WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010300070001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 21, 2016
• Document Release Date: December 18, 2007
• Sequence Number: 1
• Publication Date: June 22, 1973
• Content Type: SUMMARY

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Secret
WEEKLY SUMMARY
State Dept. review
completed
Secret
22 June 1973
No. 0375/73
Copy N?_ 47
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The WEEKLY SUMMARY, issued every Friday morning by
the Office of Current Intelligence, reports and analyzes signif-
icant developments of the week through noon on Thursday.
It frequently includes material coordinated with or prepared
by the Office of Economic Research,, the Office of Strategic
Research, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and there-
fore published separately as Special Reports are listed in the
contents.
CONTENTS (22 Junc 1973.)
I USSR: Next Stop, Paris
2 Argentina: Can He Put the Lid On?
3 Yugoslavia: Economic Maze
3 Indochina
6 Japan: Communist Victory
9 West Germany: Gathering No Moss;
New Opposition Team
11 NATO: The Ministers Meet
12 Iceland: Lack of Leverage
13 CEMA: Uneasy Alliance
MIDDLE EAST
AFRICA
14 Greece: Establishing a Republic
15 Turkey: Parliament Under Pressure
16 Israel: Remaining, Reluctantly
17 Syria: Arms Pour In
17 Libya-Egypt: Merger Blues
18 Afghanistan: Help from Moscow
19 Ghana: Communist Aid Overtures
WESTERN
HEMISPHERE
19 Brazil: Geisel for President
20 Chile: Closing In
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USSR
NEXT STOP, PARIS
j jBrezhnev will spend three days in Paris next
week-on his way home from Washington. The two
stops will cap six weeks of vigorous personal
lobbying in Western capitals. With the conspic-
uous exception of London, the Soviet leader will
have carried his current campaign for detente to
each of the major Atlantic allies.'
1 6Brezhnev doubtless welcomed the French
invitation, which evidently was extended only
after Italian President Leone canceled a planned
state visit to France at about this time. The Paris
stopover will provide an opportunity to show that
France still has, in Soviet eyes, a favored place
among West European nations. Although the Paris
visit has been all but submerged in the flood of
Soviet propaganda on Brezhnev's visit to Washing-
ton, it will serve to demonstrate that super-power
summitry has not diminished Moscow's interest in
Europe/
\The visit is also timely as offering Moscow
an opportunity to counter whatever effect Chi-
nese Foreign Minister Chi Peng-fei had in Paris.
The French see this fourth meeting between
Brezhnev and President Pompidou in less than
three years as a reaffirmation of their "special"
relationship with the Soviet Union. Pompidou,
who has himself been actively engaged in sum-
mitry, will be able to point to his meetings with
President Nixon, and with Heath, Brandt, and
Brezhnev as proof not only of France's signficant
role, but also of his own sound health. 1
))- \Brezhnev and Pompidou will probably ex-
change views on their separate talks with Presi-
dent Nixon. They will probably focus on Europe,
including the Conference on Security and Coop-
eration in Europe which opens on 3 July in Hel-
sinki. The Soviets may raise the issue of force
reductions in Europe, as they did with Pompidou
J~? I Brezhnev campaigned strenuously in Bonn
and Washington for expanded economic coopera-
tion with the West, and he and Pompidou will
review progress toward their previously agreed
goal of doubling bilateral French-Soviet trade be-
tween 1970 and 1974. They may also discuss the
economic relationship involving the US, the EC,
and the USSR. The two leaders will touch on
their interests in Southeast Asia. With the UN
Security Council scheduled to resume considera-
tion of the Middle East in mid-July, and with the
Soviet and French positions fairly close, the two
leaders may judge that some coordinated planning
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ARGENTINA:
CAN HE PUT THE LID ON? of his own movement, which is rent by divisions
between moderate labor and radical youth. Peron
/Juan Domingo Peron returned to Argentina \ will need all of his skill to keep the pulling and
on 20 June and got an ir.nmediate taste of they,;/ihauling of these groups to a minimum and to
shoot-out between rival Peronist groups that had
gathered to greet him forced him to land at an-
other airport and call off a welcoming rally. The
violence that made his homecoming less than
triumphant has probably driven home to him in
an effective wa the urgency of meeting the ter-
rorist challenge
~ )6 YThe turmoil may have accentuated the
strains between Peron and his handpicked stand-
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irte/
a porm
and his coterie have vacillated on every question
while they waited for Peron to return and ive
direction to the new Peronist aovernment.7
Now that he is back in
Buenos Aires, he will be in a position to sound
out top officers and politicians--as well as to get a
firsthand view of the situation. He might well
decide to live with Campora and run things from
behind the scenes; he wound in this way at least
refrain from adding to the unsettling climate that
has already badly shaken his "national reconcilia-
tion" program.?
1S Among the myriad problems Peron will have
to deal with is controlling the disparate elements
l"I
impose some sort of common purpose on them.
High on the list of Peron's problems is the wave
of terrorist activity that has disrupted the sta-
bility of the new regime. Two kidnapings oc-
curred this week, presumably the work of the
Marxist People's Revolutionary Army. The presi-
dent of the Firestone tire subsidiary, an Ameri-
can, and an official of a hosiery firm, a West
German, have been abducted and presumably will
be held for ransom. Several politically motivated
robberies and an assassination threat against an
official of an Italian motorcycle company provide
further evidence that there has been no curtail-
ment of terrorist activity.
mosity to Peron.
ration in the fragile political and economic order
could revive the military's long-standing ani-
),Gxl Iuan Peron will have a dominant role to play
in attempts to stabilize the situation. The military
will probably remain in the wings for the pres-
ent-subdued and watchful-but a further deterio-
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YUGOSLAVIA:
iq' IThe economic stabilization program initiated
with some fanfare last December has bogged
down. Its unpopular, belt-tightening restrictions
have generally failed, and Belgrade is now hatch-
ing new policies in hopes of avoiding both politi-
cal trouble and a new round of inflation:(
lWidespread dissatisfaction with the stabiliza-
tion program has already forced some loosening
of controls on incomes and investment. The trade
unions have loudly complained that the govern-
ment's failure to hold the line on prices, which
are increasing at an annual rate of 16 percent, has
placed an unfair burden on the workers. Last
week, Belgrade agreed not t extend the current
wage freeze beyond 30 June(
11 Belgrade has also backed down on its plans
to gdt tough with inefficient and insolvent enter-
prises. Some insolvent firms did manage to pay
their outstanding debts, but repayment for most
of them was simply postponed through bank
grants of long-term, interest-free loans. As a re-
sult, few of the inefficient firms were forced to
close!) Despite this fact, unemployment is at an
all-time high, and fears of a recession like that of
1967 and 1968 are being expressed in the pressl.
Political overtones have begun to emerge.
The republics and provinces of the underde-
veloped south are bewailing their declining pro-
ductivity and growth-an implicit charge that Bel-
grade is not living up to its commitment to speed
their development. The grumbling has spread to
relatively well-developed Croatia. The Croat
premier said last week that the stabilization pro-
gram could not succeed in his republic. He
charged that the only growth has been in federal
funds gained from taxes on trade. This assertion
comes perilously close to a nationalistic indict-
ment of Belgrade, similar to those that provoked
the Croat purge of December 1971. Party leaders
in Zagreb have also warned that these economic
troubles could have "negative political reper-
cussions." 1
"i IThe Yugoslav government faces some un-
pleasant choices. If it gives in to excessive wage
demands-and workers in one factory have al-
ready voted themselves a 33 percent wage hike-it
will increase inflationary pressures. On the other
hand, ignoring the grass-roots discontent would
invite embarrassing events, with national elections
and a party congress set for early next year.
3-- 1A substantial loosening of economic controls
would add to Yugoslavia's trade deficit, which is
already 87 percent higher than in the same period
last year. Although hard currency earnings from
tourism and remittances from Yugoslavs abroad
will offset part of the deficit, it could still be
excessive. If so, hard currency reserves will drop
and it will be more difficult for Belgrade to ac-
quire the $1 billion in long- and medium-term
credits it is seeking in Western financial markets
this year.
COMBAT COOLS IN SOUTH VIETNAM sides exercise over the country's territory or
~y people.
Fighting has eased considerably in the coun-
try except in a few areas of southern Military ''-'j The reaction to the Paris communique
Region 1, the highlands west of Kontum City, among most officials and government supporters
and the delta province of Chuong Thien. The in South Vietnam was pessimistic concerning the
modest upsurge of military action that immedi- 2 outlook for peace. President Thieu in an Armed
ately preceded the "new" cease-fire of 15 June Forces Day message on 19 June asserted, "The
brought no change in the relative control the two South Vietnamese people cannot believe naively
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that the Communists have relinquished their
aggressive designs so that a true, lasting peace can
be achieved." Thieu's key civilian adviser told
cadets at a Saigon military training center that the
government will not demobilize its forces as long
as North Vietnamese troops remain in the South.
Government military commanders have all pro-
fessed concern that the Communists will use the
new agreement to gain a foothold in the adminis-
trative affairs of the country.?
2f 1 [Saigon radio and TV have concentrated on
defending the government interpretation of the
point communique as "nothing new," and exten-
sive coverage has been given statements made by
government leaders. Editorial comment in Sai-
gon's newspapers has been more varied, but no
commentator has predicted that genuine peace is
at hand:1
'-- [The reaction among the populace appears to
be a mixture of relief over what the communique
X does not say and apprehension over what it may
really mean. Concern about the provision calling
.s0 The country's main non-government groups
are sitting the election out. Some were convinced
that they had no chance against Thieu's well-
organized political machine, and others were un-
able to agree on slates in time to meet the short
filing deadline./
',s LThieu apparently sees the election as an
integral part of his long-range plan for
strengthening his hand politically, suggesting that
he does not anticipate an early political settle-
ment with the Communists. The Senate has been
the country's only official body in which the
non-Communist opposition has considerable
strength; it is now almost evenly divided between
pro- and anti -government Senators
Pharr Van Dong To Tour
for early delineation of territory by the two sides zr{ )Hanoi has announced that Premier Pham
prompted some persons to leave Kontum Prov- Van Dong will lead a party and government dele-
ince to wait out the fighting in neighboring areas. gation to North Korea and Mongolia soonn[The
There have been some indications of economic 2-5-exact dates were not announced, although Ulan
uncertainty in Da Nang since the announcement Bator has publicly stated that the visit will occur
from Paris. There are no signs of panic anywhere in late June. The trip apparently fulfills a clause
in South Vietnam, however, and a sober "busi- in Ho Chi Minh's will directing that all of the
ness-as-usual" attitude seems to prevail. countries which aided Hanoi during the war
should be thanked in this way]
Hats in the Ring
2y [Pham Van Dong will also be visiting Eastern
~C JFour slates of candidates have entered the Europe, and it is possible he may also make stops
race for 31 of the 60 Senate seats at stake in the in Africa and CubaJ[Presumably he will be
5 slate getting the most votes will fill 16 seats, and -balance off the recent visit he and vLe Duan paid
the runner-up slate will get the other 15. Two of=-'-~:to Peking./
the slates, composed of members of President
Thieu's Democracy Party and other well known CAMBODIA: STILL HITTING THE HIGHWAYS
pro-government personalities, are heavily favored
to win. The other two slates contain little-known f Khmer Communists continued to put pres-
individuals of uncertain political orientation; sure on key highways this past week. On 17 June,
indeed, both are suspected in some opposition they again cut Route 5, the only overland access
circles to be merely a government-contrived route to the rice-rich northwest, and by mid-week
facade of competition. were in control of a six-mile stretch of the
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highway some 45 miles from the capital. The
Communists seized control over a short section of
Route 6 about 40 miles northeast of Phnom Penh
early in the week and repeatedly thwarted govern-
ment attempts to clear stretches of Route 3 south
of the capital?
`,;2-"The government had more success along
Route 4 west of Phnom Penh. Government troops
reopened a section of that vital highway, encoun-
tering little resistance in the process. Truck con-
voys began to use Route 4 for the first time in
two weeks on 20 June, but there is no assurance
that the government will be able to keep the
highway open and supplies moving freely into
Phnom Penh from the port of Kompong Sorr{
.1 Routes 4 and 5 are the key roads by which
Phnom Penh is provided needed rice supplies.
Rice stocks in Phnom Penh are now reaching
dangerously low levels; hoarding, unusually high
consumption rates throughout most of the year,
and the large influx of refugees into the capital
are all contributing to the problem. There is less
than a two-week supply of rice in government
warehouses, although arrangements are being
made to bring some additional supplies into
Phnom Penh?
'?,"[Against this backdrop of an impending rice
shor age, the cabinet has finally moved to stem
serious economic deterioration. On 15 June, it
adopted reforms calling for an immediate increase
in the price of most rice to more than double the
current artificially low, controlled level. Begin-
ning in July, water and electricity rates will be
raised to more nearly match producer costs, and
petroleum prices will be increased to reflect
higher world prices and the declining value of the
Cambodian riel. To compensate for the higher
prices, salaries and allowances for civil servants
and the military are to be increased.l
3
4' These reforms will have a favorable effect.
The price increase on rice will be badly received
and may result in some panic buying at first; but
in the longer run consumption should decrease
considerably from present high levels. The
increase in wages is a change in policy from the
ill-advised use of politically motivated price sub-
sidies to the use of specific curbs on the decline in
real incomes among government workers and
lower-level military personnel. The reaction
among workers whose wages are not increased
will, however, be adverse.]
LAOS: DOWN TO BUSINESS
~SNow that the US and the Vietnamese have
rein orced the cease-fire in South Vietnam, the
Lao negotiators appear to be settling down to
serious discussions on the implementation of the
Lao peace agreement. Vientiane's chief
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negotiator, Pheng Phongsavan, described his meet-
ing on 15 June with Communist envoy Phoumi
Vongvichit-the first since the signing of the Paris
communique-as "productive" with the Commu-
nist taking a more businesslike attitude. The two
sides have begun meetin frequently in an effort
to reach early agreement.
`Prime Minister Souvanna now seems ready
to make some concessions on matters that have
blocked progress on the talks since February. He
appears prepared to modify his stand on the al-
location of portfolios in a new coalition cabinet,
on the provisions for the security of Pathet Lao
coalition members in Vientiane and Luang
Prabang, and on the demarcation of lines of con-
trol. Souvanna presumably hopes that these con-
cessions will help to create some momentum in
the negotiations process. He expects that the
Communists-in wake of the Paris talks-will also
show some flexibility.
JAPAN: COMMUNIST VICTORY SMARTS
35 iA surprising show of strength by the Com-
munist Party in an Osaka by-election last Sunday
will heighten the Liberal Democratic sense of
alarm over the party's declining political fortunes.
Most Japanese political observers view the leftist
victory as a forerunner of serious setbacks for the
ruling party in the Tokyo Metropolitan Assembly
elections, which take place on 8 July. Moreover,
few media commentators are now optimistic that
the conservatives will be able to maintain their
majority in the Upper House after next year's
Diet election
3Y y Miss Takeko Kutsunugi, the Communist can-
didate in Osaka, is a physician who rode to vic-
tory on the shoulders of urban dissatisfaction
with Prime Minister Tanaka's domestic policies
and the mobilization of a reported 250,000 cam-
Tanaka campaigns in Osaka
paign workers. The Liberal Democrats fought a
last-ditch campaign and aimed it directly at the
Communists. In one personal appearance, Tanaka
reportedly warned that the Communists posed a
threat to free society and would ultimately crush
Osaka's numerous small and medium-sized indus-
tries(
3 `These emotional appeals did not bring out
Liberal Democratic voters. Only 72.7 percent of
those who voted for Liberal Democratic candi-
dates in the Diet elections last December turned
out Sunday; the comparable figure for the Com-
munists was an amazing 99.6 percent-1
5 Miss Kutsunugi's victory reduces the major-
ity f the ruling party in the Upper House to a
slim nine seats. It gives the Communists the mini-
mum 11 seats needed to introduce non-budgetary
bills in that chamber and will give the party a
greater voice in floor debate. The Communists
will now attempt to parlay this latest victory into
a successful bid for parliamentary leadership of
the "progressive" parties.
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ROMANIA: CEAUSESCU LOOKS WEST
4~-iPresident Ceausescu will become the first
Romanian chief of state since World War II to;,,
visit West Germany. He begins a tour-day visit on
26 June. The trip is part of Romania's efforts to
9 expand ties with the West and to guarantee its
place as an independent among European nations]
year, but that trip foundered on problems arising
from Romanian efforts to negotiate a large Ger-
man loan in advance of his visit. This time, how-
ever, Ceausescu has set no prerequisite. He report-
edly will ask Bonn for new credits, West German
guarantees for their investments in Romania, and
increased economic cooperation across the board.
On the political side, he will ask Chancellor
Brandt to sign a joint declaration of "solemn
principles" governing the relations between states.
Bucharest is pushing these principles, which stress
the equality, independence, and territorial in-
tegrity of all states, as a cornerstone to any agree-
ments on European security.
/ ._ LCeausescu had planned to go to Bonn last
month boosted bilateral economic cooperation.
He called on the Pope. On 4 June, Romania
became the first Warsaw Pact country to be
granted tariff preferences by the EC, and Bucha-
rest appears close to achieving its long-sought goal
of most-favored-nation status with the US. Such
agreements have as much political as economic
significance, and the Romanians read them as a
Western vote of confidence in their country
The Romanians have also increased their
military contacts with the West. The fact that
Romania is a member of the Soviet defense sys-
tem did not prevent Bucharest from playing host
to the chief of the British general staff in late
May. Under Ceausescu's leadership, Romania has
joined Yugoslavia in developing a subsonic
fighter-bomber aircraft that uses a Rolls-Royce
engine and numerous Western-made parts
a' Romania scored some successes in the West
earli r this year. Ceausescu's trip to Italy last
2~eausescu probably will not achieve all of
- -- ---- - .- A `I-- .... L.:
ect
of closer military ties is not likely to come up.
he trip, nevertheless, gives him another oppor-
tunity to use European detente as a means of
advancing Romanian national interests.
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East German border guards watch preparation of new crossing point
A 7 JTwo key symbolical events for West Ger-
many took place this week, the entry into force
of the inter-German treaty on basic relations and
the initialing of the elusive treaty of reconcilia-
tion with Czechoslovakia. Together with the So..
viet and Polish treaties, these pacts constitute the
core of Chancellor Brandt's efforts to normalize
relations with West Germany's former enemies in
the East.
' b (Bonn and Pankow exchanged ratification in-
struments on the inter-German treaty after the
West German constitutional court turned down
the Bavarian state government's second request in
three weeks to block the pact's entry into forcer
/ yThe court still has the treaty on its docket.
This week, it began to deliberate the treaty's
constitutionality after reversing a decision not to,48
disqualify a justice who had already expressed
approval of the pact. Although justices sponsored
by the opposition parties hold a four-to-three
edge, a verdict of unconstitutionality next month
remains unlikely; most Christian Democratic lead-
ers do not approve of the Bavarian challenge. A
negative verdict might encumber efforts to nego-
tiate other agreements pursuant to the treaty, but
would not nullify the pact itself.)
With its entry into force, the treaty will
quickly lead to several improvements in inter-
German relations. Among the most visible will be
the opening of several new border crossing points
and permission for West Germans to visit border
communities heretofore in the restricted zone.
Both Germanies have filed application for UN
membership, and Bonn expects Pankow to agree
to complete negotiations on the exchange of
diplomatic missions, possibly before fall.?
Czechoslovak Foreign Minister Chnoupek
went to Bonn to initial the Czechoslovak - West
German treaty on 20 June. The pact negotiated
this spring describes the most difficult obstacle in
the talks, the Munich Agreement of 1938, simply
as null and void, and thus avoids declaring when it
became so. The treaty also excludes legal claims
flowing from the Munich Agreement and its nulli-
fication, another difficult point. Like Bonn's
treaties with Moscow and Warsaw, it renounces
the use of force. Chancellor Brandt has indicated
his willingness to go to Prague in September to
sign the treaty, but there are signs that his hosts
want to move the event forward to July, possibly
to coincide with the opening of the Conference
on Security and Cooperation in Europe. J
la 'As expected, the conclusion of Prague's
negotiations with Bonn is rapidly clearing the way
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for Bulgaria and Hungary to establish diplomatic:
relations with West Germany. World War II did
not leave a residue of problems requiring treaties
of reconciliation with these two countries, and
negotiations are expected to proceed smoothly.
Bulgaria got its foot in the West German door
before Hungary. Talks are to begin at any
moment, and Foreign Minister Scheel is slated to
wrap up the loose ends during a visit to Sofia in
mid-August. Once Bulgaria and Hungary are on
board, the West Germans will have established
relations with all the East Europeans, save
Albania.
A NEW OPPOSITION TEAM
After several weeks of intra-party strife, the
opposition Christian Democrats managed to avoid
squabbling over personalities at their special party
congress on 12 June. Helmut Kohl, the minister..
president of Rhineland-Palatinate, was unopposed
in his bid to succeed Rainer Barzel as party chair..
man. Five deputy chairmen were elected also
without competition as several leaders of the
conservative and liberal factions either did not
seek or declined nomination. The election of
Kohl and three state-level party leaders as deputy
chairmen suggests that the party's domination by
its parliamentary delegation will decline.
Kohl's remarks following the election were
cautious. Being a new man, he obviously did noi:
wish to disturb the relatively harmonious at..
mosphere of the convention. Even so, the various
party factions still differ sharply over the party's
future orientation. The Christian Democrats will
convene again this fall to formulate a party
program. At that time they will have to decide
whether to remain on the right of the political
spectrum, as advocated by party conservatives
and by their ally, Strauss' Bavarian Christian
Social Union, or to move to the center as pro-
posed by party liberals. The new leadership team
is moderate, but the malor ideological battle re..
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Chairman: HBIrnuI Kahl (Minister-Presidant, i;hincltrnd- al~iunat:4
Deputy Chairmen: Gerhard Stoltenberg (Ministr:r-NI Io: nt,
Schleswig Holstein)
I lei;:rir:h Kontiplr:r lV,n ty leader, W0101111C
VVuslph,illu)
Hree; F iibinynr (Minister Nrasidnnl, l :Inn-
W!:rInemb(2rg)
I I,u:: K,d /nr (Cheirnan, CUU SOCI::I Curtimit!c
I Iclg.r Wcx (Chairman, CDU Woux;n,' Alliar::
Secretary-General: Kurt Biedenkopf
Treasurer: VVullhur LuiK::r Kiep
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Danish Prime Minister addresses NATO foreign ministers
:evidence for their concern Mr. Schlesinger's pres-
'?entation to the NATO defense ministers on 7
June and a Washington Post article.on the same
day disclosing a study being made in the Penta-
gon! upgrading the strength of NATO relative to
Warsaw Pact forces:]
.S .1 11 (though the French went along with the
proposal for a study of Atlantic relations, they
undoubtedly will take every opportunity to keep
it as narrow as possible. None of the Europeans
believe that specific monetary or commercial
matters should be negotiated in the NATO forum.`\
--in in the final communique that either NATO ob-
5'- ectives or NATO strategies are in for a change.
The allies fear that the US is preparing for a major
,overhaul of the alliance. They have taken as
Council begin a study of the Atlantic relationship.
The ministers agreed that such a study should be
made in view of "the profound changes which
were tak ng place in every field of international
-2activity.'~They avoided, however, any implication
[The French predictably refused to join in
any recognition of the US claims on the Euro-
c-yfr peans regarding the balance-of-payments costs of
SUS forces in Europe. The other ministers agreed
that the NATO Council could examine the ques-
tion, but gave no encouragement, even in private,
that the US could expect any joint European
action on the matterljjn fact, the allies probably
will want to evaluate the relationship between US
,balance-of-payments claims and US positions in
the international trade negotiations scheduled for
this fall before they do anything
`jr)'LThe NATO foreign ministers in Copenhagen Vj ~he allies concluded that the outcome of
last week lent modest endorsement to the US 55security conference preparations had justified
proposal for an intensive examination of alliance /opening the conference on 3 July. Expected
goals and relationships. Theirs was the first formal S'-Canadian and Dutch opposition to giving a green
multilateral response to the US call for a new light to the conference until the Soviets had
declaration of Atlantic principles. The ministers agreed to set a date for beginning force reduction
approved the decision to open the first phase of talks never emerged, and the two joined the allied
the security conference in Helsinki on 3 July and consensus that the allies should not link the two
reiterated their expectation that the Soviets wills sets of talksjlThe allies assume that it is Washing-
honor their commitment to begin force reduction- , ton's responsibility to convince the Soviets to
negotiations no later than 30 October.) settle on a date. In any case, they see the possi-
bility of delays in the second phase of the secu-
)The allied ministers went along with the US rity conference as giving the West leverage on the
suggestion that their ambassadors to the NATO force reduction timetable.]
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5-4j'The ministers' discussion of NATO prepara-
tions for the force reduction negotiations brought
out some of the differences that the allies will
have to settle before they can plunge into sub
":-stantive discussions with the East. West German
Foreign Minister Scheel noted Bonn's preference
for simultaneous negotiation of indigenous and
stationed force reductions. The other ministers
generally favored the US preference for initial US
and Soviet cuts. The allies also have differences
over whether constraints to accompany reduc-
tions should be applied to an area larger than the
f__ 3 reduction zone:flThe final NATO communique
gave prominence to the importance of "undimin-
,J' ished" and "indivisible" security by which the
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/ -
a
...i
h
+ ti
+h
u
h +h
h
on
----
ched
t
grea
ro
a
orouci
ICELAND: LACK OF LEVERAGF
)_Reykjavik's attem`'pt to use the base issue to
force the US and NATO to aid Iceland in its
fishing dispute with the UK has failed. Neither
pressure on the eve of the French-US summit last
month nor pressure prior to the NATO ministerial
meeting last week gained Iceland the leverage it
wanted in the Cod War. Although Iceland soon
will start the clock on base negotiations, its
chances for linking that issue with the fishing
dispute are waning.
In the week preceding the summit, Iceland
instigated several incidents at sea, stimulated
popular demonstrations against the British, and
railed at the US and NATO for failing to persuade
London to withdraw its frigates. Prime Minister
Johannesson led the way, declaring that Icelandic
opinion toward the base would depend on what
the US and NATO decided to do about the Brit-
ish naval intervention. Icelandic leaders charged
that the base at Keflavik afforded protection to
the US and mainland Europe, but not to Iceland
when it was faced with British "aggression."
The summit passed, but the government
kept up the pressure. Foreign Minister Agustsson
observed that he would be ordered to invoke
"immediately" Article VII of the base treaty,
calling for renegotiation of the agreement. On 8
June opposition leaders claimed that they stood
alone against invocation of Article VII at a For-
eign Affairs Committee meeting. On 12 June,
Agustsson informed the US ambassador that his
government intended to invoke the provision. At
the NATO foreign ministers' meeting, he notified
NATO of Iceland's intention, and the final move,
expected later this month, is the formal invoca-
tion of the article. The parties will then have six
months to work out a new arrangement. If no
accord is reached, either party can at any time
call for the closure of the base within 12 months.
The Icelanders' primary concern is fishing,
and little progress on the base issue is likely until
the fishing dispute is resolved to Reykjavik's
satisfaction. NATO Secretary-General Luns has
tried without success to restart fishing negotia-
tions by asking the British to withdraw with the
understanding that the Icelanders would not
harass British trawlers once the frigates were
pulled back. The British rejected the offer be-
cause Reykjavik would not give such a guarantee.
Both sides rejected a Norwegian offer to mediate.
The British, as intransigent as the Icelanders, may
become separated from their fellow disputants,
the West Germans, who have agreed to open talks
with Iceland later this month. Most of Iceland's
Scandinavian neighbors have backed Reykjavik.
If the fishing dispute could be settled this
summer, resentment toward the US and NATO
for not "protecting" Iceland may subside before
the six-month period expires. Communists and
other leftists in the government will try to keep
anti-base sentiment alive, but without the fishing
dispute the arguments for retaining the base are
generally acceptable to the majority of Ice-
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CEMA: UNEASY ALLIANCE
)Members of the Co_unc l of Mutual Eco-
nomic Assistance met in Prague earlier this month
to hash over the problems of economic integra-
tion and coordination for the years 1976 to 1980.
The East Europeans were especially interested in
implications of the Soviet economic setback last
year for their economies, as well as the longer run
reliability of Soviet material supplies.
Because of the drop in Soviet agricultural
output and the slowdown in industry in 1972, the
USSR failed to meet some of its export commit-
ments to the six East European CEMA members;
even more significantly, the USSR had to demand
above-plan deliveries of agricultural and industrial
goods from its CEMA partners. As a result, the
USSR last year ran an unprecedented trade deficit
with Eastern Europe on the order of $1 billion.
The CEMA meeting produced the usual ref-
erences to progress in economic integration, but it
also produced some complaints. Hungarian Pre-
mier Fock, in a post-session interview, said that
there was a ''healthy impatience" among the dele-
gates with progress to date. He singled out the
machine building industry, saying that duplica-
tion within CEMA "has not diminished but rather
increased." Polish Premier Jaroszewicz described
recent specialization accords in the engineering
industries as "a modest achievement" and pointed
to the need for a real breakthrough in industrial
cooperation.
The CEMA session reflected continued East
European concern over Soviet deliveries of mate-
rials beyond 1975. The East Europeans have for
some time recognized that if they want deliveries
from the USSR to increase, they must make fur-
ther investments in the Soviet Union, along the
lines of the investments already made in the So-
viet oil, gas, copper, and cellulose industries. Such
investments, however, no longer guarantee ade-
quate future supplies.
For some years, the Soviets have been warn-
ing Eastern Europe to look elsewhere for an in-
creasing share of its materials. Now, there is a
growing concern that Soviet deals with the United
States, Japan, and other Western countries may
cut into Soviet energy supplies to Eastern Europe.
Economic progress in a more integrated CEMA
depends not only on the ability of all members,
especially the USSR, to meet yearly plans, but
also on imports from non-Communist countries
to minimize the impact of unexpected short-
ages.
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SIUKL I
GREECE: ESTABLISHING A REPUBLIC e__
`7'-f fPreparations to transform Greece into a re-
public are continuing amid speculation over pos-
sible early cabinet changes and eventual forma-
tion of political parties. Although the forms of
government will change, Papadopoulos and his
military colleagues will remain very much in
charge.]
certain to become a party, and there may be
attempts to form at least four others. It can be
assumed that no party posing a major threat to
the regime will be permitted)
f~ Papadopoulos would like to rid the regime
o many of his military colleagues. Such a step
could prove dangerous to him, particularly if the
`7Z On 29 July the Greeks will be asked to vote army-the mainstay of the regime-disapproves./
"yes" or "no" on 34 changes in the 1968 consti- `Deputy Prime Minister Stylianos Pattakos has al-
tution. The changes eliminate all vestiges of the ready s uelched rumors that he will be stepping
monarchy and entrust wide powers to the new down.
presidency. A "yes" vote will embark Prime Min-
ister Papadopoulos on a presidential term that LPapadopoulos is
extends to 1 June 1981 and install the present likely to proceed cautiously with any changes,
commander of the armed forces, General Angelis,~rnaking only those that have the approval of his
as vice presidental.There have been predictions in main military supporters.?
the press that the changes will be approved by 97
percent of the electorate, but Papadopoulos' ad-
'?~ visers expect something closer to 80 percent.
TG 'The regime has announced that municipal
elections will be held by the end of 1974, but is
'7L) Tong with the referendum, the Greek press T, committed to do no more than set a date for
has been discussing the possibility that political- 11 national elections by that time. Thus. the forma-
parties may be permitted again sometime in 1974} tion of a parliament is far off.
.,)\Papadopoulos' "cultural organization" is almost
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SELKE I
TURKEY: PARLIAMENT UNDER PRESSURE
back he managed to maneuver the mili-
tary ack to the barracks this spring, Suleyman
Demirel, leader of the majority Justice Party, is
having trouble prodding a dawdling parliament to
take action on important pending bills before it
adjourns'.jAdjournment will probably come in late
75 June; the legislators are anxious to get out on the
hustings. Primaries are in the offing, and parlia-
mentary elections will be held on 14 October:
J 7 )Most of the bills on the agenda had their
origin in the military's intervention in March
1971. At that time, Demirel was forced to step
down as prime minister, and the military de-
manded the passage of tough internal security
measures, along with libeiral social and economic
legislation. Parliament has been dragging its feet
ever since. When the conservative Justice Party
7 71 Both lassitude and politics have had a hand
in parliament's slowness in dealing with the
reforms. Until Demirel recently got the lower
house to hold late sessions, the legislators had
stuck to a routine 20-hour work week. The op-
position parties-the Republican Peoples Party on
the left and the Democratic Party on the right-
have taken advantage, sometimes in concert and
sometimes individually, of parliamentary proce-
dures to thwart Demirel. The opposition has fili-
bustered, absented itself from sessions, demanded
time-consuming quorum calls, and offered dila-
tory amendments. Legislators from Demirel's own
Justice Party have added to his woes by leaving
Ank ra in droves to campaign in their constituen-
cies.,
'7 5 Un the past two weeks, the lower house of
parliament has managed to pass several of the
and the centrist Reliance Party agreed last April,, b reform bills and is debating others. Little has been
to form a coalition cabinet under Prime Minister done in the Senate, but prospects that at least
Naim Talu, Demirel promised that the reform some of the proposals will pass now seem good.
proposals would be adopted before parliament Most of the reform legislation will emerge so
quit for the summer.i watered down by the Justice Party that it will be
Prime Minister Talu and leaders of Reliance and Justice parties ride the camel of government;
Republican Peoples and Democratic Party leaders hold it back
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JCt..IiC I
ISRAEL: REMAINING, RELUCTANTLY
Prime Minister Golda Meir, despite misgiv-
ings, has decided to stay on in the top job. She
announced on 17 June that she would lead her
ruling Labor Party ticket in the October parlia-
mentary elections. Mrs. Meir clearly was prevailed
upon to remain by party leaders, particularly
Finance Minister Sapir, in order to avoid a bitter
succession struggle at this time.
Mrs. Meir was urged out of semi-retirement
in March 1969 on the death of Prime Minister
Levi Eshkol. Labor Party leaders then saw her as a
stopgap prime minister to postpone a bitter party
fight over the succession between the Labor Party
"Old Guard" and some of the younger leaders
like Defense Minister IDayan or Deputy Prime
Minister Yigal Allon. Mrs. Meir, however, quickly
established herself as a leader and quieted down
the quarreling factions, including the often free-
wheeling Dayan.
Mrs. Meir had for months been talking about
her desire to retire; her health is not good and her
family has pleaded with her to leave office. Her
desire to retire was outweighed, however, by
strong party loyalty and a desire to avoid any hint
of general Israeli disunity. Prime Minister Meir's
main pursuit will be to continue Israel's present
diplomatic course, to paper over the deep domes-
tic differences on Israeli territorial needs, and to
prevent Dayan from bolting the party line.
The announcement that Mrs. Meir will seek
another term will probably tone down the cam-
paign speeches of the major office seekers. Still,
her decision merely postpones the eventual power
struggle that will occur when she finally does
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SEC:RE T
SYRIA: ARMS POUR IN
Syria is emerging t" year as Moscow's main
arms client among the developing countries. The
high rate of deliveries, begun in mid-1972 after
Syria requested a speedup of shipments of arms
ordered earlier, has continued through the first
half of this year. Since January, Moscow has
delivered over $185 million worth of arms, com-
pared with $150 million for all of 1972. More-
over, during a two-day trip to Moscow early last
month, President Asad may have concluded an
agreement for additional military equipment.
Soviet aid to Syria during the past year has
focused on strengthening Syrian air defenses and
modernizing the army. Since late last year, Mos-
cow has introduced into 'Syria SA-6 surface-to-air
missiles, SA-7 hand-held surface-to-air missiles,
ZSU-23-4 anti-aircraft guns, FROG-7 tactical sur-
face-to-surface rockets, BMP infantry combat
vehicles, T-62 and JS-3 tanks, 203-mm. howitzers,
and 240-mm. mortars. The navy has received
Vanya-class minesweepers and Osa-1 class patrol
boats. The air force has received more than twice
as many jet fighters this year as in all of 1972.
The rapid rise in arms deliveries has been
accompanied by a 75-percent jump, to 1,400, in
the number of Soviet military technicians. None
of them are known to be involved in an opera-
tional capacity.
The new equipment and technical assistance
is not likely to improve significantly Syria's mili-
tary capabilities against Israel. Damascus has
neither the manpower nor the capability to
absorb large quantities of equipment and use it
effectively against an opponent like Israel. After a
sufficient amount of time for training, however,
the new equipment will provide a much improved
air defense system against potential Israeli air
SECRET
Differences between Libya and Egypt are
gro ing as their 1 September deadline for union
draws nearer. Presidents Qadhafi and Sadat appar-
ently have agreed to proceed with a proclamation
of the merger on schedule, but it is clear that the
union will be largely symbolic
[The two presidents apparently have not been
able to agree on any details of the merger and
intend to drag out the integration process. The
volatile Qadhafi is another big problem. While the
Lf Egyptians would be reluctant to entrust much
military power to him, Qadhafi himself undoubt-
edly expects to exert considerable control over
the military and, through this means and his "cul-
tural revolution," ultimately to dominate the
union. The Egyptians also expect to dominate the
union and Qadhafi's money.]
/ ,The "cultural revolution" poses a problem
of some magnitude. Cairo is disdainful of the
movement and has grave misgivings about its ef-
fects on the uniori the Cairo press, after a long
officially imposed silence, has recently begun
reporting the "revolution" in a guardedly critical
vein. The Egyptians have also begun to level
oblique criticism against QadhafiAn influential
Cairo columnist this week attacked Qadhafi,
though not by name, for undertaking "bombshell
measures" which do 1 do not take account of the
"greater realities.' !
! TSadat and Qadhafi are scheduled to meet
once again in early July to discuss the merger
further. That meeting and the months ahead will
probably be marked by increased tension in
Libyan-Egyptian relations.
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AFGHANISTAN: HELP FROM MOSCOW
Moscow has long provided most of fghanis-
tan's military and economic assistance. Recently,
the Soviets have begun to provide Kabul with a
new generation of armored vehicles, which will
increase the military's prestige more than its com-
bat effectiveness.
Ten Soviet-built T-62 medium tanks and
nine BMP infantry combat vehicles have been
observed near Kabul. The newly arrived T-62s
carry a more powerful gun than the T-54/55s that
have been the Afghans' main tank. The BMP, a
tracked, armored, amphibious vehicle carrying a
76-mm. gun and a Sagger anti-tank missile, will
help increase the infantry's firepower and mo-
bility. The armored vehicles probably were
ordered in 1971 when Kabul launched a program
to upgrade its arms inventory. Other equipment
covered by the 1971 arms accords included MI-8
helicopters, BTR-50 AP(--s, bridge-laying tanks,
artillery, and small arms.
Since 1956, Moscow has signed arms agree-
ments with Kabul valued at $450 million; more
than two thirds of the equipment specified under
these agreements has been delivered. The weapons
have ranged from small arms to MIG-21 jet fight-
ers and SA-2 surface-to-air missiles. Repayment.
terms on this aid have been the most favorable
received by any of Moscow's arms clients---a
75-percent discount on practically all purchases
with long-term repayment at very low interest:
rates.
The Afghan military will have difficulty
integrating the new equipment into the army de-
Soviet-financed irrigation canal; T-62 tank
spite extensive Soviet technical assistance. Some
200 Soviet military advisers and technicians are in
Afghanistan to assist in the operation and mainte-
nance of the equipment. In addition, over 2,200
Afghan troops have been trained in the USSR.
Nevertheless, Afghanistan's small and unskilled
population cannot provide enough men to handle
large quantities of modern and relatively sophisti-
cated equipment.
Soviet economic aid deliveries of about $600
million have accounted for half of the funds spent
on Afghanistan's economic development pro-
grams since 1956. Soviet aid has focused on ex-
pansion of the road network, development of a
power grid, extension of irrigation, and exploita-
tion of natural gas deposits. As with military aid,
repayment terms are as generous as any Moscow
has given. The USSR accounts for about 40 per-
cent of Kabul's foreign trade, supplying Soviet
machinery and petroleum products in exchange
for Afghan natural gas and agricultural products.
The USSR has held the pre-eminent position
in providing military and economic aid to Afghan-
istan for more than 15 years, but Kabul has been
able to maintain to a large degree its freedom of
action. Moscow has not sought to dictate Afghan
policies, but has sought to make sure that no
other power can use the country to threaten
Soviet interests. The Afghans have been success-
fully playing off the great powers one against the
other for more than a century. During the past 20
years, Kabul has sought, and received, economic,
military, and technical aid from the West in an
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SECRET
I
mated $31 million in credits, leaving $62 million
in credits outstanding. It is likely that some other
old projects will be reactivated.
11 he U55K has recently taken steps to reacti-
vate some of its aid projects in Ghana. Moscow
has been able to do this despite the inability of
the two countries to renegotiate an extension of a
debt moratorium that expired last December.
Accra apparently has made no repayment since
the expiry, and its failure to pay has been a major
stumbling block since discussions on resuming aid
began.
A Soviet delegation arrived in Ghana early in
June to talk about reviving several Soviet projects
abandoned after Kwame Nkrumah's overthrow in
1966. The Soviets seem disposed to revive a pre-
fabricated housing project in Accra and a fishing
complex at Tarkwa. Ghanaian officials also want
the Bui Dam project, important for industrializa-
tion of northern Ghana, reactivated. When Soviet
aid was suspended, Ghana had drawn an esti-
I > JPresident Medici has announced that he has
chosen as his successor retired General Ernesto
Geisel. Geisel, whose selection will be formally
ratified by an electoral college consisting of con-
gressmen and delegates specially chosen from the
states, will begin a five-year term in March 1974)
No real rival ever emerged to challenge
Geisel, whose name was the most mentioned from
eculation be
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an
p
g
/c Medici banned all public discussion
o the issue to preclude debate, which he feared
would promote divisiveness within the military.
Although nearly every Brazilian general would
like to be president himself, the commanders
agreed on Geisel because they regard him as com-
petent, honest, and able to continue the success-
ful policies initiated by the Medici administration.)
basic' policy direction-top priority on economic
development, stress on national security, a grow-
ing role in world affairs, and an independent, but
The elevation of Geisel means that Brazil's
Suspended programs financed by other Com-
munist countries may also be revived. Last week a
Hungarian delegation talked with President
Acheampong about resuming Hungarian projects
abandoned in 1966. The value of unused Hun-
garian aid is estimated at $13 million. Budapest is
prepared to develop Ghana's bauxite deposits
jointly with other countries and is willing to help
Ghana's textile industry. Another Hungarian
delegation is scheduled to visit Accra next fall to
ratify any agreements reached on cooperation.
The Chinese may have agreed to reactivate some
projects financed under 1961 and 1964 cred-
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SECRET
basically pro-US, foreign policy-will remain the
same. At the same time, Geisel's style and the
composition of his overning team will differ
from those of Medici
I JSome Brazilian observers have suggested that
Geisel may in fact be disposed to loosen the
bounds on political activity. This hope is based
C largely on his close identification with the late
president Castello Branco and certain other offi-
cers widely regarded as opponents of harsh gov-
ernment controls.
President Allende is finding less and less
room these days to exercise his gift for political
maneuver. Already under pressure from the op-
position and the military, he now finds that the
usually cautious Communists are joining the
extremist Socialists in forcing a harder line on
him.
The Communists have evidently decided to
abandon their support of Allende's strategy of
compromise and maneuver in favor of cracking
down at every opportunity on the increasingly
obstreperous opposition. This is a marked, though
probably tactical, shift that brings the Commu-
nists more in concert with the Socialists than the
two major coalition parties have been since they
took power in 1970 with Allende's election. Their
improved cooperation led to the unprecedented.
action by party leaders of publicly rebuking the
President for having met with striking copper
miners last week. Although Allende responded by
defending his presidential authority, strike nego-
tiations have gone no further.
SECRET
The first national congress of the Popular
Unity starts on 22 June. It will probably ratify
the new tougher line that has crystallized in the
holdout against the copper strikers' demands. One
sign of this is the choice of radical Adonis Sepul-
veda of the Socialist Party as chairman of the
coalition, a post that had previously gone to one
of the minuscule parties. Leaders of both Com-
munist and Socialist parties are galled by the use
of the strike and a dozen other issues to obstruct
and defy the government. As a result, the two
parties are using much rougher tactics against all
forms of opposition, lumping these together as
"fascist."
Among the weapons they are using against
the opposition are mobs and armed bands of
thugs. At the same time, government officials are
ordering more repressive police and army moves
tion is taking the brunt of this crackdown. The
Christian Democrats charge that some national
police (carabineros) who objected to tolerance of
extreme leftists have been forced to resign.
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Allende is not alone in pressing for continued
The Communists have pointed out, quite
correctly, that the services are not united on
conditions for entering the cabinet and that the
appointment of those most amenable could fur-
ther divide the military to the government's
advantage. Even the Socialists now appear less
opposed to accepting selected officers. Socialist
Defense Minister Toha's announcement on 19
June that new benefits for the uniformed services
are imminent strengthens the prospect that
military suonort of the government.) 125X1
INTERNATIONAL MONEY
The dollar reached new lows this week on
European foreign exchange markets before rally-
ing slightly. The decline was attributable to a
number of factors---chiefly, uncertainty about the
adequacy of the new US anti-inflationary pro-
gram announced by President Nixon and concern
that US agricultural exports may be restricted in
the future. West Germany's Bundesbank inter-
vened to support the Dutch guilder, which is at its
floor against the mark within the narrow Euro-
pean currency band. European reaction to the
dollar's decline and to stress within the band
remains low key, but further runs on the dollar
will generate demands in European capitals for
more positive action. The Europeans are likely to
increase pressure on Washington to support the
dollar.
The dollar's devaluation since the beginning
of the year has not prompted strong counter-
measures by the major US trading partners. Al-
though the dollar has now depreciated almost 9
percent on a trade-weighted basis since the Smith-
sonian Agreement of December 1971, only a
handful of new foreign export subsidies and tax
incentives have been introduced. No significant
new tariff restrictions or non-tariff barriers have
been imposed against US goods, and no foreign
capitals have intervened substantially in the ex-
change market to halt the dollar's slide.
Several minor measures, however, have been
introduced to soften the adverse impact of the
dollar's devaluation, particularly on politically
sensitive industries. Tokyo has offered $800
million in financial relief for small and medium-
sized industries hurt by the currency realign-
ments. Brussels is considering increasing the funds
available for export promotion, for underwriting
export credits, and for exchange guarantees. New
tax incentives for exports and for investment in
the export industries have been introduced in
Austria, and Norway has proposed interest-free
loans and tax refunds to compensate its exporters
for devaluation losses on dollar-denominated
contracts.
A number of countries have not introduced
countermeasures because so little of their trade is
with the United States. In addition, the econ-
omies of most of the major US trading partners
are expanding rapidly-too rapidly in some
cases--and foreign governments are consequently
anxious to hold down their own inflation by
purchasing cheaper US goods. They are also con-
fident that burgeoning domestic demand will be
adequate to compensate for any losses in sales of
domestically produced aoods in the 115. ~ 25X1
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Secret
Secret
Approved For Release 2007/12/18: CIA-RDP79-00927A010300070001-2