in Venezuelan hands.
Although this bill is an annoyance and cuts
further into the companies' profits, it is not as
serious as the other two. The companies have
been resigned to the loss of this market for several
years. Together, however, the bills, if passed in
the form now before congress, would further in-
crease investor apprehension. The "reversion of
assets bill" also would significantly increase the
operating costs of the oil companies.
Venezuelan legislators are spurred on by
political considerations, a growing nationalism,
and by a firm belief that the world energy situa- 25X1
tion has created a seller's market for Venezuelan
oil. The bills are expected to pass congress this
year, possibly as early as next month.
The "popular assembly" session, however,
could develop into a showdown between Torres
and the extreme left. "Popular forces" leader
Juan Lechin has adamantly maintained that the
assembly will carry out its decisions, but Torres
has declared that this body has no formal rela-
tionship with the government. A new
SECRET
Page 26 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SECRET
constitution, scheduled to be promulgated by
Torres on 22 June, is almost certain to include
provisions for a representative body that will
make the assembly superfluous.
Torres' failure to acquire a solid base of
support has made him vulnerable no matter how
he handles the situation. Extreme leftist elements
within the government could move against him if
he moderates his policies and tries to secure sup-
port from more moderate political groups and the
military. The contending forces could continue to
cancel each other out, but Torres' position ap-
pears to be weakenin
4- F
SECRET
Page 27 WEEKLY SUMMARY 18 Jun 71
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 25X1 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Secret
Secret
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
South Vietnams Dry-Season Campaign in Cambodia:
Aims and Unfinished Business
Secret
N! 39
18 June 1971
No. 0375/71A
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 25X1 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
South Vietnam's Dry-Season Campaign in Cambodia:
Aims and Unfinished Business
South Vietnam's dry-season campaign in Cambodia is ending on a disappointing note
because of ARVN's withdrawal under heavy enemy attack from the battered town of Snuol.
The heavy losses in troops and equipment during the withdrawal reflect badly on ARVN's
entire campaign; it is clear that after months of fighting the Communists are still present and
potent close to the border of South Vietnam. The Snuol action also indicates that
Communist main forces can still attack aggressively in the COSVN region, and that the
South Vietnamese Army is vulnerable to the kind of pressure a determined enemy force can
bring to bear. Recent moves by Communist forces in the Cambodia - South Vietnam border
area, moreover, suggest that the enemy intends to carry out more attacks here soon,
possibly to include some sharp thrusts back across the border into South Vietnam.
But the mauling of ARVN units around Snuol and earlier South Vietnamese setbacks
near Dambe and the Chup plantation do not constitute the whole dry-season story; indeed,
in many cases the South Vietnamese, with their substantial air support, inflicted more
damage on the enemy than they received and their efforts helped keep the bulk of
Communist forces in eastern Cambodia at bay during the 1970-71 dry season. Partly as a
result of ARVN operations, South Vietnam's two southernmost military regions continued
to enjoy a respite from the main-force war, and the Cambodian Government was given more
time in which to train and equip its armed forces.
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
~) tA )1S L I
The South Vietnamese strategy in eastern
Cambodia during the dry season was shaped from
the beginning both by a recognition that Commu-
nist strength there has a direct and critical bearing
on the war in South Vietnam and by an aware-
ness, soon reaffirmed by stiff enemy resistance in
some areas, that ARVN's capability for fighting
across the border is strictly limited. As early as
last summer, President Thieu was wary of becom-
ing overextended and bogged down in Cambodia
in a way that might enable the Communists to
slip back into South Vietnam or to operate there
with greater freedom. At that time Thieu had to
rein in his vice-president when Ky wanted to form
an anti-Communist alliance with Phnom Penh and
to commit ARVN troops to permanent occupa-
tion bases deep in Cambodia. Thieu made it clear
to the Cambodians that there were limits to the
help ARVN could provide and that the Cambo-
dian Army would have to carry the main burden
of defending the country.
With these considerations constantly in
mind, Thieu often took a close personal interest
in ARVN cross-border operations. He held back
the aggressive General Do Cao Tri for several
weeks last fall when Tri wanted to expand his
border operations and push deeper into Cam-
bodia. Thieu finally gave Tri the green light in
December to go to the aid of stalled Cambodian
forces on Route 7 west of the Mekong River near
Kompong Cham. By that time it was clear that
the Cambodians badly needed help there, and the
President judged that assistance was within
ARVN's means. The Communists did not seri-
ously contest this operation and Thieu later
allowed ARVN forces to help clear stretches of
Route 4 and the Pich Nil Pass in southwestern
Cambodia in January when the Cambodians once
again were bogged down and could not handle the
job themselves. South Vietnamese forces have
also played the key role in keeping open both
Route 1 between Saigon and Phnom Penh and the
Mekong River water route to the Cambodian
capital.
In late February and early March several
developments combined to convince Thieu and
the top army command that ARVN was being
pushed to the limits of its capabilities-that it was
necessary to shift to a more cautious approach in
Cambodia. South Vietnamese forces that had
earlier threatened Communist base areas north of
Route 7 met strong enemy resistance and suffered
heavy losses in February and March; before long
there were reports of serious morale problems
within ARVN's task forces in Cambodia.
At the same time, heavy fighting was going
on in the Lam Son 719 operation in south Laos
involving much-publicized South Vietnamese
casualties and the sharp drawing down of scarce
ARVN resources. Do Cao Tri was killed in an air
crash in late February-an untimely event lending
further discouragement to ARVN's Cambodian
task forces. Because of these considerations and
because there was no sign of a major Communist
push back into South Vietnam, in early March
Thieu told the new commander of ARVN troops
in Cambodia, General Minh, to use more cautious
tactics that would avoid heavy ARVN losses but
still keep the Communists tied down.. The South
Vietnamese settled down to more defensive tac-
tics along Route 7, and some Cambodian calls for
help were turned down. The Communists coun,
terattacked strongly again in mid--April when
South Vietnamese forces probed enemy base
areas just north of Route 7 near the Chup planta-
tion. But then the war in eastern Cambodia set-
tled into a lull for nearly six weeks, with neither
side showing much ardor for battle, until intense
enemy attacks broke out near Snuol in late May.
South Vietnamese forces in Cambodia
accomplished much less than the maximum goals
set by some ARVN officers in both public and
private statements at the outset of the dry season
last fall. They talked confidently then of eroding
the strength of Communist units, destroying their
Special Report -2-
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
SECRET
supplies and border bases, preventing the enemy
from moving back into South Vietnam, and tak-
ing the pressure off Cambodia. The South Viet-
namese certainly were not aggressive and effective
enough to capture any large enemy supply caches
or to inflict lasting damage on large enemy units
in the main COSVN base areas north of Route 7.
Although Saigon is claiming some 9,000 enemy
killed since larger scale operations began in early
February, the Communist units that were there
six months ago are still in place and are still
effective fighting forces. There is some evidence,
including reports on North Vietnamese infiltra-
tion, suggesting that Communist units in the
COSVN area may even have increased their
strength during the past dry season. In addition,
the South Vietnamese have taken sizable casual-
ties themselves-at least 800 dead and 4,000
wounded at latest report-and ARVN morale has
been extremely frayed and ragged at times, espe-
cially when troops have stayed in forward posi-
tions under heavy enemy fire for sustained
periods. South Vietnamese units that suffered the
heaviest losses in Cambodia are now being re-
equipped and reconstituted.
Yet the South Vietnamese can point to some
accomplishments. They kept enough pressure on
COSVN's main striking forces (the 5th, 7th, 9th
divisions) along the north of Route 7 both to
reduce the immediate threat these units posed in
Cambodia and to make it harder for their main
elements to return to South Vietnam. That
ARVN forces carried out these operations after
many US combat units had been withdrawn from
South Vietnam's Military Region 3 around Saigon
adds to the significance of their performance.
Three years ago the COSVN divisions were able to
penetrate through ARVN forces and three US
infantry divisions and threaten the Saigon area
itself.
But what about the psychological impact of
the campaign on the South Vietnamese Army?
The campaign's effect on morale and motivation
could be a critical factor during the next dry
season beginning in the fall. Troops that fought in
Special Report
Cambodia no doubt consider their assignment to
engage the COSVN divisions on their own home
ground as tough as anything they have ever been
given. The punishment they suffered could dis-
courage them from ever going back into Cam-
bodia in strength again.
It seems likely, however, that some ARVN
units may turn their experiences to advantage and
become more seasoned forces than they were six
months ago. Some of the ARVN units that fought
in Cambodia had, in earlier years, rarely left their
base camps in the provinces around Saigon except
to take part in a coup in the capital. These units
were long scorned by both US and South Viet-
namese combat officers; a few years ago the pros-
pect of their engaging the elite COSVN divisions
in Cambodia would have been unthinkable. Thus,
in spite of their losses, setbacks, and unimpressive
performance from time to time, it seems likely
that ARVN units learned some valuable lessons,
such as how to provide much of their own logis-
tics and air support and operate without US liai-
son officers and advisers. Additionally, one posi-
tive result of ARVN's performance at Snuol is
that it has finally given President Thieu an obvi-
ous enough reason to relieve the inept and lack-
luster commander of the ARVN 5th Division-a
step US advisers have been urging for some time.
A more extensive shakeup of ARVN leadership
doubtless would still be beneficial.
The effectiveness of South Vietnamese oper-
ations in Cambodia must be judged mainly in
terms of how seriously they interfered with Com-
munist plans in Cambodia. Many captured enemy
documents, a great deal of indoctrination material
in Communist radiobroadcasts, and the actions of
enemy units on the ground, all indicate that the
Communists recognize that a strong position in
eastern Cambodia is a prerequisite for raising the
ante in the southern part of South Vietnam. Con-
sequently last year they set out to develop new
overland and river supply routes from south Laos
to Cambodia to help offset the loss of the
-3- 18 June 1971
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET
Sihanoukville logistics channel. At the same time
they proceeded to build up a Communist insur-
gency in Cambodia and to consolidate their con-
trol over base areas fairly close to the Cambodia -
South Vietnam border. Staging areas near the
border are, of course, essential to long-range Com-
munist goals in South Vietnam, for they provide
the outside support required by main forces, guer-
rillas, and the enemy apparatus inside South Viet-
nam.
The Communists can claim some success in
each of these areas. They have built some 200
miles of new roads and way stations forming an
elaborate linkup between south Laos and Cam-
bodia. South Vietnamese cross-border opera-
tions have not been targeted in this area and
therefore have had no impact on this enemy ef-
fort. The ARVN operation, however, may have
disrupted Communist plans to establish secure
supply lines south of the Chhlong-Chup area in
eastern Cambodia. Indeed, in recent months
ARVN officers have stated that their presence
along Route 7 was designed to forestall enemy
supply movements to the south. The fact, how-
ever, that the ARVN presence does not extend
along the entire length of Route 7 has enabled the
Communists to circumvent South Vietnamese
blocking operations to some extent, especially
between Suong and Tonle Bet. In the task of
building a Cambodian "insurgency" the Viet-
namese Communists can also claim some success.
This movement, with the Vietnamese Commu-
nists providing the backbone, presents a growing
challenge to the government in the countryside,
even though South Vietnamese operations may
have diverted Communist energies and resources
in some areas from the task of building up the
Cambodian Communists.
The Communists also have succeeded in
holding the COSVN base areas north of Route 7
in Kompong Cham Province, and some large
enemy units are still located within a few miles of
the South Vietnam border. Yet the enemy is a
long way from making up for the loss of Siha-
noukville and from enjoying the kind of safe
Special Report -4-
SECRET
haven provided by Cambodia under Sihanouk.
Moreover, the Communists have not been able to
get nearly as much help as before in the form of
manpower and materiel to their people still active
inside South Vietnam.
The enemy divisions now north of Route 7
in Cambodia at one time used War Zones C and D
within South Vietnam as staging bases from
which to bring pressure to bear on major Viet-
namese population centers; they were a strong
backup to Viet Cong local forces, guerrillas, and
subversive cadre and, in turn, received support
from those groups. After the spring of 1969 these
enemy divisions pulled back to the Cambodian
border, and after the allied attacks into Cambodia
in 1970 they pulled back farther still. With each
pullback the system of mutual support among
Communist main, local, and guerrilla forces-a
central feature of the Vietnamese Communist
system when it is strong and healthy-broke down
a little more. During the past dry season, with
South Vietnamese forces deployed in the gap
between Communist main forces in Cambodia
and those forces remaining in South Vietnam, the
enemy's mutual support system has been inter-
rupted even further. The best enemy main forces
are isolated from South Vietnamese battlefields,
and the enemy's local apparatus has had to fend
for itself.
This situation has obtained in large part be-
cause the Communists decided they had to con-
centrate on building a strong position in Cam-
bodia before they attempted to bring more mili-
tary assets to bear against South Vietnam.
COSVN divisions in eastern Cambodia have been
engaged in a holding action while the Communists
work on their supply system, develop local sup-
port, build base areas, and wait for better oppor-
tunities to strike in South Vietnam. The divisions
have harassed the South Vietnamese constantly
along most of the Route 7 front, but by and large
they have been on the defensive, usually showing
eagerness for heavy battles only when South Viet-
namese forces approached especially sensitive
base areas. I n February and March, for example,
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
~L,I~i\Ji 1
when the South Vietnamese were operating
around the Chup Plantation and Dambe, the
Communists massed their forces, slugged it out
with ARVN units, and succeeded in protecting
areas that they considered important.
But whatever the Communists have been
able to accomplish in Cambodia, they have been
unable to stop the slow erosion of their strength
in the southern part of South Vietnam or to
furnish much support to their counterpacification
effort in the region around Saigon and in the
Mekong Delta. Having a breathing spell has en-
abled the Saigon government to make substantial
headway in consolidating its position in these
critical areas.
Special Report
Moreover, just as various Communist ac-
tions are mutually supporting, whatever gains Sai-
gon has made in the countryside in MRs 3 and 4
during the past year will make it that much
harder for the Communists to return and to im-
prove their weakened military and political appa-
ratus.
The South Vietnamese campaign in Cam-
bodia was only a limited test of Saigon's ability to
cope with the Communists as US forces with-
draw. South Vietnamese determination and abil-
ity to carry the fight into enemy strongholds
across the border were found wanting, but so
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
bJ*KLI.
were the Communists' capabilities for bringing
main-force strength to bear in the southern half
of South Vietnam. Because neither side was ready
or willing to play all or even most of its cards on
this front this year, the lessons for Vietnamiza-
tion are by no means clear-cut, and the past
dry-season should be regarded primarily as pro-
logue for the fighting yet to come.
If the Communists had made a strong effort
to thrust back into South Vietnam or to sustain
attacks like recent ones they have launched
against Cambodian forces northeast of Phnom
Penh, or if the South Vietnamese had maintained
their drive against the COSVN base areas north of
Route 7, it might be easier to say which side
looks more like a winner. As the campaign was
actually fought, however, one must balance the
breathing spell the South Vietnamese helped pre-
serve for the important Saigon - Mekong Delta
region against the strong position and units the
Communists have been able to maintain in Cam-
bodia adjacent to that region.
For now, the South Vietnamese have been
spared the turmoil and insecurity that would have
resulted had the big-unit war spilled back across
the border, and the Communists must be cha-
grined to see another year pass with their position
still deteriorating in the southern part of South
Vietnam. But the Communists can take some
satisfaction in the fact that they have developed
new supply channels and have maintained control
over the large parts of Cambodia they need for
the longer term struggle. And as the South Viet-
namese look ahead, the memories of the battles
near Dambe, Chup, and Snoul must be disquiet-
ing, for they point toward more heavy fighting in
the future.
Special Report -6.
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 KONG
Kompo g Som
(Sihan ukville)
O gtl~
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Kompong Thom
K O M P O G T H O M
C A
KOMPONG
SPEU
Pich Nil
4Z'
Takeo
TAKEO
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
L A71- N G
Kompong Cham
docile
72 \--
CHAM
75
REY
Prey Veng
VENG
0 50
I I i
/ miles
area of largest 4~8VN
season operations _J
BINH
VA ETNA
TUONG
VINH
LONG
(DINI
1IGO;
KIEN
HOA
BIEN
HOA
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Secret
Secret
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
`' Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Yugoslavia: The New Revolution
Secret
N4 38
18 June 1971
No. 0375/71B
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 25X1 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
br,V1tr .I NNO
Yugoslavia: The New Revolution
President Tito, Yugoslavia's undisputed leader,
has over the last few years forged a unique political
structure, gradually discarding some of the more
doctrinaire tenets of Communism in favor of a
freer, more open system. The movement in this
direction was dramatically accelerated last Septem-
ber when Tito-with an eye toward his eventual
demise-called for the creation of a collective presi-
dency representing all interests, and invited nation-
wide discussions of his proposal.
The response was far broader than the 79-year-old chief executive had ex-
pected. Tito's invitation to talk about succession surfaced a wide variety of long-
smoldering demands for political reform, for greater republican and provincial
autonomy, and for the extension of personal freedoms. The ensuing debates,
arguments, and give-and-take-unlike anything anywhere else in the Communist
world except perhaps in Czechoslovakia in 1968-resulted in formal moves to adopt
a far-reaching political reform that is nothing short of a new revolution.
The frank, open discussion of ideas and interests beyond those of the Com-
munist Party is far more akin to that occurring in Western political life than to
anything currently known in Eastern Europe or the Soviet Union. In the months
that have followed Tito's proposal, the Yugoslav federation has shown a high degree
of resiliency in the face of assaults by separatists and an unprecedented tolerance for
the new politics. During recent weeks even Tito wonder?d whether the process was
not getting out of control and used his great personal prestige to silence the most
outspoken critics of the reforms.
If Belgrade creates the decentralized socialist state it is aiming at-one that
takes for granted wide-ranging freedom of expression not only for individuals but
for groups such as trade unions and student and mass organizations that are
increasingly powerful politically-the impact on the Communist world will ulti-
mately equal and probably will surpass that resulting from the Tito-Stalin break of
1948. Such a development probably would ensure the continuation of a democ-
ratized, Westward-leaning but nonaligned Yugoslavia no longer dependent on Tito's
presence for survival. The road ahead will be long and arduous, because Yugoslavia is
a complex state with chronic economic difficulties, a residue of orthodox Commu-
nists who still have a modicum of influence, nationality hatreds, and a young
generation that is looking for democracy on the West European socialist model.
Nevertheless, the chances are good that Belgrade will succeed in making its projected
new system work.
Special Report - 1
CONFIDENTIAL
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
ShuKJ I
I THE COLLECTIVE PRESIDENCY
1. Josip Broz Tito
2. To be elected Serbia
3. Serbia
4. Serbia
5. Croatia
6. Croatia
7. Croatia
8. Macedonia
9. Macedonia
10. Macedonia
11. Slovenia
12. Slovenia
13. Slovenia
14. Bosnia
15. Bosnia
16. "
17. Montenegro
18. Montenegro
19. _ Montenegro
20. Vojvodina
21. Vojvodina
22. Kosovo
23. Kosovo
FEDERAL EXECUTIVE COUNCIL (FEC)
The FEC, the present cabinet, will be reduced
in size. The prime minister will be nominated
by the Presidency and he and the FEC mem-
bers will be responsible to the Federal As-
sembly. Each republic will have equal mem-
bership in the FEC.
Special Report
A. Tito will retain the titular position of
President of Yugoslavia for an indefinite
period.
B. Once Tito is no longer president, a presi-
dent will be chosen by annual rotation
among the 22-member executive body.
C. A vice president will be chosen annually
from the 22 members of the executive
body. Under Tito, he will be in charge of
day-to-day executive duties.
D. Each republic will have three representa-
tives on the presidency and theprovinces
two each.
E. The president of each republic or pro-
vincial assembly will by virtue of his
office, be a member of the presidency.
Other members will be elected for non-
successive, five-year terms by majority
vote in these bodies.
1. Foreign Affairs
2. National Defense
3. State Security
These bodies will serve as advisory organs to
the Presidency.
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
w S.LIA.KL1 Nwe
The Revolution Takes Shape
The aging, 79-year-old President Tito, whom some
describe as the "first and last Yugoslav."
The need to institutionalize the succession
process, rather than court chaos, has led directly
to the dramatic new developments in Yugoslavia's
political life. President Tito, long cognizant of the
problems that will accompany the transition
period after his retirement or death, over the last
few years had already begun to delegate some of
his once-absolute powers to trusted colleagues. He
nonetheless stunned an audience in Zagreb on 21
September 1970 when he called for the creation
of a collective executive body to replace his own
lifetime presidency. He indicated that he was
wearying of the duties of the office, looking
ahead to possible retirement, and desirous of cre-
ating a collective presidency that could begin to
relieve him of some of the rigors of his post.
Four days later, Tito called into session the
powerful party executive bureau along with
representatives of the Federal Assembly, the
popular front organization (SAWPY), the trade
unions, and the constituent republics. The result
Special Report -3-
3 -
was
was an endorsement of the collective presidency
plan. The next step came on 4 October when
Tito's close adviser, Edvard Kardelj, in an address
to the party presidium, gave his peers a glimpse of
what was envisaged.
Kardelj's remarks stressed urgency in im-
plementing Tito's proposed collective government
leadership. He expanded the concept by bringing
up the need to define clearly the relationship
between the federation and the constituent
republics, as well as the limits of authority of the
self-managing organizations on the one hand and
the government administrative bodies on the
other. Kardelj's proposal meant basic constitu-
tional revisions that were bound to antagonize
those whose rights and privileges accrue from the
present system. This fact was evident when
Slovenian party boss Franc Popit rose at the pre-
sidium to agree with Kardelj's basic analysis of
the problems facing Yugoslavia but took excep-
tion to the alleged need for constitutional reform.
Popit's objections notwithstanding, a commission
was established to draft a set of constitutional
changes. Thus, within two weeks of Tito's original
proposal for the creation of a collective presi-
dency, the reform was reaching proportions be-
yond what he originally contemplated. Tito
publicly admitted as much in March of this year
to a gathering of party officials, but he also
indicated that he saw the logic of the additional
reforms.
Yugoslavia, as envisioned in the pending gov-
ernment reforms, will be a union of nearly
autonomous socialist republics, with the federal
government's authority restricted mainly to con-
ducting foreign policy, providing for national
defense, achieving a unified economic system, and
channeling funds from the more developed re-
publics to the backward regions-Bosnia-Her-
cegovina, Macedonia, Montenegro, and Kosovo.
All other functions, duties, responsibilities, and
considerable financial resources will be passed to
the republics.
Tito recognizes that an attempt to recon-
struct a highly centralized country, as Yugoslavia
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
S~ UKL"1'
Tries
H ER OEG0VIN'
Snffljevo
-'- Republic boundary
Autonomous area boundary
ELGR
Special Report
M A O-E D.Q N VA,
GREECE
Thess:
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
was between the two world wars, would be fore-
doomed to failure. Such a system would mean
either Serb or Croatian dominance (most likely
the former) would again set in motion ancient
national feuds, would invite foreign meddling,
and most likely would lead to a period of civil
war with the ultimate destruction of the federa-
tion.
Tito wants none of this. He opted for a bold
course of action he hopes will ensure the survival
of the federation after his passing. Under his plan,
demands of the regions for a greater voice in
running their own affairs are to be met. Un-
spoken, but nevertheless vitally important to the
proposal, is the hope that allowing extensive de-
centralization will give the country's diverse
nationalities the feeling that they have a decisive
voice and a stake in the future as members of a
federation.
The first formal step taken in carrying out
the program was the introduction of proposed
constitutional amendments on 28 February.
Despite the extensive decentralization outlined in
the constitutional reforms, the amendments on
balance are weaker than originally expected and
the federal government is retaining more author-
ity than first proposed. There are several reasons
for this. First, Tito has encountered more inter-
republic squabbling and difficulty than he ex-
pected in winning clear-cut support for his plans
to decentralize the state; and second, the govern-
ment, by having to cope with the problem of
drafting major constitutional reforms while
simultaneously dealing with increasing economic
difficulties, learned something about the dangers
of too much decentralization.
The prolonged debates and arguments on
both the political and economic issues have made
time critical because bureaucrats have tended to
become immobilized in the face of drastic change.
As a result, the constitutional reforms have been
pared down to a basic package for speedier
implementation (see amendments at annex). The
remainder of the original program will be in-
Special Report
troduced over the next year or two in a second
package of amendments.
Simultaneously with Tito's proposal to cre-
ate a collective presidency, Yugoslavia's chronic
economic problems began to assume alarming
proportions. The nation's first party conference
met in October 1970 and examined the proposed
government reorganization. By far the largest part
of the conference's time, however, was spent on
economic difficulties, and a temporary stabiliza-
tion program was outlined to the delegates.
Thereafter, economic and political problems more
and more began to dovetail as regionally based
differences of opinion over the best courses of
action to follow were introduced and openly
debated in the context of the contemplated con-
stitutional reform. In the weeks and months that
followed, the stopgap stabilization measures did
nothing to cool spiraling inflation or reduce the
rising balance-of-payments deficit. The nation's
economy quickly became a political hot potato.
By mid-November the highly charged debate
over the economic stabilization program pro-
duced the sudden and dramatic resignation of
Vice Premier Nikola Miljanic. At issue was
whether to devalue the dinar, a move that
Miljanic at the time was unsuccessfully backing.
His unprecedented resignation overshadowed the
devaluation issue; no other high-level, federal
leader had ever voluntarily resigned because his
policies were not being followed.
By late December, the Federal Assembly was
flexing new political muscles, more like Western
parliaments than its counterparts elsewhere in
Eastern Europe. The issue, just as in the case of
the Miljanic resignation, was over an aspect of the
economic stabilization program-a government
proposal to limit personal income growth in 1971
to 11 percent. Presentation of the proposal to the
Federal Assembly caused an uproar. The result
was a compromise in which the government short-
ened its originally proposed time span on the bill
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
.7r. )itr 1
from one year to four months. The issue was not
resolved, however, until a majority of the As-
sembly delegates had labeled the original proposal
"repressive" and "incompatible" with self-
management.
The dispute underscored the growing role
trade unions play in Yugoslavia's political life.
Throughout 1970 they had sought to dispel the
impression that they were mere "transmission
belts" for party policy, and union officials wasted
no time in denouncing and lobbying in parliament
against the proposed wage limitation. Trade
Union secretary Marijan Rozic personally and
vigorously addressed the Assembly arguing against
the measure in its original form.
Worker support for the government's pro-
posed constitutional reforms, however, was evi-
dent at the second self-management congress,
held in Sarajevo the first week in May. The 2,100
delegates strongly endorsed the reforms and used
the occasion to press for greater political and
economic power for the workers. They urged
more worker influence over the investment deci-
sions of their firms, equal pay throughout the
country for those working on the same job,
across-the-board wage and pension increases, and
extensive social welfare projects. In a move antici-
pating a second phase of Tito's constitutional
reforms (tentatively slated for introduction some-
time in 1972), the congress called for further
decentralization of government with specific con-
stitutional recognition of worker councils and of
the municipalities as the basis for the self-manage-
ment system.
During the first half of 1971, public partici-
pation in government has grown rapidly, infusing
new vigor and vitality into the country's political
life. The once quiescent mass organization, the
Socialist Alliance of Working People of Yugo-
slavia (SAWPY), has suddenly become a forum in
which the voice of the people can be heard. Long
merely a vehicle for implementing party policies,
SAWPY is in the thick of the constitutional de-
bate because of its responsibility for arranging
public meetings on the proposed amendments. In
1966, the late Milentije Popovic, then SAWPY's
vice president, advocated for the mass organiza-
tion a more prominent role approaching that of a
second political party. At that time, however, his
words fell on deaf ears. Subsequent, similar pro-
posals were also disregarded by the party leaders.
The use of SAWPY meetings as the forum for
open debates on the constitutional amendments
and the organization's concomitant drive to
strengthen ties with socialist parties throughout
the world and with Communist parties in the
West indicate that SAWPY is now becoming a real
factor in Yugoslav politics, separate from the
party. It could become a major political force in
"legal opposition."
Nowhere is evidence of Yugoslavia's new
revolution more apparent than in the press and
other media. Always an anomaly in the Commu-
nist world because of their objective, critical
reporting, the Yugoslav media have in the last
year discarded most of their remaining restraints
so that they are often hard to distinguish from
many of their Western counterparts.
The press has pulled few punches in its ex-
tensive coverage of the polemics over the eco-
nomic stabilization program and the constitu-
tional reforms. Reporting has been so candid and
critical of Yugoslav officials and policies that Tito
himself has recently castigated it for lack of
responsibility.
The aging Yugoslav leader was undoubtedly
shocked by the free-swinging fight that developed
between the Belgrade daily Borba and the Zagreb
journal Vjesnik early this year. The two hotly
debated the seemingly innocuous question of the
national census. Vjesnik took issue with a new
regulation permitting a variety of responses to the
question on nationality affiliation; the paper
charged that the regulation was a threat to the
Special Report -6-
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
integrity of Croatia. This dispute degenerated into
a Serb-Croat name-calling contest, and before it
was over Federal Assembly Vice President Josip
Djerdja (a Croat) resigned from the editorial
board of Borba for what he considered the
paper's unjustified attack on his republic.
A further relaxation of formal restrictions
on the press may be achieved if the Yugoslav
newsmen's current demand for greater access to
foreign wire services is met. Slovenia in particular
is taking the lead in urging uncensored access to
these services because its press has to compete
with the Austrian and Italian papers, which circu-
late freely in Slovenia. Those responsible for what
appears in the Yugoslav press will, however, still
be expected to show self-restraint and use dis-
cretion on what to print.
Yugoslavia's students, always outspoken,
have found new encouragement in the nation's
more open political climate. In late December,
the students at the University of Zagreb suc-
ceeded in defeating a party-backed candidate for
student prorector of the school. The election of
Catholic, Croat nationalist Ivan Cicak, dumb-
founded university party officials. Subsequent
pressure to nullify Cicak's election failed. Flushed
with victory, the vast majority of the student
body rallied to Cicak's support and ousted the
party-backed leadership of the Zagreb student
federation. This action came in a turbulent ses-
sion on 4 April, which saw the federation's presi-
dent carried feom the podium, after which he and
his cohorts were voted out of office. As a result,
only four of the nineteen-man student board,
previously dominated by Communists, are now
party members.
Yugoslav students support the constitutional
reforms in principle, but criticize some aspects of
the proposed changes. The Croatian student body
in particular has taken an exaggerated stand in
pressing for nearly full republic autonomy and in
opposing the federal government's retention of
such powers as the right to assure a unified eco-
nomic system and market throughout the nation.
Special Report
The stand of the Croatian students in favor
of greater republic autonomy has even colored
their relations with the Yugoslav Student Federa-
tion. On 8 June the Croatian student delegation
to the Federation's gathering in Novi Sad refused
to agree either to a common platform or to the
body's new organizational statutes. Instead, the
Croats insisted that the Student Federation be
reconstituted along more autonomous lines, i.e., a
loose association of independent student bodies.
Regional Chauvinism: A Sobering Note
The new revolution is not without its dan-
gers. The interplay of government reforms, the
nation's economic problems, and the freer politi-
cal climate have contributed to surfacing deep-
rooted, bitter regional and nationality animosi-
ties. Dark events of the past have not been for-
gotten. During the Nazi occupation in the Second
World War, for example, the Yugoslav peoples
turned on each other with a vengeance. Hundreds
of thousands of Croats and Serbs lost their lives in
a civil war fought over fascism, Communism, and
national hatreds. This same penchant for blood-
letting is prevalent among some members of the
Yugoslav emigre community today-as witnessed
by the recent assassination of the Yugoslav am-
bassador to Sweden.
The forceful and genuinely respected Presi-
dent Tito has brought a halt to the more drastic
expression of internal antagonisms in the postwar
period. Moreover, because of the government's
system of rotating officials every two or three
years in and out of federal offices, a large body of
well-informed leaders attached to the concept of
federation has developed. Clearly, however, no
one has an accurate reading on the depth or
potential virulence of latent republic nationalism.
As debates on the reforms have gone into
full swing, each republic has maneuvered for the
largest possible share of the considerable political
and economic power that will be transferred to
local levels. With the exception of Croatia-and to
a lesser extent Serbia-all the republics have
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
5ELKL I
demonstrated a willingness to compromise. In the
case of Serbia there appears to be an undercurrent
of opposition to decentralization by unspecified
officials who prefer a more orthodox, centrally
controlled Communist state. In addition, many
other Serbs still sentimentally look back to inter-
bellum Yugoslavia, when Serbia dominated the
country. Neither centralism nor Serbian domi-
nance, however, will be possible under the pend-
ing constitutional reforms.
The Croats, on the other hand, loathe the
interbellum period as a time of subjugation to the
Serbs, and they are determined never to be put in
this position again. Numerically weaker than the
Serbs, the Croats, because of their historical ties
with the West, feel culturally superior to the rest
of the nation (Slovenia excluded) and are deter-
mined to push for nearly full autonomy in the
reforms. As a result, executive bureau member
Mika Tripalo and to a lesser extent Croatian cen-
tral committee president Savka Dabcevic-Kucar
have become the champions of national integrity
and regional particularism as an integral part of
reform.
The words of these two outspoken Croatian
leaders have caused concern in Belgrade and ap-
parently were key factors in Tito's recent call for
a clampdown on nationalism. Equally unnerving
to many loyal to the federation are the other
outbursts of Croatian nationalism that have oc-
curred throughout the republic in the last year-
soccer riots, demands for a Croatian "national
airline," and inflammatory press stories calling for
the Croatian people to again "prove" their na-
tionality.
Tito, admittedly surprised at the forces un-
leashed by his invitation to debate the reforms,
convened the party presidium in late April. After
a three-day, closed-door session, which apparently
included some head-knocking, the party leader-
ship emerged calling for stricter discipline to over-
come regional chauvinism and implement the
reforms. The Croatian party's commission on
ideology and organization subsequently recom-
Special Report
mended that the republic party oust all elements
opposed to the reforms. The Croatian central
committee has echoed this call, but as yet no
heads have rolled.
To some observers, the presidium's call for
stricter party discipline amounts to a reversal of
the reform movement, but in fact it testifies
mainly to Tito's intention to direct the reforms
from above.
A key to the success of the new revolution
will be the regime's ability to find a way out of its
third inflationary crisis since 1960. Belgrade
knows that a healthy economy is critical to the
smooth introduction of a more democratic po-
litical system. For the 1970s the Yugoslavs
ambitiously hope to achieve growth without seri-
ous inflation and trade difficulties, to reduce the
gap between the nation's "have" and "have-not"
regions, and convert the dinar into hard currency.
Past attempts to achieve these objectives have
failed.
Last fall the government began a stabiliza-
tion program with curbs on inflationary spending
by banks and government, particularly republic
and local bodies. In February, there was a belated
devaluation aimed at discouraging imports and at
spurring exports. The government has had trouble
getting the program off the ground, however. In
addition to the dispute over devaluation, im-
plementation has run afoul of fights over the
degree to which the federal government could
intervene in the economy, and of footdragging by
republics, which are charged with a considerable
role in the stabilization effort. As a result, the
program has hardly made a dent in the economic
problem. Republic and local spending has been
rising more than twice as fast as the legal maxi-
mum, domestic price increases already have
eroded most of whatever impact the devaluation
might have had, and imports have been soaring
and exports stagnating.
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
bhk_1KL 1
Help appears to be in sight, however. Recog-
nizing its past errors, the magnitude of the prob-
lem it faces, and the need to move quickly, Bel-
grade, as it did in 1965, is seeking and apparently
getting financial assistance from the West. The
Yugoslavs have asked for some $600 to $700
million in assistance for 1971 and 1972. Accord-
ing to one prominent government official, they
hope to get 20 percent of the total from the US.
Under the proposed government decen-
tralization, the burden of maintaining national
cohesion and a feeling of unity will fall heavily on
both the party and the military. This, in fact, was
the dominant theme of the 18th party presidium
that met in early June.
In the postwar history of Yugoslavia the
party has been viewed as a key unifying force in
the country. This aspect of party activity now
will be intensified, either by returning some
power to Belgrade from the republic parties, or at
the very least by giving teeth -to the party ap-
paratus concerned with enforcing discipline.
Tito has announced that after the first series
of constitutional reforms is implemented in Au-
gust a major party reorganization will take place.
Speaking to a party presidium session on 2 March,
he strongly emphasized that there can be no
boundaries for the party in Yugoslavia-"neither
republican, local, nor any other." Since then, this
theme has been repeated consistently in nearly all
his speeches. Other than Tito's announced inten-
tions, specifics on the reorganization are not yet
available.
The Yugoslav armed forces, along with the
party, have been a mainstay of the regime. The
military has consistently supported Tito's non-
conformist policies, backed him in times of na-
tional crisis, and traditionally served as a national
unifying force. Most recently the military's sup-
port of Tito's policies was expressed by Col. Gen
Djoko Juric, commander of the Zagreb military
Special Report
district. On 28 April, the same day Tito opened a
presidium session to whip party (mainly Croat)
dissidents into line for his reforms, Juric delivered
a speech endorsing Tito's policies and con-
demning those individuals who use regional
chauvinism to disrupt and block official policies.
In reaction to the occupation of Czecho-
slovakia nearly three years ago, Yugoslavia has
rearranged its armed forces. Major reforms have
taken place in the military's party organization to
encourage open dialogue between the military
and civilian party personnel and organs. At the
heart of these reforms is an effort to close the gap
between the armed forces and the rest of society.
Ultimately, the success or failure of Yugo-
slavia's current revolutionary reforms could rest
on the attitude of the military in the post-Tito
era-specifically its understanding of and support
for decentralization. The armed forces' knowl-
edge that their support has in the past spelled the
difference between success and failure for Tito's
policy undoubtedly has bolstered the feeling,
however, that these forces have a "privileged"
position in the Yugoslav power structure. The
success of the pending reforms, therefore, may in
large part rest on the regime's agility in carrying
through on its program of identifying the armed
forces with the reforms and not treading on their
vested interests.
Significant progress has been made in getting
the military accustomed to a freer political atmos-
phere and in encouraging young officers to be
well versed in party policies. Juric's support of
Tito last month indicates that the regime is having
some success in achieving this goal.
The Impact of the New Revolution
on the Communist World
Final judgment on the new revolution will
have to wait for some years following Tito's pass-
ing. In the long run, however, should the new
revolution prove a success in fact, the already
discernible movement toward more democratic
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
SECRET
institutions elsewhere in Eastern Europe will be
accelerated. Success would mean that the Yugo-
slavs were not only the first Communist nation to
carry out a smooth succession adhering to consti-
tutional provisions, but also that they were not
dependent on a single strong man.
Needless to say, a failure of the new revolu-
tion involving a reorientation of Yugoslavia to-
ward Moscow would remove a chronic irritant
from the Soviet point of view. Tito's successful
defiance of Stalin, Yugoslavia's success in building
its unique style of Communism, and its non-
aligned foreign policy have been bitter pills for
the Soviets to swallow. The existence of an in-
dependent, socialist Yugoslavia from 1948 to the
present has not only given Belgrade enormous
prestige, but Yugoslavia's success has proven a
tempting example for the other Communist
regimes in Eastern Europe, all of which long to
follow their own particular road to socialism. On
two past occasions, Hungary in 1956 and Czech-
oslovakia in 1968, the Yugoslav example was a
key stimulant to abortive attempts to break away
from Soviet domination. If the new Yugoslav
experiment fails, Romania would find its inde-
pendent position vis-a-vis Moscow seriously
undermined.
Not only inside but outside the Communist
world Belgrade enjoys a great deal more prestige
than would be expected of a country its size, and
here too its policies undermine those of the So-
viets. In the case of the "third world," Yugo-
slavia's skillful manipulation of nonalignment has
been the key to its success. In addition, Yugo-
slavia's socialist experiment is a potent political
concept among developing nations, and Belgrade's
decentralized system of workers' councils holds a
great deal of fascination for the nonaligned na-
tions. Many developing nations that favor social-
ism but distrust Soviet motives and reject the
West see in Yugoslavia an acceptable alternative.
The Kremlin is clearly keeping close tabs on
developments in Yugoslavia. Belgrade claims that
Moscow is stirring up nationality antagonisms
with the idea of keeping the regime off balance
and preoccupied, thus preventing the reforms
from being carried out. Evidence is scant on how
deeply the Soviets are involved. There is little
doubt, however, that Moscow's ultimate goal is to
scuttle the new revolution and to encourage those
Communists inside the country who have views
parallel to Moscow's and whom the Russians
would like to see in power some day.
The obstacles to the new revolution are
great, but recent history has taught that the
Yugoslavs should not be sold short. Yugoslavia's
relatively open political life is both a sign of
maturity on the part of the people and a show of
confidence on the part of the regime. In this
climate, differences are being surfaced and dealt
with while Tito is still alive and can act as a
moderating influence. But not all public problems
are being handled by Tito, and this is what is
encouraging for the future. The populace as a
whole, in one way or another, is being consulted
on some of the problems associated with the
succession period, and some decisions are being
made by consensus by high-level government
committees.
Extremely significant is the flexibility the
Yugoslavs are showing in introducing their re-
forms. This indicates a genuine willingness to
listen to domestic criticisms and to meet objec-
tions if they appear valid. One instance of this is
the fact that the constitutional amendments
themselves have been changed since their intro-
duction last February. The collective presidency
has been expanded from two representatives for
each republic to three, thereby meeting a Bosnian
need for a three-way nationality balance-a Croat,
a Serb, and a Muslim-on the collective executive.
Other proposed amendments have been the
subject of a great deal of give-and-take. Leading
Macedonian party official Krste Crvenkovski drew
attention to this fact last March when 25X1
he de ined the real
Special Report _10-
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927A008800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
%W ~7L' V1~1~ i r/
value of reform in this whole period as lying not
in the amendments and proposals themselves, but
in the open political climate, with its accompa-
nying controversy, generated by the reforms.
At best, the period ahead will be troubled
and the transition confused, but the chances are
good that even without Tito the Yugoslavs will
carry the program through to a successful con-
clusion and establish a system of government and
economic administration that can transcend the
personality of their long-time leader. There is a
core of trained military, party, and government
officials who will remain loyal to the federation
despite their regional attachments. There is
support from the population for the changes.
There is youthful pressure just strong enough to
keep the revolution from stagnating. There is a
national zest for showing up the Soviets, who
claimed a generation ago that an independent,
unorthodox Yugoslavia could not survive.
Special Report
Yugoslav tempers explode easily, and there
will be many minicrises ahead. It appears, how-
ever, that the forces for constructive change prob-
ably will combine to keep the crises manageable.
There is no way of predicting what the new
Yugoslav federation will look like in five years.
The Yugoslavs are already thinking about deeper
changes in years to come, and their national pen-
chant for tinkering with the system probably will
continue to be indulged.
Aside from the constitutional reforms, Tito's
greatest step toward achieving stability and the
future of the republic may have been his clear
shift toward a strong anchor in the West, particu-
larly Western Europe and the US, and his con-
comitant abandonment of any further tries at
rapprochement with the USSR. The added West-
ern economic assistance granted this year is evi-
dence of the stake the hard currency countries
have in the survival of the Yugoslav federation.
Tito is counting on this and on the political
support that is imlicit in the economic
11- 18June 1971
SECRET
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
%..' U1NL,LI- 1r1LL! 'MW
THE CONSTITUTIONAL AMENDMENTS
Article XX Defines Yugoslavia as a federal slate based on a voluntary union of six socialist
republics, as well as two autonomous provinces that are component parts of
Serbia. Authority in this union ultimately rests on the power and self-management
of the country's working class. The constituent republics are recognized as
self-managing communities made up of equal nationalities and national minorities.
Article XXI Stipulates that incomes will be distributed according to the individual's work (in
contrast with standard Marxist phraseology: From each according to his abilities,
to each according to his needs). The rights and duties of the workers and
enterprises in the self-management system are also defined.
Article XXII Describes the ways in which enterprises can invest funds (without possessing
ownership rights), including investing money abroad and accepting foreign capi-
tal-in accordance with federal law.
Article XXIII Guarantees private work in the fields of agriculture, handicraft, and other services
within the limits prescribed by law. Such private enterprises may own the means
of production, manage their own affairs, and exercise the right to dispose of the
income earned as they see fit. Lifts the 10-hectare limit on private farms for the
mountainous regions of Yugoslavia.
Article XXIV Defines the concept of a united market. A common economic policy will exist
throughout the country, manpower and capital are supposed to move freely
within the country, branches of enterprises set up in another republic must not be
discriminated against and, finally, no republic, province, or commune will be
allowed to retain a monopoly in any given economic field.
Article XXV Stipulates that the social plan (a common economic policy) will be drawn up
jointly by the representatives of the federal republic and provincial governments.
Article XXVI Empowers the National Bank of Yugoslavia to issue the nation's currency. A
Council of Governors made up of representatives of republic and provincial banks
will govern the National Bank.
Article XXVII Gives to the republics and provinces wide-ranging authority to collect and dis-
tribute tax revenue. Grants to the Federation the right, in case of national
emergency, to step in and regulate the nation's tax system.
Article XXVIII Guarantees the rights and equality of every nationality and national minority in
the country and describes their joint economic and social interest.
Article XXIX Spells out in 17 sections the rights of the federal government of Yugoslavia. These
include responsibility for the protection of sovereignty and territorial integrity,
the regulation of a unified economic market, control over national defense,
determination and conduct of foreign policy, and arbitration of legal differences
between republics and provinces.
UNCLASSIFIED
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
UNCLASSIFIED
Article XXX Makes mandatory the implementation of federal laws by the federal, republic, and
provincial governments. Albanian and Hungarian are recognized as official lan-
guages along with Serbo-Croatian, Croat-Serbian, Slovenian, and Macedonian.
Article XXXI Defines the procedure for amending the constitution.
Article XXXII Deals with the relationship between the federal government on the one hand and
the republics and provinces on the other. Inter-republic committees are to be
formed to discuss problems that arise. The federal government, however, will have
more power than originally thought. If a republic opposes a specific measure, and
federal authorities consider that failure to implement the measure will harm the
state, then the government can override the opposition and implement the bill.
Article XXXIII Spells out the sources of federal revenue and areas of spending.
Article XXXIV Stipulates that any international agreement that requires modification of a re-
public or provincial law will have prior approval of that republic or province.
Article XXXV Provides for the creation of a collective presidency based on equal representation
of the republics and corresponding representation of the autonomous provinces.
(See chart entitled "The Collective Presidency"). Among other things, the collec-
tive executive is given the right to propose policy direction to the Federal
Assembly as well as to initiate changes in the constitution. The president is also
designated the supreme commander of the armed forces.
Article XXXVI Makes a special exception of President Tito's tenure in the new collective presi-
dency, allowing him to retain his position for an unlimited time.
Article XXXVII Provides for a smaller Federal Executive Council (cabinet) composed of an equal
number of members from Yugoslavia's six constituent republics and a correspond-
ing number from the two autonomous provinces. The council is responsible for
the implementation of established government policy, and for the first time it will
enjoy immunity.
Article XXXVIII Provides for the creation of federal secretariats to carry out the administration of
federal duties. Heads of the secretariats are directly responsible to the Federal
Assembly.
Article XXXIX Flatly asserts that it is the right and duty of all citizens to defend Yugoslavia.
Under this article no one has the right or authority to sign or recognize'the
capitulation of Yugoslavia or to invite the intervention of foreign troops.
Article XL States that a constitutional law shall be adopted for the implementation of the
above amendments.
(See Timetable next page)
UNCLASSIFIED
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
e UNCLASSIFIED 1-0
15 May 1971 Public discussion and debate ended.
25-30 May Four of the five chambers of the Federal Assembly
debated the changes.
The constitutional commission met, considered com-
ments of four chambers and prepared final drafts for
the Chamber of Nationalities.
25 June The Amendments will be approved by the entire
Federal Assembly and will go into effect in early
July.
Between 25 June
and 25 July Members of the collective presidency will be elected
within 30 days after the amendments go into effect.
31 August Before this date, the Federal Assembly will confirm
the election of the collective presidency.
30 September The new Federal Executive Council will be elected by
this date.
A-3
UNCLASSIFIED
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Secret NNO" '"0
Secret
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
 25X1 Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1
Next 23 Page(s) In Document Denied
Approved For Release 2008/04/24: CIA-RDP79-00927AO08800060001-1