WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A009500080001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 21, 2016
• Document Release Date: July 18, 2008
• Sequence Number: 1
• Publication Date: May 5, 1972
• Content Type: SUMMARY

Approved For Release 2008/07/18: CIA-RDP79-00927A009500080001-1
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
Secret
5 May 1972
No. 0368/72
Copy N! 47
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CONTENTS (5 May 1972)
1 Vietnam: A Turn for the Worse
25X6
6 Costa Rica: Figueres
7 Indochina: North Vietnam, Laos,
Cambodia
10 Thailand: Shuttlecock Diplomacy
10 China: May Day Maladies
12 North Korea: Anniversary, Buying
Plants
13 USSR: Uninspired Growth
13 Yugoslavia: Purge
25X6
15 EC Enlargement: Ireland,
Jorway-Denmar-k
MIDDLE EAST
AFRICA
16 Guinea: Purge is Over
17 Middle East: Egypt, Israel,
Jordan-Syria
19 Burundi: Insurrection
20 Turkey: Still No Government
21 india-Pakistan: To the Summit
WESTERN
HEMISPHERE
22 Peru: Oil Boom, Concessions to
Communists
23 Mexico: Help the Hemisphere
24 Canada: Business as Usual
25 Cuba: Fidel Sets Forth
26 Guatemala: Less Violence
27 Argentina: Labor Cools Off
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A TURN FOR THE WORSE
South Vietnamese forces suffered their
worst setback since the early days of the 1968
Tet Offensive this week when they lost Quang Tri
City. It was the first provincial capital to fall to
the Communists in this campaign. Several thou-
sand government troops have retreated down the
coastal highway from Quang Tri toward Hue,
which now is threatened by four of Hanoi's first-
line divisions supported by heavy artillery and
tanks. North Vietnamese troops have already
moved closer to that refugee-swollen city, while
the government forces around it attempt to
stiffen their defenses.
In the central highlands, South Vietnamese
forces are bracing for an assault against Kontum
City. The Communists have a big numerical edge
in this area and hold the nearby high ground from
which damaging artillery attacks can be launched
against the city. Along the coast, the Communists
have eliminated the government's military and
civil presence from the three northern districts of
Binh Dinh Province where some 200,000 people
reside.
Farther south, government troops still hold
An Loc, but South Vietnamese officials continue
to be concerned about the increasing threat closer
to Saigon. South Vietnamese units, which for
weeks have been engaged in heavy fighting near
Kompong Trach in Cambodia, are pulling back
toward South Vietnam. The pullback could open
the way for two more North Vietnamese regi-
ments to move into the delta, which so far has
not been as hard hit as some other parts of the
country.
The South Vietnamese defeat at Quang Tri
and the worsening situation in other areas make it
clearer that the character of the war has changed
basically. Even in 1968, when the Communists
made their previous major effort to alter the
balance of forces in the South, the enemy's best
units often used guerrilla-type tactics, striking
hard at allied bases and towns, then pulling back
when heavy firepower was brought to bear against
them. Now, however, the North Vietnamese are
advancing as a conventional army, bringing along
heavy artillery, tanks and anti-aircraft weapons,
and giving every indication that they intend to
hold the territory they seize.
The strong thrusts in Quang Tri, Kontum,
and Binh Dinh have revealed weaknesses in South
Vietnamese will and leadership. Observers on the
scene report that South Vietnamese field officers
in these provinces have not, in general, performed
well; where officer performance has been defi-
cient, the troops have often broken and run. The
latest defeats have convinced President Thieu that
a shakeup of the army's leadership is necessary.
During the week, Thieu relieved General Lam, the
top South Vietnamese officer in the northern
provinces for many years. He was replaced by
General Troung, the highly regarded commander
in the Mekong Delta. Thieu picked the com-
mander of the 21st Division to take charge in the
delta. He also relieved the commander of the
South Vietnamese 3rd Division (which lost Quang
Tri), and sent a new deputy to bolster, and per-
haps eventually replace, General Dzu in the cen-
tral part of the country. These changes may mean
that there will be some improvement in the way
the South Vietnamese meet the next round of
assaults, which are being prepared on several
fronts.
In each of the areas where heavy fighting has
occurred, the Communists still have substantial
forces that have not yet been committed. By
varying the timing of their attacks and allowing
periodic lulls in the action in different regions,
the North Vietnamese could keep heavy fighting
going in South Vietnam for months. In most of
the major battle areas the weather will hinder, but
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Territorial Control
4 May 1972
COMMUNIST
CONTESTED
GOVERNMENT
UNCONTESTED
ProvinciaIt, capital
overrun y VCINVA
o District capital
overrun by VC/NVA
Page 2
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not necessarily prevent, major military operations
after mid-May. The full summer monsoon will
come about the first of June and will bring heavy
rains and flooding in the highlands, the region
around Saigon, and in the delta. Along the north-
ern coast, however, where the North Vietnamese
supply lines are shortest, the weather will be good
throughout the summer.
POLITICAL DEVELOPMENTS IN HANOI
The keynote speaker at Hanoi's May Day
celebration has indicated that the Vietnamese
Communists remain deeply concerned over pos-
sible great-power maneuvering on Vietnam. In a
speech to the traditional gathering, labor leader
Hoang Quoc Viet said Hanoi was grateful for both
Soviet and Chinese assistance, but he left no
doubt that his praise was mainly for their material
aid-not their political backing. Indeed, at three
different points in his speech, he called on
Hanoi's supporters abroad-particularly in the
socialist bloc-to "strengthen and broaden" their
support for Hanoi's war effort. He also sought to
downplay the effectiveness of any possible "cun-
ning schemes by the US"-almost certainly an
allusion to President Nixon's Moscow trip as well
as US maneuvering at the Paris talks.
In citing both the Chinese and the Soviets
for their aid, Viet may well have been trying to
emphasize that Hanoi's options are not tied ex-
clusively to Soviet assistance and that Moscow's
aid does not confer any special influence over
North Vietnamese policy.
Much of Viet's speech seemed designed to
convince domestic-as well as international-
listeners that there is no reason for a Communist
compromise on the war. He assessed Viet Cong
prospects in the South in much bolder terms than
most other Hanoi spokesmen have done lately,
claiming that Communist forces are nearing a
"total victory" on the battlefield. He argued that
there is nothing the US can do to turn the tide.
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Viet also phrased Communist negotiating de- of all US support for the Thieu regime. Other
mands so as to suggest that the next move is up to recent Communist spokesmen have similarly
the US. Rather than dwell on the political aspects emphasized the withdrawal question, suggesting
of a settlement (President Thieu's resignation is that Hanoi may be ready to concentrate on this
not mentioned), he focused solely on Communist point in its diplomatic dealings with the US. 25X1
demands for a US troop withdrawal and cessation
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COSTA RICA: LIFE WITH FIGUERES
Last December, when President Jose
Figueres was told that a hijacked Nicaraguan
plane had just landed at San Jose for refueling, he
rushed to the scene and attempted personally to
capture the skyjackers with a submachine gun
wrested from a policeman.
Recently, two more Figueres-inspired events
have ruffled the normally placid Costa Rican
waters. One-an "unauthorized" presidential trip
to Florida--raised constitutional questions; the
other-the disclosure of a Cuban exile training
base on Costa Rican soil-raised the hackles of a
public opposed to anything that smacks of mili-
tarism.
When Figueres wanted to attend the Apollo
16 launch last month, opposition legislators, and
some in Figueres' party also, refused to give the
permission for him to leave the country. They
branded the trip a wasteful personal jaunt and
argued that Figueres, who had just returned from
Miami and Disney World, should look after seri-
ous economic problems at home. Figueres pro-
ceeded to Cape Kennedy anyway, touching off
the controversy.
Indeed, the trip created such a stir that some
legislators feared the AWOL President might, in
anger, close the chamber, call for a constituent
assembly, and rule by decree. Their fears were
calmed last week when Figueres appealed to the
nation for "institutional reforms," saying that the
altercation over the Florida trip was but a
symptom of other deficiencies in the country's
political system. Along with eliminating the re-
quirement that the President ask the Assembly's
permission to leave the country, Figueres wants
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to throw out the proviso that the President di-
vorce himself from party politics. He would also
put stricter limits on filibustering, and reduce the
Assembly's power to alter the budget. Figueres
warned that the country runs the risk of "more
radical measures" if the Assembly does not make
these changes.
As for the other controversy-the Cuban
exile activities--Figueres has played it down, hop-
ing perhaps that it would fade away. A local
newspaper broke the story last month, alleging
that 30 or so anti-Castro Cubans were organizing
a paramilitary base on Costa Rica's east coast.
The President has
since denied any involvement and ordered an in-
vestigation.
In addition to all this, government officials
and ruling party leaders are concerned over the
President's failure to tackle the country's worsen-
ing economic problems. Figueres is finding that,
unlike problems posed by hijacked planes, bal-
ance of payments and other fiscal difficulties do
not have quick and easy solutions.F
Only recently have o i-
cials recognized how serious this problem is, and
hard times lie ahead. To overcome them, the
maverick Figueres will have to become a more
serious administrator-a role he has always dis-
INDOCHINA
HANOI'S LEADING STRATEGIST?
The Communist offensive in the South was
undertaken as a result of a collective decision by
Page 7
the North Vietnamese politburo, but there is
strong evidence that much of the inspiration came
from the party's first secretary, Le Duan. One
significant indication of his role in Hanoi's stra-
tegic planning is provided by the February issue
of the party journal Hoc Tap, which was meant to
set the doctrinal tone for the current offensive.
Featured in the publication, along with articles by
General Giap and Truong Chinh, is a commentary
by an obscure party functionary eulogizing the
strategic theories of Le Duan in terms generally
applied only to Ho Chi Minh. The article-written
by a certain Hoang Le-draws heavily on an ear-
lier work by Le Duan. Its ostensible topic is the
"revolutionary mission of the worker-peasant alli-
ance," but the main underlying theme is the im-
portance of main-force warfare in the over-all
revolutionary effort. Quoting from the original Le
Duan piece, the writer indicates a strong prefer-
ence for the kind of modernized army Hanoi is
fielding in South Vietnam and makes it clear that
he feels these forces should carry the brunt of the
fighting, with "political uprisings" and "city
struggles" to come only after conventional units
have secured the Communist position in the coun-
tryside.
Le Duan's ideas, as spelled out in the article,
are right in line with current strategy in South
Vietnam, with its premium on main-force warfare
and its de-emphasis of the political struggle and
guerrilla tactics. Whether or not Le Duan in fact
masterminded the offensive, he would have no
trouble supporting its current thrust from a theo-
retical standpoint. The fact that the exposition of
his strategic theories is being left to others may be
a token of his influence over policy. Up to now,
only Ho Chi Minh's works have been similarly
honored with exegesis by loyal subordinates.
Defense Minister Giap and Truong Chinh, in
their Hoc Tap articles, provide additional insight
into doctrinal alignments within the politburo.
Although Giap's piece is only one part of a book-
length commentary that has yet to appear in its
entirety, it does offer enough to suggest that Giap
is toeing the strategic line attributed to Le Duan.
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Indeed, in all three installments of the work thus
far available, Giap seems to be trying to develop a
rationale for Hanoi's current preoccupation with
main-force warfare. Another installment, pub-
lished in Hanoi's official military journal, states
explicitly that conventional military forces must
be used "to create conditions" for subsequent
guerrilla warfare and the political struggle. This is
in sharp contrast with Giap's contention in the
early 1960s that the revolution must begin with
guerrilla warfare and that conventional war
should come at a later stage. Giap's apparent
flexibility suggests that he, like many other lead-
ers in Hanoi, is capable of adjusting even basic
components of strategy to prevailing conditions.
In his Hoc Tap contribution, Truong Chinh
is apparently reluctant to agree with Le Duan.
The point at issue between them is whether the
revolutionary movement should be narrowly
based on the Communist Party or whether con-
siderable reliance should be placed on front
groupings of non-Communists. Hoang Le's com-
mentary, like Le Duan's original, strongly implies
that Hanoi has wasted time and resources trying
to achieve its goals through such vehicles as the
National Liberation Front and that a more direct,
violent effort is needed.
Chinh, on the other hand, assigns far more
importance to front activities-and indeed to the
political side of the struggle in general. Although
he acknowledges the basic role of the party, he
insists that the Communists have only one en-
emy-"US imperialism"-and should be willing to
ally with anyone who shares that antipathy. He
also addresses the question of political action in a
way that suggests he puts considerable faith in the
effectiveness of nonmilitary activity and the abil-
ity of native southerners to succeed on their own.
The ideological distance between Truong
Chinh and Le Duan may be less than the Hoc Tap
articles imply, but the commentaries do not dis-
tort the theories of either man as they have been
Page 8
presented in the past. The two men have, for
instance, previously taken the same divergent
positions on the party-versus-front question.
Their differences may well have figured in the
politburo debate on Hanoi's current strategy.
No cadre who reads the February Hoc Tap
can doubt that many of Le Duan's ideas have
become official policy. But the simultaneous air-
ing of Truong Chinh's divergent views suggests
that dissension has not been completely sup-
pressed. This could mean that no one politburo
member is strong enough to keep opponents from
expressing themselves in public; it could also
mean that Le Duan feels strong enough to permit
a modicum of public disagreement; clearly, if Le
Duan remains the "most equal" leader in Hanoi,
his position does not preclude a vocal, if ulti-
mately loyal, opposition.
The initiative has passed to the government
in the Long Tieng area as the Communists with-
draw to rainy season positions. On 29 April about
100 irregulars, backed by artillery and aircraft,
occupied the two positions near the center of
Skyline Ridge which had been controlled by the
Communists for the previous six weeks. The
North Vietnamese 148th Regiment had with-
drawn from the ridge, and Communist reaction
was limited to light shellings of irregular positions
overlooking Long Tieng.
Vang Pao has already begun to test Commu-
nist defenses in the rough terrain between Long
Tieng and the Plaine des Jarres. An irregular bat-
talion has moved to within three miles of Phou
Pha Sai, a mountain complex just southwest of
the Plaine, without encountering opposition. In
the next few days, enemy reaction to this recon-
naissance operation should provide some indica-
tion of Communist defenses in this sector.
Vang Pao would like to move back into the
hills ringing the southern Plaine, but his options
are limited by the need to reorganize and refit his
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troops at Long Tieng. Within the next few weeks,
the irregulars will probably attempt to push the
North Vietnamese out of mortar and recoilless
rifle range of Skyline Ridge and then try to move
north to retake Sam Thong. As the wet season
progresses, Vang Pao should be able to regain
most, if not all, of the strategic terrain between
Long Tieng and the Plaine des Jarres.
The Lon Nol government presided over its
first national election when the citizenry went to
the polls on 30 April to vote in the referendum
on the new constitution. The official results of
the balloting will not be made public until next
week, but the government has already announced
that the vote was-as expected-"overwhelm-
ingly" in favor. Although Communist propagan-
dists denounced the referendum, there were only
a few minor and ineffective instances of terrorism
aimed at disrupting the voting.
In Phnom Penh, the balloting was conducted
in the midst of student demonstrations. The stu-
dents originally were protesting alleged deficien-
cies in the draft constitution, but that issue was
soon overshadowed by a shooting incident at
Phnom Penh's law school on 27 April, in which a
number of students were wounded by police gun-
fire. The incident induced student activist Koy
Pech to leave the law school under the protection
of a Cambodian Army commander, but it also
served to increase the hostility between the gov-
ernment and the students.
The student demonstrations later shifted to
the city's Independence Monument, where large
numbers of students staged a week-long protest
over the "deaths" of several of their comrades
allegedly killed at the law school. President Lon
Nol insisted that the shooting was the work of
"outsiders"-even though hundreds of onlookers
saw military police fire into student ranks-and
accused the students of aiding the Communists by
creating public disorder. Talking tough but acting
with restraint, Lon Nol managed to outwait the
demonstrators, and by the end of the week the
students were off the streets.
The government's victory over the students
may prove to be evanescent. The events of the
past two weeks are not likely to be quickly for-
gotten or forgiven by the students, whose oppo-
sition is likely to manifest itself in other forms.
More Trouble Along The Border
The government suffered more military mis-
fortune during the week, when the 600-man gar-
rison at Bavet, in the Parrot's Beak area, aban-
doned its positions and crossed the border into
South Vietnam. The abandonment of Bavet left
Svay Rieng town as the only government-held
strongpoint along Route 1 between Neak Luong
and the South Vietnam border. The Cambodians
launched an operation from Neak Luong aimed at
reopening the highway, but it soon stalled near
the Communist-held town of Kompong Trabek.
Farther south, Cambodian and South Viet-
namese abandoned the town of Kompong Trabek
in Kampot Province. The town had been under
strong and sustained pressure from elements of 25X1
the Communist Phuoc Long Front for over five
weeks. Both sides reportedly took heavy casual-
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Bangkok's public acceptance of an indirect
Chinese invitation to a Thai badminton team is an
important step in the Thai's guarded effort to
establish contacts with Peking. General Praphat,
deputy chairman of the military ruling body, has
told the Thai press that the government will
permit a Thai badminton team to visit Peking. He
stated that an invitation had come via the Hong
Kong badminton association but that no date
could be set for the trip until Peking issues a
formal invitation. This requirement could pose a
problem; while Peking appears to want a Thai
team to visit China, it may prefer to handle nego-
tiations for the trip unofficially and informally
through the Hong Kong channel.
If the trip does come off, Praphat told the
US ambassador, the Thais would closely watch
the reception given Thai players in Peking, even
though no officials authorized to engage in polit-
ical talks would accompany the team. He ex-
pressed particular interest in a possible return visit
by a Chinese team as a test of the reaction of
Thailand's large Chinese community. Thai leaders
have long been concerned that an improvement in
relations with Peking could cause them trouble
with their own Chinese.
Bangkok's receptivity to a sports exchange is
in line with the decisions made at a high-level
meeting on the China question last November.
The government decided at that time to accept
any Chinese sports invitation that might be ex-
tended, but to continue the ban on private trade
and contacts with China. Praphat's statement that
Thai businessmen would not be permitted to
attend the Canton trade fair indicates that these
decisions are still in force.
This policy not withstanding, the Thai evi-
dently feel obliged, in the wake of developments
in US-Chinese relations, to appear actively inter-
ested in limited overtures toward Peking. They
are still suspicious of Chinese intentions, however,
particularly with regard to support of Thai in-
Page 10
surgents. Bangkok's caution was underscored by
Field Marshal Thanom's statement last week that
Thailand "will not rush" into contacts with the
Chinese. He said Chinese support for insurgency25X1
in Southeast Asia made it impossible for Bangkok
to go as far as the US in modifying relations with
Peking.
Peking's public treatment of this week's May
Day festivities provides fresh signs of political
trouble in the Chinese capital. The Chinese failed
to publish their customary stock-taking editorial,
and the traditional May Day fireworks display,
usually accompanied by a full-fledged leadership
turnout, was canceled. The handling of the fes-
tivities was strikingly similar to that accorded
National Day ceremonies last October, when
Peking was attempting to mask the political dis-
array resulting from the Lin Piao purge. While it is
clear that political difficulties have again arisen in
Peking, it does not thus far appear that an up-
heaval of the magnitude of the Lin affair is under
way.
The absence of a May Day editorial, in par-
ticular, points to political trouble. If the regime
were faced merely with the illness of an im-
portant leader, it would presumably have little
difficulty concocting some sort of statement for
the public.
As was the case last fall with the October
celebration, the Chinese have ascribed the deci-
sion to scale down the May Day celebrations to
economy measures, but a more likely explanation
is that Peking wanted to avoid a full-scale leader-
ship line-up in order to conceal the political
standing of the politburo members. Unlike last
fall, however, all of the active politburo figures
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have appeared individually in recent weeks on a
regular basis-with the exception of Mao, who
frequently remains out of the public eye for pro-
longed periods of time.
Peking's accounts of the activities of the
elite on 1 May seemed clearly designed to allay
suspicion of anything untoward in the leadership.
Although Mao missed his first May Day appear-
ance since 1966, the official Chinese news agency
was quick to observe that his picture was featured
prominently on the front of Chinese newspapers.
Moreover, Premier Chou En-lai and several other
top leaders reportedly greeted passersby inform-
ally in Peking's parks.
Even so, there was a hint that this modest
effort to reassure the party faithful ran afoul of
political bickering and intrigue. For example,
NCNA went out of its way in a second, more
expansive treatment of May Day to note that
Mao's wife, Chiang Ching, had attended cere-
monies in the south China city of Canton-a fact
that had been strangely omitted in the first re-
lease.
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NORTH KOREA: ANNIVERSARY FETE
Pyongyang's celebration of the 40th anniver-
sary of the Korean People's Revolutionary Army
on 25 April brought forth one of the clearest
manifestations of Sino - North Korean accord in
recent months. Although the anniversary has re-
ceived only cursory attention in the past, Pyong-
yang's decision to emphasize it this year
prompted the Chinese to dispatch a high-ranking
delegation, headed by politburo member Chien
Hsi-lien, and to provide considerable coverage of
the event. A joint editorial in People's Daily and
the Liberation Army Daily on 24 April set the
tone, stressing the closeness of the Korean and
Chinese military forces in the anti-Japanese strug-
gle. Peking noted further that in the Korean war
Pyongyang's struggle had "safeguarded the se-
curity of China" and reiterated many of the
cliches that signify an extremely close identity of
interests. Pyongyang reciprocated by giving the
Chinese delegation top billing among the 30 mili-
tary deputations that attended the celebrations.
Official Pyongyang pronouncements on the
Army Day observances were focused on the role
of Kim II-sung as the founder of the Korean
revolution. This emphasis appeared directly re-
lated to the celebration of Kim's 60th birthday
ten days earlier. On that occasion, a flood of
praise for the North Korean leader had stressed
his domestic achievements and demonstrated that
the cult of personality was very much alive. At
the Army Day celebration, the North Koreans felt
it more politic for the international audience to
portray Kim in a broader role as the founder of
the Korean revolutionary movement against the
Japanese.
By emphasizing Kim's role in the anti-
Japanese struggle, in which both North and South
Koreans participated, Pyongyang may also have
been attempting to underscore the concept of
Korean unity in the face of outside aggression-a
notion that could serve to buttress Kim's current
line on national unification through bilateral
negotiation. Perhaps with this thought in mind,
Pyongyang toned down the usual polemics di-
Page 12
rected at the South Korean Government and care-
fully avoided giving the impression that the North
was harboring aggressive designs on the
South.
Whole plant imports are playing a major role
in North Korea's Six-Year Plan (1971-76). Since
1970, at least 48 plants are known to have been
purchased from both Communist Europe and the
industrial West. China is believed to be providing
whole plants as part of its economic assistance,
but the USSR continues as the major source of
such facilities. North Korea is now negotiating
with Western firms for an additional 13 plants,
worth about $200 million.
The new facilities are designed primarily to
boost production of iron and steel, petroleum
products, electric power, and machine tools. The
two most important plants are an oil refinery
worth an estimated $40 million from the USSR
and a petrochemical complex worth about $50
million from a West European consortium. The
petrochemical complex is the most expensive
single Western project ever purchased by an Asian
Communist country, including China. Upon com-
pletion, North Korea should save considerable
foreign exchange by substituting domestic for im-
ported petrochemical products. Other plants-
particularly in the metallurgical sector-will assist
the North Koreans in improving existing export
capabilities.
sistent efforts to expand trade and by a more
reasonable posture in a changing international en-
The success of Pyongyang's efforts to buy
foreign plants depends on the availability of
credit. Credits from both the USSR and China are
financing the bulk of North Korea's imports of
whole industrial plants. The North Koreans have
also obtained greater access to credits and govern-
ment guarantees in Western Europe through per- 25X1
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USSR: UNINSPIRED GROWTH
The lackluster growth of Soviet industry in
1971 continued through the first quarter of this
year. Non-military industrial production grew by
an estimated 5.5 percent over the comparable
period last year, marking the smallest first-quarter
gain since 1969. As in 1969, harsh winter weather
contributed to the poor showing.
The output of most industrial materials, par-
ticularly construction materials and ferrous
metals, grew at lower rates than a year ago. Ma-
chinery output is estimated to have grown at
about the same high rate as last year, largely due
to the continued boost in passenger car output
from the Tol'yatti plant. Production of most
other consumer durables, however, continued to
stagnate. Within the consumer non-durables cate-
gory, only meat and butter output showed re-
spectable increases. Industry's support for the ag-
riculture sector fell from the generally high rates
of growth achieved in 1970 and 1971, although it
was not far off the pace required to meet the
annual goal.
It is estimated that industrial output must
rise by an average annual rate of 8 percent during
the 1971-75 period in order to meet the ninth
five-year plan goal. With industrial growth at 5.5
percent, the Soviets are making only slow prog-
ress toward this goal. Moreover, the severe winter
weather killed a significant percentage of the
winter crops, which may further jeopardize reach-
ing the 1975 targets, notably in the light and food
GROWTH OF SOVIET INDUSTRIAL OUTPUT
(rounded to nearest half percent)
1966-70
1st Quarter
1971-75
Annual average
1971
1972
Plan
7.0
5.5
5.5
g
* Annual average required to meet 1975 target
The new party leadership in Zagreb is pre-
paring its case against Croat nationalists driven
from office by Tito last December. Some of the
offenders can expect stern party discipline, and a
few of the more extreme could even be brought
to trial.
The Croat party now led by Mrs. Milka
Planinc would like to end the purge psychosis
that has gripped the republic since December and
get on with its reorganization. Mrs. Planinc, who
is herself inclined to be conservative, is having
trouble with some of her colleagues who are de-
manding a wider purge. She will have the upper
hand when the central committee meets on 8 May
to discuss penetration of the party by Croat na-
tionalists. She will try to satisfy Tito that she is
not weak on nationalists; at the same time she
will argue for punishment according to the indi-
vidual crime.
The former Croat party leader, Mrs. Savka
Dabcevic-Kucar, may well escape with a repri-
mand because she is popular in Croatia and her
failures were primarily sins of omission. The more
rabid Croats, like Miko Tripalo and the former
party boss in Zagreb, Srecko Bijelic, will probably
be expelled from the
The atmosphere in Croatia is calm enough
now to permit the party to finish its houseclean-
ing. The most active nationalists have been driven
from office and others are quietly awaiting the
axe. Bitterness over the way Tito crushed the
nationalist movement has been temporarily sup-
pressed, but it remains a long-range problem.
One exception to the general attitude of
grudging acceptance of the status quo is found
among Zagreb university students. Student
hostels are still rife with nationalist agitation,
according to press reports. The regime, however,
has wisely scheduled trials of student leaders and
intellectuals involved in the nationalist movement
for July when most students will be on summer
leave.
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Tito's stand, the critical factor, apparently is
to leave Zagreb a good deal of leeway while
warning of the continuing danger of Croat na-
tionalism. Tito would surely step in, however, if
he thought that nationalists like Tripalo were
getting off too lightly.
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Irish voters appear likely to approve entry
into the European Community in a referendum
on 10 May. Recent polls have shown a large bloc
of undecided voters, and the two major political
parties--the Fianna Fail and the Fine Gael-are
conducting intensive campaigns to overcome
voter apathy and urge a large affirmation vote.
enjoy tariff-free entry to the UK market. Because
of the large role of foreign trade in the Irish
economy-total exports equal about 28 percent
of gross national product-and because the UK
absorbs about two thirds of Ireland's exports, the
nation's economic prospects would be seriously
hurt. Prime Minister Lynch has asserted, however,
that should this referendum fail, he will raise the
issue repeatedly until it passes.
The small Labor Party and both the official
and provisional wings of the Sinn Fein, the polit-
ical arm of the IRA, have been campaigning
against entry. IRA groups have complained, for
example, that citizens of Northern Ireland will
not be able to vote in the referendum. To counter
such opposition, Prime Minister Lynch in a recent
speech linked the referendum with the border
issue, saying that the border will become less
significant after Ireland joins the EC.
Uncertainty as to the potential economic
effects of entry has enabled various Irish interest
groups to mount campaigns for and against entry.
Trade union officials, for example, have predicted
"massive unemployment," while the government
asserts that a long-term gain in employment
would result. Others argue that tariff-free access
for Irish exports to the large EC market should
provide a boost to Irish industry, lead to in-
creased foreign direct investment, and reduce un-
employment, now running at about eight percent
of the labor force. If, however, Ireland is unable
to curtail the rising costs of labor and materials,
EC entry would make Irish goods more vulnerable
to European competition.
Irish farmers as a group probably will benefit
from the EC's higher agricultural prices, but Irish
fruit and vegetable producers could suffer from
open competition within the EC. Food costs to
consumers will rise in any case.
If Ireland does not join the EC and the UK
does, London will have to impose the EC's com-
mon external tariff on Irish exports, which now
Government campaigns aimed at winning
popular support for entry into the EC are in full
swing. So far, most voters remain undecided on
whether Community membership is desirable.
Referenda are scheduled for 24 September in
Norway and 2 October in Denmark.
In Norway, where the referendum is only
advisory, Prime Minister Bratteli's Labor govern-
ment is striving to overcome the fears of fisher-
men and farmers that EC membership would
jeopardize their livelihoods. Although they com-
prise a relatively small portion of the population,
they are quite vocal and command the sympathies
of many other Norwegians. Furthermore, signifi-
cant numbers of Norwegians live in isolated settle-
ments along the coast. They are very independent
minded, resent directives from Oslo, and dislike
even more the idea of control from Brussels. They
will be hard to convince.
Business and industrial leaders in Norway
support entry, as do labor organizations not con-
trolled by the extreme left. Opinion polls, how-
ever, show nearly 40 percent of the populace still
undecided with the rest almost equally divided
pro and con. Furthermore, a simple majority in
favor may not be viewed as a mandate for par-
liament to approve entry; a three-fourths vote is
needed for ratification.
For Danish voters, EC membership is more
an emotional than an economic issue. Prime
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Minister Krag's Social Democratic government is
campaigning hard. Recent parliamentary debates
on the EC issue left little doubt that a substantial
majority will support entry, and most Danes
freely admit the economic advantages of mem-
bership. However, they view the EC as being
dominated by arrogant German and Catholic
commercial interests.
Krag has a tough summer of campaigning
ahead. The results of the Danish referendum are
GUINEA: THE PURGE IS OVER
A flurry of diplomatic activity has reintro-
duced Conakry into the mainstream of West Afri-
can politics following 17 months of almost total
preoccupation with security. At home, the con-
centration on subversives has given way to em-
phasis on economic problems.
The highly publicized visit in March of Ni-
geria's General Gowon marked the start of an
effort by President Toure to strengthen Guinea's
foreign ties and to recoup prestige lost during the
purges last year. Gowon had warm praise for the
Toure government, giving it a much needed
psychological boost. Last month the UN commit-
tee on colonial issues met in Conakry, and this
provided another lift for Toure. It also helped
allay his fears of political isolation and enhanced
his image as an African "progressive." The visit
this week of Fidel Castro and the scheduled visit
of Cameroonian President Ahidjo on 14 May will
keep up the momentum.
Toure has moved privately to improve rela-
tions with three neighboring states from which
Guinea has long been estranged. During March he
sounded out a receptive Ghana on the possibility
of resuming diplomatic relations, which were
broken in 1966 when deposed president Nkrumah
was given refuge in Conakry. This week an official
binding, and if more than 30 percent of the
electorate oppose membership, parliament cannot
ratify the accession treaty. Opinion polls have
shown more than 30 percent opposed, at least
until recently. Furthermore, the outcome of the
Norwegian referendum, which could easily be
negative, will have a significant impact on the
Danes, as will any free trade arrangement that
Sweden and Finland make with the EC this
summer.
Ghanaian delegation, the first since the break,
visited Guinea to negotiate the return of Nkru-
mah's body. Toure also appears to be cooperating
with new efforts to mediate his dispute with
Senegal over the presence there of anti-Toure
exiles. Both Guinea and Ivory Coast seem inter-
ested in pursuing a move toward reconciliation,
begun in 1970 but interrupted by the purge in
Guinea. A warming trend also is evident in
Guinea's troubled relations with the US.
Domestically, Toure is trying to maintain
the momentum of his "revolution" by radical
rhetoric and by focusing attention on corruption
and the need for rural development. A shake-up
in the government and party hierarchy, an-
nounced at the party congress last month, prob-
ably does not presage any major departures in
policy. Three members of the party's seven-man
executive bureau were replaced, and one minister,
Lansana Beavogui, was elevated to the newly
created post of prime minister. Toure, to empha-
size his claimed commitment to economic de-
velopment, combined economic and financial
affairs under one ministry, headed by his brother.
Nevertheless, Toure remains reluctant to free
Guinea's stagnant economy from the tight re-
strictions he has im osed in order to enhAnc-p-
political control.
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President Sadat returned from an abbrevi-
ated visit to Moscow last week and hinted at
promises of new arms aid before departing on a
tour of North Africa.
Arab disillusionment with international
peace-making efforts was evident in the joint
communique issued on 29 April following Sadat's
trip to the Soviet Union. Support for the UN
Middle East resolution of 1967 was duly reg-
istered, but no mention was made of the mission
of UN special envoy Gunnar Jarring. Jarring was
prominently mentioned in the communique that
followed Sadat's trip to the Soviet Union in Feb-
ruary, and Egyptian diplomats had expressed
renewed interest in his mission when the US plan
to arrange bilateral proximity talks evaporated in
early 1972.
The latest communique used somewhat
more ominous language in addressing Arab op-
tions for dealing with the Middle East stalemate.
It asserted that if a political settlement continues
to be thwarted, the Arab states "have every
reason to use other means" to regain the occupied
territory. Subsequent Soviet commentary, how-
ever, has stressed Moscow's determination to con-
tinue the quest for a political settlement. The
Soviet Union pledged to study "further increasing
the military potential of Egypt" and agreed to
"strengthening military cooperation" between the
two states. Unlike previous communiques, this
one failed to note the defensive nature of the
military aid the Soviets were providing Egypt.
Sadat was quick to highlight the more forth-
coming Soviet language in a May Day speech to a
workers' rally in Alexandria. He twice brandished
the communique as proof of Moscow's continuing
support and promised that Egypt would obtain
the necessary strength to liberate its land "in a
reasonable time." Speculation that Egypt may
have received some assurances of further military
aid was fueled when the new chief of the Egyp-
tian Air Force, who had accompanied Sadat to
Moscow, remained for two days following the
President's departure.
In his May Day address, Sadat added some
vitriol to his earlier attacks on the Israelis, which
described them as "a mean, treacherous people"
on which "abasement and humiliation were
stamped." The President declared that he would
not be satisfied with merely liberating the oc-
cupied territory, but insisted that an arrogant and
blustering Israel be humbled. The racial overtones
in the two speeches no doubt shook the Israelis,
evoking, as they did, memories of earlier Arab
pledges to drive the Israelis into the sea.
After the May Day speech, Sadat took off
on a tour of North African states, apparently
designed to drum up broader Arab support
against Israel. He will visit Algeria, Tunisia, and
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Libya. Foreign Minister Ghalib, meanwhile, is
scheduled to visit France in mid-May as part of
Cairo's current diplomatic offensive.
Much of the current movement and bluster
is aimed at the many Egyptians who are restive
over the President's failure to show any move-
ment toward a reckoning with Israel.
keep the Gaza Strip, the 140-square-mile territory
abutting the southwestern edge of Israel, which
Foreign Minister Eban once described as a "finger
sticking into the Israeli throat." The strip is poor
and overpopulated. Most of its more than
350,000 inhabitants are embittered Arab refugees
from the 1948 war. The territory was to become
part of Arab Palestine in the 1947 UN partition
plan. It was occupied by Egyptian forces in May
1948 and administered by Cairo until the 1967
war.
Israeli public statements regarding Gaza
were until recently infrequent and usually con-
sisted of declarations that it would not be re-
turned to Egypt. In March, Minister Without
Portfolio Gallili told the Knesset it was the policy
of the government that "the Gaza Strip shall
never be separated from the State of Israel." In
April, General Shlomo Gazit, head of Israeli mili-
tary government in the occupied Arab territories,
privately confirmed that Israel intends to keep
Gaza permanently. He said Israel also will retain a
buffer area in northern Sinai adjacent to the strip.
The Israeli administrators found Gaza the
most intractable of all occupied Arab territories
Page 18
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Ashgelon
~l ~er~, ham,
I/
) ~Hehro 1
\
1 ISRAEL
and the site of a steady staccato of fedayeen
incidents until it was declared secure in mid-1971.
This was accomplished by a combination of the
carrot (economic benefits) and the stick (tough
military measures). There is little anti-Israeli ac-
tivity now.
As part of its effort to provide more em-
ployment to inhabitants of the strip and at the
same time to tie Gaza to Israel, Tel Aviv opened
its borders to Gaza workers, expanded the citrus
fruit industry in the strip, transplanted Israeli
factories to Gaza, encouraged local industries, and 25X1
brought in Israeli goods for finishing. Gazan elec-
tricity is connected to the Israeli grid, and the
strip is now dependent on Israeli water.
~ ?
A!
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Two Jewish settlements have been planted
in the strip, and there are plans for additional
ones. Israel from time to time encouraged the
departure of Gazan refugees, but with only lim-
ited success. Arab overpopulation remains a prob-
lem, and the Israelis apparently intend eventually
to move out considerable numbers of refugees,
presumably to Arab states in the context of an
over-all refugee settlement. General Gazit indi-
cated this was the Israeli intention, adding that
only some 150,000 "permanent residents" of
Gaza could be placed on Israeli electoral
I ists.
Relations between Syria and Jordan have
been slowly improving, and Syria recently re-
moved most of the restrictions imposed on Jorda-
nian goods and travelers last July after the feda-
yeen provoked a battle between the two coun-
tries' regular forces. Recently, however, officials
in Amman have begun to express concern at the
number of incidents along the border. These are
caused largely by fedayeen based in Syria trying
to enter Jordan or simply firing across the border.
25X1
None of the fedayeen actions has yet caused 5X1
major damage or casualties
Amman's interest in avoiding a
reimposition of the border restrictions has led it
to impose restraints on Jordanian Army counter-
measures against the fedayeen and their Syrian
sanctuaries.
BURUNDI: INSURRECTION
A well-organized insurrection is under way
in southern Burundi, but it has failed so far to
spark a general uprising against the government of
President Micombero. The uprising, which began
on 29 April, apparently is being led by survivors
of the 1965 Hutu tribal rebellion against the
Tutsi-dominated government. The rebellion in
1965 was quickly put down by army forces under
the then Captain Micombero, but it did surface
deep-rooted tribal hatreds that have continued to
fester.
The Burundi Army, approximately 2,800
men, has prevented the insurrection from
spreading out of areas of southern Burundi bor-
dering Lake Tanganyika. Government forces are
spread thin, but seem to be holding their own
against rebel bands who have been attacking
soldiers and civilians. Considerable loss of life has
occurred.
In response to a request from Micombero,
the Zairian Government has provided about 160
paratroopers for guard duty in the capital, several
reconnaissance aircraft, and modest quantities of
arms and ammunition.
The Burundi Government suspects that the
rebels were organized clandestinely in Tanzania
and Zaire, but Micombero has made no public
char es.
25X1
For unexplained reasons, Micombero dis-
missed his cabinet at almost virtually the same
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time the rebellion broke out. There is no evidence
to suggest a connection between his action, which
primarily affected Tutsis, and the insurrection.
No cabinet replacements have been named.
The government has refrained from publicly
characterizing the insurrection as a Hutu revolt,
probably in order to play down tribal tensions
and avoid eneral bloodbath.
The trouble seems likely to drag on. Even
when order is restored, Micombero will face se-
rious problems within his government. Putting
together a new cabinet will probably revive the
intense political infighting within the ruling Tutsi
oligarchy. This infighting has been going on over
the past several months and probably led to the
cabinet dismissals. Moreover, he will be con-
fronted by calls for harsh re ~iiii a ainst the
Hutu majorit
TURKEY: STILL NO GOVERNMENT
Prime Minister - designate Suat Hayri
Urguplu, named by President Sunay on 29 April
to form a new government, has run into prob-
lems. Sunay has asked him to continue his efforts,
however.
A major issue in Urguplu's consultations
with key political leaders is whether the new
cabinet will have a mandate to enact far-reaching
reforms, presumably including highly contro-
versial land reform, before holding general elec-
tions. The two major parties, while favoring
action, believe that national elections should be
held as soon as possible even though some of the
reforms may not have been passed. Elections
could be held as early as next spring. Justice Party
head and former prime minister Demirel re-
portedly is holding out for more say in who will
participate in the new cabinet. Demirel was
Page 20
Urguplu's deputy in the latter's eight-month care- 25X1
taker government in 1965.
Meanwhile, the hijacking of a Turkish air-
liner and the abortive attempt to kidnap gendar-
merie commander General Kemalettin Eken may
further delay the formation of a new government.
These events have drawn attention away from
politics and focused it on the terrorist problem.
The immediate goal of the recent terrorist acts
has been the freeing of the three condemned
terrorist leaders who are scheduled to be executed
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UNC
UNC
INDIA-PAKISTAN: TO THE SUMMIT
Both sides have expressed satisfaction with
the results achieved during four days of prelimi-
nary peace talks in Pakistan that ended on 29
April. A summit meeting between Prime Minister
Gandhi and President Bhutto is scheduled to
begin in New Delhi late this month or early next
Pakistani insistence on
discussing only the agenda for the summit was
generally respected, with substantive issues being
generally avoided. Of the latter issues, Pakistan's
relationship with Bangladesh was one of the most
difficult considered. The Pakistanis have refused
to recognize Bangladesh until after Bhutto and
Prime Minister Mujibur Rahman have made
another attempt to patch things up. The Bengalis
insist that recognition take place before any such
meeting, and especially before they release
Pakistanis held prisoner by the joint Indian-
Bengali command.
During the preliminary talks, the Pakistanis
apparently tried to get the Indians to exert pres-
sure on Mujib to attend the summit discussions,
presumably hoping that once there Mujib might
be convinced to move on the prisoner-of-war
question and to drop plans for trials in Bangla-
desh of Pakistanis accused of war crimes. Upon
his return to New Delhi, however, India's princi-
pal negotiator, D. P. Dhar, asserted that his gov-
ernment will not urge Bangladesh to take a soft
approach to war crime trials. He added that India
would not act as a proxy for Bangladesh on the
prisoner issue. The Indians may, nevertheless, at-
tempt to work out a formula which satisfies
Bengali demands for Pakistani recognition and
includes a mutually acceptable compromise on
prisoner exchanges and trials. But in light of con-
tinuing Indian support for the basic Bengali posi-
tion, Bhutto probably will have to accede to
Bengali demands for recognition if he expects to
make progress on the return of the prisoners.
Kashmir, the most important long-tern25X1
Indo-Pakistani problem, was almost certainly
Indian Negotiator D. P. Dhar
raised during Dhar's private meeting with Bhutto,
but neither side has since spoken about it in
public. The Pakistanis want to delay con-
sideration of Kashmir until there has been prog-
ress on other, more tractable problems. The
Indians, for their part, are pressing for a ackage
settlement of all outstandin issues 25X1
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The discovery of oil in the jungle of eastern
Peru by the State Oil Company, Petroperu, has
sparked a major search for oil. Ten large foreign
oil companies have signed joint venture explora-
tion contracts with Petroperu, and two other
companies are likely to sign up this month. Nego-
tiations are under way with companies competing
for the remaining nine contract areas. Altogether,
close to $1 billion may be spent over the next
seven to eight years in exploring and developing
the area. Peruvian officials are optimistic, fore-
casting Peru's emergence as a major world ex-
porter of petroleum by the end of the decade.
Petroperu opened the eastern area in June
1971 when it let the first contract to Occidental.
The Occidental contract, the model for the other
contracts, provides for reversion of developed
concessions to the state after 35 years. Occidental
will pay all exploration and development costs
and receive half of the oil and gas recovered,
while Petroperu will pay all taxes and receive the
other half of output. The other contracts contain
similar reversion arrangements, but, in these,
Petroperu will receive up to 54 percent of output
during the joint-operation period.
The favorable terms accorded the companies
reflect the substantial costs and risks of oil ex-
ploration in the remote jungle of eastern Peru
Equipment must be flown in by helicopter, and a
$250-million pipeline will have to be constructed
across the Andes to the Pacific coast. Although
only Occidental has completed enough seismic
work to start drilling, exploration will be rapid
because the companies must drill a specified num-
ber of wildcat wells within four years. Moreover,
Petroperu, which has reserved a substantial por-
tion of the eastern area for its own development,
plans to invest $250 million by 1975.
Earlier petroleum development in other
parts of Peru was on a concessionary basis, but
the government thought the pace of exploration
by some of the companies was too slow. Holders
of old-style concessions are now required to meet
stringent drilling requirements. As a result, four
of the six companies may lose their concessions.
But, unlike similar demands which resulted in the
complete take-over of US-held copper conces-
sions, the oil companies will have first priority in
reaching joint venture agreements with Petroperu
for the areas.
Peru's recent success in attracting foreign
capital for petroleum development reflects a sig-
nificant improvement in investor confidence since
the nationalization of the International Petroleum
Company several years ago. The government has
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been far less successful in its attempts to use joint
ventures to develop Peru's extensive copper re-
sources. The long lead times required to start
production in both the mining and petroleum
sectors, however, preclude any immediate impact
on tax or export earnings. In the meantime, budg-
etary and balance of payments strains may be
exacerbated by rising expectations associated
with the well-publicized oil finds.
The administration yielded to the Commu-
nist-controlled labor federation on the place and
timing of its May Day rally, indicating the au-
thorities still hope for cooperation with the Com-
munists. The action is building up problems for
the future.
The federation had requested permission to
hold the rally on 28 April in front of its head-
quarters in Lima. The prefect of Lima refused this
permission, citing weekday traffic problems, and
suggested a change in either the place or the time.
After strenuous Communist protests, however, his
decision was reversed, and the rally was held as
scheduled.
The secretary general of the federa-
tion praised the government's objectives in his
speech at the rally, but he emphasized that labor
was not tied to the government by public or
secret commitments.
The government has been favoring the Com-
munist federation as a means of undercutting
APRA, a political party with a strong labor fol-
lowing which has long been anathema to the
military. The policy boomeranged last year, when
Communist-led agitation caused extremely costly
production stoppages in the mining industry.
There were signs that the government's patience
was wearing thin; new labor regulations were
enacted earlier this year in the face of Communist
opposition. Nevertheless, the change of heart on
the May Day rally indicates that the government
still prefers to placate the Communists where
possible.
President Echeverria, uneasy over political
and social ferment in Latin America, is urging
that something be done to reverse the present
drift toward violent upheaval. That something, he
says, is a stronger US commitment to economic
development for the countries of the hemisphere.
Echeverria has asked the US to endorse the
principles set forth in his recent speech at the
UNCTAD meeting in Chile. He has packaged the
principles in the form of a charter of economic
rights and duties for developing nations. The
Mexican press is touting these principles as the
"Echeverria Doctrine." He believes they could
offer a rallying point for underdeveloped coun-
tries, Latin ones especially, to use in fighting
economic injustice. He hopes that many nations
will support them.
In a talk with the US ambassador, Echeverria
described himself as confused and concerned by
what he saw and heard in Chile. He was alarmed
by everything he was told about conditions in
other Latin American countries, especially Argen-
tina. He views the turmoil as a serious threat to
the hemisphere, and to his own country, and
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asserts that his principles could provide under-
developed nations with nonviolent means to prog-
ress. Mexican leaders theorize that, if Allende fails
in Chile, everyone in the hemisphere will con-
clude that Castro-type violence is the only means
of achieving reform.
Turning to domestic concerns, Echeverria
admitted that one goal of his Chile trip was to
placate restive leftist elements. His reorganization
of Mexico's ruling party and his declarations to
workers' and farmers' groups had the same aim.
Student activities were continuing to bother him,
he added, but the worst appeared to be over. He
also expressed a new-found sense of urgency over
Mexico's population explosion, saying that his
government must deal with this threat now and
not leave it to the next administration. Believing
that problems at home and in neighboring coun-
tries can no longer be ignored, he is groping for
some method by which Mexico, working together
with the United States, can alleviate them.
A desire to approach these difficulties in a
way that will not put him in conflict with the US
is characteristic of Echeverria. He has been em-
phatic in expressing a belief that close friendship
25X1 with the US is in Mexico's best interest, and he
has sought opportunities to prove this. He plans
to raise these issues when he visits Washington in
June.
The Trudeau government's move Tuesday to
establish a screening process for foreign take-overs
of Canadian companies essentially permits busi-
ness as usual. The new policy applies to foreign
acquisition of existing companies with gross assets
of at least $250,000 or revenues of over $3 mil-
lion a year. It is not retroactive. Furthermore, it
does not affect other forms of investment, includ-
ing foreign investment in new companies. Take-
overs account for only 10 to 20 percent of recent
foreign investment in Canada, so that the bulk of
foreign investment will continue outside the new
regulations.
The key judgment to be made under the new
policy is whether proposed take-overs, defined as
acquisition of five percent of the shares of a
public company or 20 percent of the shares of a
private company, will result in significant benefit
to Canada. The government will judge each pro-
posed acquisition for its impact on economic ac-
tivity and employment, the degree of Canadian
participation, its contribution to productivity and
technology, its effect on competition, and its
impact on industrial and economic policy. If a
proposed acquisition fails to meet the criteria,
there is a provision for further negotiation which
could be used to stimulate foreigners to help
increase employment, a major concern in Canada
at this time.
The policy is surprisingly mild, and has pre-
dictably been attacked by the opposition Pro-
gressive-Conservatives and the New Democratic
Party as incapable of fostering Canadian owner-
ship of the Canadian economy. Provincial leaders
who had strongly opposed restrictions on foreign
investment probably feel satisfied. The new pol-
icy recognizes the major role that foreign invest-
ment has played in Canada's development, as well
as the country's continuing need for foreign
capital.
The policy should prove to be a relatively
small obstacle to foreign investors, who come
primarily from the US. Many had expected more
stringent controls, possibly extending to regula-
tion of all new investment and policing of foreign
enterprises. Ottawa did, however, leave the door
open to tighter control in the future.
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Fidel Castro has begun a two-month, nine-
nation tour. He arrived in Guinea on 3 May and
will go on to Algeria, Bulgaria, Romania,
Hungary, Poland, East Germany, Czechoslovakia
and, finally, the Soviet Union in late June.
The trip to the Soviet Union is, of course,
the key to the whole tour. Castro probably
wanted to speak with the Soviet leaders before
President Nixon's arrival in Moscow on 22 May,
and earlier reports had indicated that Castro
would be in the USSR prior to the summit. But
Castro's emissary, Carlos Rafael Rodriguez, was
probably informed last week that Fidel could not
come until June. It seems likely that the decision
to postpone the visit reflects Soviet concern for
maintaining a favorable atmosphere prior to the
meeting with the President.
In any case, the single most important fact
of life for Cuba today is that it is heavily de-
pendent on Soviet support. Cuban indebtedness
to the USSR, estimated at $3 billion, will increase
substantially this year because of Cuba's antici-
pated poor sugar harvest.
The Cubans and the Soviets have had their
ups and downs during the past 12 years. The
present phase, featuring relatively warm relations,
began in 1968 when Castro gave a back-handed
endorsement to the Soviet invasion of Czecho-
slovakia. Since then, the improved relationship
has been expressed in the economic field. In 1970
a joint Soviet-Cuban commission was formed to
facilitate Soviet assistance in rehabilitating the
Cuban economy. All of the problems in this field
have not been solved, however, and Soviet irrita-
tion with Cuban inefficiency and wastefulness is
amply documented and may be increasing.
From Castro's point of view, therefore, the
little stops along the way are secondary to what
occurs in Moscow. He probably hopes that he can
get concrete assurances from the Soviets that they
will increase their economic assistance. More im-
portant, he will want to be reassured that he will
not be abandoned because of some arrangement
between the US and the USSR.
Foreign policy implications of the trip aside,
an important aspect of the extended tour is the
picture it projects of the Cuban internal political
situation. Castro would never leave the country
for so long unless he was sure that his position
was secure. In his May Day speech he declared,
"A few years back, none of us could think of
leaving the country.... This is not so today.... We
know that this is a solid revolution, and a solid
leadership, with more than enough men capable
of accomplishing any task and able to handle any
situation."
The important point here is that since 1968,
an increasing amount of governmental power ap-
pears to have shifted from Fidel to his brother,
Raul, presumably with Fidel's consent. The
reasons for this change are somewhat obscure, but
Fidel may have concluded that the complex day-
to-day economic and political problems of the
country could be more capably handled by tech-
nocrats under Raul's leadership. In effect, the
routine problems have come under Raul's ju-
risdiction, leaving the role of "elder statesman of
the revolution" to Fidel. Raul and his colleagues
are thus in a position to keep the island operating
and waiting for the great one's return.
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In Guatemala, surprisingly, partisan maneu-
vering is overtaking violence as the way to suc-
ceed in politics. Political activists, weary of the
bloodletting of the past two years, are turning
more to party work, probing for possible alli-
ances, and testing their leaders. With President
Arana almost midway through his term, incidents
of political violence have dropped to less than 60
a month, only a third of the rate last year. Se-
curity forces still employ the scattergun approach
to the terrorist problem, but they have nailed a
few important subversives recently. The guerrillas
25X1 are on the run or in hiding. Both the government
and the Communist Party deny it, but a modus
vivendi is strongly suggested b the release from
jail of important Marxists.
The political climate began easing per-
ceptibly after the year-old state of siege was lifted
last November and no spectacular terrorist action
followed. The government was able to hold-and
win handily-the municipal elections in March.
Then the trumpeted threat to territorial integ-
rity-the Guatemalans believed their claim to
British Honduras was in peril last month-served
to unite politicians on a national issue.
The major rightist party and Arana's organi-
zational base, the Nationalist Liberation Move-
ment, is in fine shape as the parties enter the
shakedown phase preliminary to the presidential
campaign next year. Its would-be standard bearer,
Mario Sandoval, however, poses a one-man threat
to the process of political normalization, since he
personifies the politics-by-assassination method so
feared by the opposition. His candidacy could
spur the now highly fragmented center and left
into a coalition of convenience for the 1974 elec-
tions.
There are two other positive notes. One is
that almost all the groups that have at one time or
another depended on terrorism have postponed
schemes for "large antigovernment operations" to
some indefinite future and are checking into links
with legal political organizations. Another is that,
for the first time in several years, academic issues
rather than the terrorist-counterterrorist debate
are being argued at the largest university. The
trend, at least temporarily, is toward internal
peace.
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ARGENTINA: WAGE HIKE COOLS LABOR
The wage increase effective on 1 May should
reduce the tensions that flared into violence in
Mendoza last month and produced strikes and
protest marches throughout Argentina. The
15-percent hike and the added side benefits will
ease the political pressures on President Lanusse,
but are likely to add to his economic problems
over the next several months.
Beset by a growing tide of urban terrorism
and labor opposition, Lanusse sacrificed his semi-
-austerity policy to gain some maneuvering room.
In announcing the wage increase, the President
called on all Argentines to overcome their dif-
ferences and work together. He also made it clear
that economic policy will continue to serve his
political objective of holding elections next year.
He said there will be "no definite economic solu-
tion until we achieve political stability."
President Lanusse's package-including the
pay hike, a smaller increase in workers' family
allowances, pension increases, and an agreement
to permit collective bargaining this fall-was con-
siderably more generous than labor, or anyone
else, had expected. For the benefit of the rank
and file, some labor leaders will probably con-
tinue to raise new demands, but for now at least
Lanusse has probably bought the cooperation of
the national confederation leadership. He has also
strengthened the position of moderate labor lead-
ers who were coming under increasing pressure
from hard liners.
The large wage increase apparently had the
approval of top military officers, who hope it will
contribute to social peace for the next few
months. It probably also had the support of
major business leaders, who were becoming con-
cerned that the decline in purchasing power in
Argentina signaled the onset of a serious reces-
sion. In the case of the latter group, this approval
may not extend to holding the line on prices until
mid-May as Lanusse has requested. The President
hopes to meet with business leaders to discuss
new price guidelines, but the failure of past ef-
forts to hold down prices suggests that Lanusse
will have little success in dampening the inflation-
ary impact of the new wage package.
The only significant opposition to the large
wage increase reportedly came from Finance Min-
ister Licciardo, who advocated a smaller raise to
become effective on 1 June. Licciardo's major
concern was the possible impact on current nego-
tiations for large international loans. In fact, the
International Monetary Fund has already post-
poned consideration of Argentina's request for a
large credit. Lanusse, however, seems to believe
that the risk of complicating the loan negotiations
is worth taking to defuse the tense internal situa-
tion exemplified by the riots in Mendoza last
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UN-AFRICA: HEARING FROM REBELS
Last week the UN General Assembly's com-
mittee of 24 on decolonization, which is dom-
inated by militantly anti-colonialist governments,
concluded a lengthy safari through Africa. It con-
centrated on the insurgent movements in Portu-
guese Guinea, Angola, and Mozambique. The
committee junket has been most useful to the
principal rebel group in Portuguese Guinea; it will
provide new grist for those bent on increasing the
pressure in the UN on Lisbon and its allies.
The committee's first, and longest, stop was
in Conakry, the headquarters of the African Party
for the Independence of Portuguese Guinea and
the Cape Verde Islands, which has been carrying
out a relatively successful insurgency for nine
years. Four days of open sessions included an
articulate and non-polemical presentation by its
leader, Amilcar Cabral, who emphasized his con-
tinuing willingness to negotiate with Portugal.
The committee also heard a report by three mem-
bers who allegedly had just visited "liberated
areas" of Portuguese Guinea. The Conakry pro-
ceedings culminated in the unanimous adoption
of a resolution recognizing the Cabral group as
the "only and authentic" representative of the
people, proclaiming its de facto control of the
"liberated areas" as "established beyond any
doubt," and calling for all-out moral and material
support by all UN states and agencies. The re-
solution included fresh charges that the assistance
Lisbon receives from its allies is essential to its
colonial policy.
Despite the one-sided composition of the
committee, its visit to Conakry enhanced the
status of Cabral and his organization. They gained
significant new moral support which may lead to
additional material assistance. Particularly im-
portant was the committee's "confirmation" of
claims by the rebels that they control and admin-
ister significant areas within Portuguese Guinea.
This endorsement and the assurances that dip-
lomatic recognition would be forthcoming when
requested may have been sought by Cabral as part
of a political program that probably includes a
proclamation, perhaps fairly soon, of a govern-
ment. Other steps, including the holding of "elec-
tions" leading to the creation of a "national as-
sembly," reportedly were under way last month.
The committee, which also held sessions in
Zambia and Ethiopia, seems to have intended to
send missions from Lusaka to insurgent zones
inside Angola and Mozambique, but apparently
no such visits took place. The committee's Tanza-
nian chairman announced in Addis Ababa that
consultations would be held to set up visits in the
future.
The Portuguese, for their part, have dis-
played great sensitivity to this new committee
tactic. They denounced the plan to visit "lib-
erated areas" as soon as it was proposed last
winter and lodged a formal protest with the sec-
retary general. Increased military activity by the
Portuguese in their three African territories may
have discouraged committee plans to visit Angola
and Mozambique. Lisbon's concern over any
endorsement of rebel territorial claims is pointed
up by its repeated public denials that any mean-
ingful visit ever took place inside Portuguese
Guinea.
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