WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010400020001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 21, 2016
• Document Release Date: November 15, 2007
• Sequence Number: 1
• Publication Date: July 13, 1973
• Content Type: SUMMARY

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Secret
Weekly Summary
Secret
13 July 1973
No. 0378/73
State Dept. review completed Copy N2 50
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CONTENTS (13 July 1973)
rip= ;her,? ever
1
Still Not in Focus
2
International Money
3
Bahamas: Nationhood
4
Grain Prospects: Good In USSR;
Eastern Europe
6
The Soviets and the Arabs
7
Europe: Security Conference Opens
8
Bulgaria-US: New Era
9
Germany: Flies in the Ointment
10
UK: Heath's Three Years
11
Italy: Center-Left Under Way
12
Indochina
16
Japan: Confidence Rising
MIDDLE EAST
AFRICA
16
China: Important Meetings on Tap
17
UN Middle East Debate
18
Pakistan: Economic; Bhutto's
Situation
20
Lebanon: New Cabinet, Old Problems
20
Iraq: The Dust Begins to Clear
21
Rwanda: Changing the Guard
WESTERN
HEMISPHERE
21
Nepal: Up in Flames
22
Chile: A Quieter Patch
23
Guyana: Burnham Marching On
24
Uruguay: Settling Down
Comments and queries on the contents of this
publication are welcome. They may be directed to
the editor of the Weekly Summary,
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STILL
NOT IN
FOCUS
'
J The The "year of Europe" has had rough going
so far. Recent monetary, trade, and political de-
velopments have, on balance, tended to erode
confidence across the Atlantic, and the Europeans
have made little progress in pulling themselves
together for a fruitful dialogue with the US.
In the absence of real economic factors: to
explain the troubles the dollar has been having
these past weeks, many Europeans attribute the
continued unloading of dollars to the general lack
of confidence in the way the US manages its
economy. The European reaction has not been
uniform. While the French, especially, profes!, to
fear the competitive edge given US exports by the
depreciation of the dollar, Bonn sees the dollar
devaluation as one way to slow Germany's exces-
sive export growth, and others see it as a probably
temporary, if unwelcome, effect of the floating-
rate system.
In any case, the prolonged uncertainty has
made negotiated reform of the international
monetary system extremely difficult. The EC
joint currency float has become a symbol of
European unity, and Bonn's decision to revalue
rather than float the mark unilaterally was due
largely to this political consideration. Although
many authorities consider the currency band a
wrongheaded approach to economic unity, its
demise under market pressures would be a severe
psychological blovv to the community and to its
ability to negotiate with the US.
Page 1
While the community has been more cohe-
sive in elaborating a common position for the
coming multilateral trade negotiations than on
monetary questions, the trans-Atlantic atmos-
phere leaves much to be desired in the trade area
as well. The French, for example, have used the
monetary situation to buttress their insistence
that the trade talks take account of the commer-
cial advantages the US may gain from a devalued
dollar. Moreover, the other EC members are
having great trouble in trying to persuade Paris to
permit the community to offer any of the com-
pensation claimed by the US for losses it will
suffer as a result of the EC enlargement. On top
of this, the sudden and unexpected controls on
certain US farm exports have aggravated the situa-
tion. In the view of at least some European
importers and farmers, these controls call US
reliability as a supplier into question-even as the
US presses for freer access to the community's
agricultural market.
On the political side, the anxieties the Euro-
peans have felt as a result of US-Soviet agree-
ments at the recent summit meeting were alle-
viated by President Nixon's briefing of NATO
perrianent representatives in California last week.
Disc!uiet nevertheless persists. Europeans fret
about the adequacy of US-NATO consultations
and about the long-term consequences for Euro-
pean defense of the US-Soviet understandings on
the Ase of nuclear weapons. These misgivings may
account for recent hints from France that it may
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be reconsidering its reservations about European
25X1 defense cooperation. This otherwise helpful sign
is mitigated by the uncertainty of Paris motiva-
security is a suspicion that West Germany may
drift into neutralism in the new area of super-
power detente.
=a large element in France's thinkinq about
tions.
While the Europeans are aware of the rela-
tion between these economic, political, and mii-
tary issues, they nevertheless hale yet to find a
way to bring the issues into focus for d scussion
either among themselves or with the US. A meet-
ing in Helsinki ast week of the EC Political Corn-
mittee made clear that France still resists corn-
munity discussion of the economic am political
dimensions of US-European relations. The Britik:h
have proposed that the political committee pre-
pare a 'working document" for the N ne on a
European identity vis-a-vis the US, on i others
among France's partners appear to be ieve that
Paris can be brought gradually ino a cr,r prehen-
sive review of these issues. Even f th s proves o
be the case, it will still be difficult for tnF Nine o
reach a concerted position on an Atlaritic declara-
lion by the time the President visits -,roue this
25X1 fail. The foreign ministers of the Nine .vill, how-
ever, take a first stab at sorting oat their views it
25X1 a meeting on 23 July.
,4 -5
Ifter fallinq to new lows on international
money markets last Friday, the dollar strengtn-
ened this week against the major European cur-
rencies and against the Japanese yen. I he major
impetus to the rally was speculation that the
United States was about to intervene saustantiai v
in the exchange markets. An ann :)uncement th it
US "swap lines" with foreign central banks had
been substantially enlarged was interpreted by
many traders as a signal that the United Stat?s
was preparing to act in suppor-i of the doilcr_
Bundesbank President Kiasen added to tnis sen i-
ment when he announced that the Americans a`e
prepared to intervene and want to see: the dollir
25X1 supported. The West Germans,
entered the market this
week for the first time since March to support the
dollar. The dollar purchases reportedly were very
small, and the rally stalled Thursday when inter-
vention failed to meet expectations.
Intervention alone is unlikely to lead to a
sustained recovery of the dollar in 1973, although
the longer-term outlook is somewhat more favora-
ble. The near-term burdens on the dollar-infla-
tion, the psychological impact of domestic politi-
cal uncertainties, and the potential damage to the
US balance of payments by agr cultural export
onto uls -clearly far outweigh in traders' minds
the longer-term prospect for improvement in US
-glance of payments resulting from the already
substantial devaluation of the dollar.
International money managers, representing
the large multinational firms, commercial banks,
some less developed countries, and the big oil
producers, believe that in the short run other
currencies, particularly the German mark, are
more likely to appreciate than the dollar. To the
extent the money managers act on this belief, it
becomes a self-fulfilling prophecy. The German
marl is the currency favored by traders because
of its remarkable performance in the last year, the
coat nuinq strength of the German economy, and
Bonn's aggressive anti-inflationary pro-
gram-
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BAHAMAS: NATIONHOOD
(p rThe colorful independence ceremonies in the occupied with their own unity problems. A small
Bahamas on 10 July introduced political changes group of white Bahamians on Abaco Island feared
that are more a matter of form than of substance. life under an independent government controlled
The Bahamas have been almost completely self- by blacks, and they lobbied before independence
governing for 20 years, and Lynden 0. Pindling, for the right to remain under the British crown.7
the islands' first black prime minister, has led the I (Their threats to resort to violence have since died
country since 1967. Independence will, however, down. Most "secessionists" seem reconciled to
permit the Bahamians to make themselves heard independence, and there remain only a few hot-
on international issues for the first time. The heads who might foment (minor violence on this
islands' basic alignment with the West should issue7
remain unaltered, but the government will side
with other small countries against the large ones
on a number of issues. Because of its small size,
the new nation is at first unlikely to send diplo-
mats to posts other than Washington, London,
New York, and perhaps a Caribbean capital or
two,)rbut limited relations of some sort with
Havana are likely soon-primarily because CLUba,
like the US, is a next-door neighbor?
(y [The moderately nationalistic Pindling gov-
ernment enters independence in good political
shape at home. There are no significant extreme
leftist or black radical organizations in the islands
to pose an internal security threat. Legal opposi-
tion parties exist, but are quite weak and pre-
yr TEconomically the Bahamas are on shakier
ground. Foreign investors remain uncertain about
the Pindling government's economic intentions
even though it has said it will follow a pragmatic
policy designed to encourage foreign capital in-
flows. The economy is vulnerable to sudden fluc-
tuations in tourism, a notoriously unpredictable
industry, but the islands' near-perfect climate,
their proximity to the US, and their suitability as
sites for oil refining and transshipment facilities
are advantages the government is eager to capital-
ize on7
IPindling and his government intend to real-
ize financial and possibly material com-
pensation for the Bahamas from the
presencelcthere of three important
defense-related US bases. Temporary
arrangements are being made that will
extend the old US-UK agreements
under which the bases were established,
but the negotiation of new agreements
could b time-consuming and com-
plicated1fhus far the Bahamians have
not ti
d th
i
h
ppe
e
r
and on their formal
asking price or their negotiating strat-
egy, but indications are that they will
be well prepared for talks with US of-
ficials. Pindling does seem convinced,
however, that his country's security
rests upon a continued close associa- 25X1
tion with the US, so protracted Baham-
ian unreasonableness in the base nego-
Independence Congratulations
Prince Charles and the Pindlings
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he Soviet grain crop this year could reach a
record 194 million gross tons (157 million net
usable tons) if favorable weather prevails for the
rest of the growing and harvesting season. 1 he
previous record of 150 million net tons was set in
1970; last year only 134 million net tons were
harvested. Even if a record harvest materializes,
the Soviets will need to import about It) million
tons of grain during fiscal year 1974 to cover
domestic and export requirements.
adequate rainfall and cool temperatures. During
most of June it was extremely hot and drier than
Eastern Europe: Major Grain Producing Areas
The largest acreage ever was sown to spring
grains, more than offsetting the shortfall in the
sowing of winter grains. The total area sown to
grain is at the highest level since 1965. As in
1972, the Soviet strategy was to sow relatively
more area to feed grains than to the lower yied-
ing spring wheat in order to give the greatest
possible support to Brezhnev's livestock progra-n.
So far, both winter and spring grains have
been developing well. At the end of June, mois-
ture conditions for the winter grains were betL.er
than normal and far better than last year. these
grains are now being harvested. As for the spring
grains, timely rainfall as well as improved organi-
zation seem to have gotten the crop oft to a good
start. They are now at a critica stage, requiring
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Harvesting
usual in much of the important New Lands area.
More of this weather in July could easily erode
Soviet hopes for a harvest substantially better
than the record year of 1970.
Through mid-June, the Soviets had con-
tracted for about 9 million tons of grain for
delivery by the end of fiscal year 1974. Almost 7
million of this was purchased from the US. Some
of the Soviet purchases are slated for delivery this
summer and fall and, therefore, should be viewed
as covering shortfalls in the crop last year. In any
case, more than 6 million tons must still be ,:our-
chased to cover the estimated 15 million ions
required for fiscal year 1974. During the last
fiscal year, the Soviets imported about 27 million
tons of grain, over half from the USI
AND ALSO 1 E~~STERN EUROPE
Tune raa?4ave improved the prospects or
Eastern Europe's grain harvest this year, and it
could total about 83 million tons if average gr: w-
ing and harvesting conditions prevail this summer.
This would be a drop of only 3.5 percent from
the record 1972 crop and an increase of 17 per-
cent over the annual average in the 1966-70
period. This year, the use of fertilizer increased,
and larger areas were seeded to wheat and corn at
the expense of lower-yielding rye and oats. Ac, a
result, the output of corn may exceed last year s,
and the quality of all grains should be better than
last year.
The winter grains-wheat, rye, and barley-
were sown later than usual last fall, but a mild
winter prevented excessive damage. One of the
driest winters on record in East Germany, Poland
and Czechoslovakia reduced soil moisture to
dangerously low levels by 1 April so that officials
were pessimistic about crop prospects. Rainfall in
April and June, however, has improved the out-
look, and it is now expected that yields for wheat
and barley will be above average. Both grains were
sown on larger areas than a year ago.
Prospects for the spring-planted grains-
barley, oats, and corn-are uncertain because of
weather. Cold, wet weather in April delayed corn
plan-:ing in Hungary, Romania, and Bulgaria, and
slowsd development of barley and oats in most
countries. May was hot and dry, adversely af-
fectiig germination and growth of spring crops in
Hungary and Czechoslovakia. On 30 June, soil
moisture levels were 15 percent or more below
normal in Bulgaria, East Germany, and Hungary.
Even with a good grain harvest, Eastern
Europe will still need to import between 8 and 9
million tons of grain in fiscal year 1974. A large
share of these imports will consist of feed grain to
support record numbers of livestock. Imports
could go even higher depending on the output of
important non-grain feed crops in the northern 25X1
countries. The upward trend in purchases of pro-
tein meals by all East European countries will
probably continue in the coming year.
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I [Moscow is engaged in a flurry of d plomat c
and political activity in the Middle East aimed at
preserving its own position in the area; is a boners
the Soviets hope to pick up infcrmatiorl on whit
the Arab nations intend to do next in their dis-
pute with Israel. Not the least of the Soviet dit-
liculties in this quest is how to explain that better
relations with the US do not mean a reduction n
Soviet support for the Arab cause.7
dispatched senior politburo member Andrrcy
Kirilenko to Syria to represent the USSR at the
opening of a new phase of the coviet-stronsoruud
Euphrates Dam project. During its v -, i he net
with Syrian Government leaden and tin) fiqur s
rorn the Baath and Communist parties His pub-
lic remarks were carefully calcul,ited to reassure
his hosts that the Soviets still support Israeli with-
drawal from all occupied territory " lire ofterE,d
nothing more in the way of practical aid, no v-
rever, than the dire prediction that if i'ie Israe is
do not move toward a ;ust ~,ett'Cmeer t, they will
"inevitably clash with the growing po,%-.r of tie
Arab people." This did riot irnpi ess :Pu Syrians,
who responded by lauding Sovie'. ecc~niwnic help
Tut made only passing reference to Soi:-. sup,,)( rt
n the Arab-Israeli confrontation.?
mediator or that it believes there is much mileage
to be gained by inserting itself in the stormy
Svrian-Lebanese-fedayeen relationship)
20 Some of the USSR's more serious problems
in the Arab world will be aired during the current
visit to Moscow by Egyptian President Sadat's
national security adviser, Hafiz Ismail. Soviet-
I- relations have gone from tepid to cool
f)ne step was taken last wee.< where Moscow /) over the last few months, and both sides have
' [From Syria, Kirilenko went an to r._?irut this
25X1 meek. he sought
the visit aril since his arrival has hart meetings
with over nment leaders and Lebanese: Comrru-
nrstsT Soviet Foreign Ministry official,. used tie
it{
Moscow has no desire to complicate Lebanel.se-
Syrian relations arid, indeed, is urging rrrstraint in
both parties4Presumably Kirilenko has taken this
line, at least with the Lebanese, but it is doubt'ul
that Moscow expects it will be able io act as ;l
some explaining to do. The Egyptians will want
morc authoritative Soviet explanations of Soviet
policy in the Middle East in light of the Washing-
ton summit meeting. the Soviets are concerned
that Cairo is about to take further action against
their position in Egypt and will want to compare
motes on the resumption of the UN Security
Council debate on the Middle East. Soviet offi-
cials have expressed annoyance at Egyptian fail-
ure to consult on this subject and say they were
taken by surprise by some of Egyptian Foreign
Minister Layyat's comments on the Palestine issue
at the security council debate in June. f he UN is
expected to resume consideration of the Middle
Last later this month, probably on 20 July.7
I he results of these consultations will prob-
.;: lv be mixed. I he Soviets can cite the treatment
of the Middle East in the US-Soviet communique
as proof that they have riot sold out Arab inter-
ests, and they can repeat their standard support
for the Arab position on Arab-Israeli issues. The
Aral, leaders, however, are looking beyond the
wording of the communique to the evidence of a
broader Soviet interest in improving relations
with the West. I his they take to be the true
barometer of what help to expect from Moscow,
and they have made it clear that they do not like
what they see.
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SECURITY CONFERENCE OPENS wants an early conclusion to the conference. The
ministers eventually decided that the next stage
rAfter six months of preparatory talks, the will begin on 18 September, as the West desired;
41 Conference on Security and Cooperation in in order to mollify the Soviets, they agreed that
25' Europe opened in Helsinki last week with a five- preliminary organizational meetings will get under
day meeting of foreign ministers. There were 1-ew way in late August. The West resisted Soviet pres-
surprises, but the meeting highlighted the dif- sure to make plans for stage three, insisting that
ferences among the
artici
t
p
pan
s and suggested progress in stage two must first be assessed.r
that the substantive phase of the conference has
its work cut out for itl L1 rThe opening presentations in Helsinki
3, vealed no willingness on anyone's part to concede
TThe ministers adopted with relative dispatch Z basic positions before the real bargaining gets
,~. the agenda "mandates" on security, economic under way. Soviet Foreign Minister Gromyko
and scientific cooperation, humanitarian conta.:vts, ?' reiterated Moscow's position that unconditional
ILA and follow-up machinery. These had been ham-,L4 recognition of the inviolability of frontiers is of
mered out in the preparatory talks. Committees prime importance. The Western delegates, per-
will use the "mandates" as the basis for their -L$ceiving in this emphasis a desire to sanctify the
work during the next stage of the conference. I he status quo in Eastern Europe, stressed self deter-
ministers had more difficulty agreeing on other mination and the importance of human contacts.
procedural questions, largely because Moscow West German Foreign Minister Scheel, in
Conference Greetings
Gromyko escorted I ~ v Foreign Minister Kar/alainen
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particular, challenged Soviet concept ons with lay the groundwork for a Balkan regional disarma-
pointed proposals for the free movement of men,, conference. Bucharest has already ap-
journalists, tourists, and public,itions between proached Turkey about taking part in such a
Fast and West.1 gathering. Tito and Ceausescu will have a chance
rThe West Europeans, hopett l that an agree-
ment enhancing the security and welfare of
Europe can be attained, consider the precise
terms of proposals important and worth arguing
about. hhey doubt that the US shares their sense
of priorities and suspect that Washington might
be willing to accept an innocuous outcome in
exchange for gains elsewhere. H us us they will be
reluctant to see the talks acquire a momentum
-hat might sweep them along against tneii
udgment. Stage two may tar_r(_cessiJo
period, proposed ten principles over Wig iutrire
relations between European states. 11-11,-V arnoent
to an international "hands oft' apps oach. One
principle would forbid "instigating or tolerating ?
emigre subversive or terrorist activity; others ire
aimed at limiting worrisome problems like ir-
redentism, military pressures and disregard for the
rights of small states.
scheduled to begin on 15 July.
BULGARIA-US: NEW ERA
?7 (Along with the other East Europeans, the
i' Bulgarians are taking a friendlier attitude toward
better 7the JS. The warming trend was first discernible
t i rr el when Secretary Rogers met with Foreign Minister
tvlladenov at the UN last November, but during
the ast two months Sofia's desire for improved
relations has become more evident)
ua y a va
,.ountries can and must establish mu
tageous relations. Peking has replaced Washington
as the archfiend in the Bulgarian press.
L G For three weeks in May, a four-man US
customs team visited Bulgaria to train some 50
customs officials in narcotics control. This train-
ing was part of an agreement reached earlier in
the year that also provides for exchange of intelli-
gen(-e on drug smuggling)
f?omania obviously believes that meaningful 2. (Bulgarian foreign policy is an appendage of
negotiations will begin only at the nfext rouna of kSoviet policy, and Sofia's more positive attitude
talks. Foreign Minister Macovescu's address left toward the US reflects Moscow's interest in
no doubt that to Bucharest, Europe in security .t detente. The Bulgarians, however, have reasons of
and military problems are inseparable He called their own for wanting improved economic re-
the
i
ti
for the dismantling of military Lases r)r the terri-
tories of others, a gradual redu_tion :ot military
troops and budgets, a renunciation ce maneuvers
on the borders of neighborinc states, and the
creation of denuclearized zones in Europe.
I he Romanians are wasting iittir' time in
mounting a campaign to link the se~:!ar ity con-
ference with the later force redu:tion talks ano to
ven
on g
lations with Washington. The recep
customs officials, as well as the improved treat-
ment of the US in the Bulgarian press, is designed
to create a good atmosphere for the Bulgarian
trade delegation scheduled to arrive in Wash-
ingirrn on Sunday. The Bulgarians hope that this
delegation will open a new era of improved
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GERMANY: FLIES IN THE OINTMENT
.2. (Signs of improved relations between the regatta in the Baltic Sea. These incidents add to
Germanies were overshadowed this week by more the skepticism with which many West Berliners
30 shooting and an angry demonstration at the Ber- view Brandt's Ostpolitik.~'
,Rlin Wal'
31 rTheir concern will increase if the East Ger-
~D rfhe East and West German foreign ministers, y mans continue to reject applications for visits to
Otto Winzer and Walter Scheel, met in Helsinki 2East Berlin during the World Youth Festival from
} on 4 July and agreed that permanent missions 3 28 July to 5 August. After first threatening to
33 should be established in East Berlin and in Bonn 'grant access only in "hardship cases," the East
by late summer. Egon Bahr, who has been seeing ) Germans reportedly acquiesced in a suggestion
his East German counterpart to iron out derails from the West Berlin Senat that they appeal to
on the missions, publicly stated that he expects West Berliners not to visit during the Festival.
the West German representative to be in residence Pankow, however, began rejecting visit applica-
in East Berlin on 15 September.I tions this week. The explanation to Western of-
ficials that the East Germans wish to prevent
D /Another sign of better relations has been the "another Munich" is self-serving; the East Ger-
31 entry into force of an agreement providing for mans are primarily motivated by a desire to
one-day visits by West Germans to formerly re- ensure that the anti-imperialist flavor of the
33 stricted East German communities. This agree- Youth Festival is not diluted. The East Germans
ment, part of the inter-German basic relations
treaty package, was at first ignored by Vest
Germans, but authorities in states bordering on
the East are now receiving numerous applications
for visit permits. Thus far, no real problems have
arisen during the visits?
7A rn contrast to these signs that the Germans
are edging toward a modus vivendi, the incident
? at the Berlin Wall suggested that the relationship
31 between East and West Germany will continue to
be an uneasy one. Border guards foiled are at-
tempted escape by opening fire on three people,
one of whom was reportedly wounded. An angry
group of West Berliners later ripped a hole in the
wall. The East Germans subsequently protested,
saying that only their "restraint" prevented a
major incident?
219 rThe East Germans demonstrated in a less
d, dramatic, even petty, fashion their claim that
there are no political ties between West Berlin and
30 Bonn. To stress that West Berlin is a separate
political entity, the East Germans continue to
33 insist that a separate agreement be signed between
the East German sports organization and the West
Berlin chapter of the West German sports federa-
tion. To emphasize the point, the East Germans
raised a West Berlin flag at an international
have attempted to lessen the effect of their action
by stating that they will not curtail access by
West Berliners or West Germans to other parts of
East: Germany. Any restriction on access, how-
ever, is viewed negatively by West Berliners, who25X1
are already concerned that while Ostpolitik has
brought some benefits, their basic situation has
not improved significantly.
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,>%&[In office since 1970, Prime Minister Heath
has accomplished much of what lie set out to do.
He still faces problems, primarily those affecting
labor and the economy. His success in controlling
inflation and maintaining industrial peace w 11
largely determine the outcome of the next general
election, which must be held before mid-] 9751
to be renegotiated. The Industrial Relations Act,
hated by the unions, remains in effect; and while
some of its provisions may be moderated, the
Heath government will not agree to abolish the
act and allow the country to drift back to the
labor chaos that existed earlier)
.;' 1EC membership is still the cause of some
ft he Heath government has f jlfilled many of friction. The opposition Labor Party is on record
his campaign promises; and some of his reforms, +' as intending to renegotiate the terms for member-
particularly in taxation, are beginning to have an 3bship if it returns to power, and Enoch Powell,
impact. Britain's economic growth rate has in-
creased to close to six percent, partly through
expansionary government budgets. Unemplo/-
ment, which rose following Heath's election, is
now at a politically tolerable level.?
F' jHeath has been less successful in dealing
with inflation. Fie has been unable to contrDl
rising food costs. He imposed a freeze, and thf n
controls on wages and prices. The government d:d
manage in this way to slow down the rate of wage
rises. Price inflation, however, continues at about
nine percent annually, and food costs have gone
up more than 15 percent in the past year. This
has caused concern among the genera! public and
will prompt labor to press for rel ef. The govern-
ment is consulting sporadically with the Trades
Union Congress in an effort to encourage the
unions to hold the line voluntarily on wage in-
creases. The unions are unlikely to cooperate;
they are more likely to demand viage increases 3s
long as prices, especially food prices, continue to
go up./
:V_?rAfter 1972, the most strike-ridden year in
Britain for nearly half a century, the labor scene
was almost bound to improve. A controntation
earlier this year between the unions and the gov-
ernment over the wage-price controls was averted
largely because of Heath's firm stand and the
r)oor financial condition of some of the unions.
This fall will bring another testing period because
contracts involving the several militant onions are
long a thorn in Heath's side, is strident in his
opposition to EC membership. According to a
recent public opinion poll, popular opposition to
membership is increasing. The percentage of
voters wanting to pull out of the EC has nearly
doubled in the past six months, and 42 percent
now favor a renegotiation of the terms. This dis-
play of popular displeasure could strengthen
Britain's hand in internal EC negotiations. The
domestic inflationary pressures, in particular, will
reinforce London's desire to reform the expensive
EC farm policy.
)Heath has been unable to settle the Ulster
problem, but some progress has been made to-
ward reaching a political solution. The Labor
Party thus far has supported the government's
policies but recently stated that unless the Ulster
moderates prevail and the situation improves, it
may reconsider its position.)
jr Although the conservatives suffered setbacks
i; several recent local and by-elections, the party
aseems inclined to read the political signposts
optimistically. Its record thus far has been good,
and if it can master the economic problems now
before it, it is likely to win the next election. The
opposition Labor Party is torn by dissension and
is unlikely to recover within the next year. The
Liberal Party, which has made a good showing in
several by-elections, is not a serious con-
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ALEKLY SUMMARY
25X1
25X1
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ITALY: CENTER-LEFT UNDER WAY
3? (though the new center-left government
r should enjoy smooth sailing for a while, its pros-
pects over the longer run are threatened by
39 lingering dissension among and within the coali-
tion parties. The new prime minister, Mar ano
Rumor, was able to present a government to
President Leone after only 17 days of negotia-
tions. The key development was the decision by
the Socialist Party to rejoin the government after
a year in the opposition?
-J-Ij fThe relative speed with which Rumor was
ble to form a government attests to his bar-
gaining skill but indicates that the more divisive
issues were papered over or set aside. The pro-
gram that emerged from last week's bargaining
gave high priority to emergency economic
37 measures. The parties pledged to fight inflation,
implement tax reforms, stimulate the building
industry and consider a pension increase. They set
`
g
3
I aside the contentious problem of radio-TV regula_ only two minister-without-portfolio slots
and
,
?Y tion-instrumental in the collapse of the previous major right-wing leaders appear to be keeping
LPJ government-by assigning it to a study com- their distance from the renewed center-leftfIFor
mittee. Consideration of explosive "law dand4o example, former prime minister Giulio Andreotti
order" issues was also put on ice. The center-eft refused to accept a cabinet post, despite heavy
program was equivocal on the perennially st cky pressure to do so)
matter of parliamentary relations with the Com-
munist Party
f' [The Socialists' acceptance of the invitation
to return to the government was marred by
r internal party feuds. The majority and minority
faction leaders are still at loggerheads over .he
terms on which the party accepted coalition
membership. Indeed, the minority leader has
refused to p rmit his faction to participate in the
government.
7 Government cohesion may be threatened ?y
other disputes. The cabinet has no vice-prime
minister because the Socialists and Social
Tv' Democrats could not agree on a candidate for P-re
post. In addition, the Republican Party's ad-
vocacy of government austerity clashes wilh
Page 11
Prime Minister Rumor being sworn in
Socialist opposition to major cuts in social pro-
grams.,
31 Although all Christian Democratic factions
are represented in the new cabinet, some in the
party are dissatisfied with the new government.
The party's left wing is disgruntled at receivin
W'. tNevertheless, the government should have no
trouble in parliament next week and probably
will not encounter major problems right away.
Rumor will benefit from the momentum gen-
erated by his rapidly concluded negotiations, and
prospects are good for agreement on emergency
measures to check inflation and spur the econ-
omy. The nearly sacrosanct August vacation
period will postpone consideration of other
touchy legislative issues until fall.?
iJ . JrOver the longer term, the coalition will be
subjected to powerful centrifugal pressures when 25X1
the parties have to face specific choices on such
divisive issues as housing, legal reforms and the
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Fighting in Kontum
[he fighting continueJfor control of two
villages west of the provincial capital of Konturn.
Both sides want to establish firm control over the
disputed territory: the Communists would like a
buffer zone between themselves and the South
Vietnamese; the government would like to deny
the Communists easy access to :he outskirts of
Kontum City.
During the past few days the two sides have
sharpened both the rhetoric and the fighting. The
Communists have conducted rocket attacks on
South Vietnamese rear areas and the aovernment
has responded with air attacks against the other
side.
Most recently, the government has greatly
exaggerated the size of the Communist units
involved in the attacks and has threatened to use
additional units to cope with the Cornrr4unist