WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010600080001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 21, 2016
• Document Release Date: November 19, 2007
• Sequence Number: 1
• Publication Date: January 4, 1974
• Content Type: SUMMARY

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Q
State Dept. review
completed
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Secret
Weekly Summary
Secret
4 January 1974
No. 0001 /74
DOS review completed ~opY N?_ 59
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nteliiaence, reports and anatw~z~:ss=gnif...
lae vveeic through noon; on ?l"3~ur~day.
coordinated with ar,~:re~aared
rch, the Jffi~e of ctrategit;
ctorate of Science and T@;ce-rDO~ogy.
separaieiy as apecdai Reports are ii::te:# i ~ the
CONTENTS (January 4, 1974)
EAST ASIA
PACIFIC
25X1;;,_
ViARY contains classified ir~fio=~rnation
Lions 793 and 794, of tt~e US
nd~ud, its transrt~ission or revelation of its corl?-
MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
5 China: The Big Switch
6 Japan: Mideast Pressure Easing
8 Cambodia: A Fresh Start
3 UNGA: Promise and Problems
10 Oil: Europe Gets the Bad News
10 West European Communists Prepare
14 India: A Troubled Economy
15 Greece: Acting in Character
16 Argentina: Peron Unveils a "Plan"
16 Panama: An Anniversary
17 Peru: A Decisive Year
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~ SECRET ~
THE
MIDDLE
EAST
IN ISRAEL: A SHIFT TO THE RIGHT
~ The parliamentary elections on December 31
resulted in a shift to the right that weakened
Prime Minister Meir's Labor Alignment but left it
the strongest party in the Knesset. The Alignment
will almost certainly be the core of the next
government, which will be a coalition as have
been all previous Israeli governments]
I CFinal results are not yet available, but the
Alignment so far has received about 42 percent of
the vote and appears to have lost six of its 57
Knesset seats. The National Religious Party, the
Alignment's major coalition partner in the old
government, lost one of its 12 seats. As of noon
Thursday, the Alignment-led coalition that has
governed since the 1969 elections appeared to
have lost eight of the 77 seats it controlled in the
120-member Knesset. Twenty-one parties vied for
seats, with ten parties having so far received at
least the minimum 1 percent of the vote required
for representation in parliament.
1 ~As anticipated, the rightist opposition group,
Likud, made substantial gains, receiving just over
27 percent of the vote and increasing its strength
from 31 to 38 seats, according to incomplete
returns. Its leader, Menahem Begin, claimed at a
post-election rally that Likud's strong showing
demonstrated to all the world that Israelis reject
any concessions that would result in a "reparti-
tian of the land of Israel," meaning primarily a
return of the occupied West Bank to the Arabs?
,~ Attempts by Mrs. Meir to form a new Align-
ment-led government coalition are expected to be
difficult and protracted, but eventually success-
ful. The National Religious Party, more sympa-
thetic to Likud's hard-line position on the terri-
torial question, will undoubtedly see the Align-
ment's poor electoral showing as enhancing the
Religious Party's ability to wring concessions
from Mrs. Meir in return for continued participa-
tion in the coalition. The Alignment's strategy,
while based on maintaining the old coalition, will
also include attempts to induce more moderate
opposition elements, especially some within
Likud, to come over to its side. It seems likely,
however, that no matter what coalition eventually
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Page 2 WEEKLY SUMMARY ,tan 4, 74
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'~' JtLKt [ ~.r'
emerges, Tel Aviv's flexibility will be impaired in
negotiating with the Arabs
/ rMunicipal elections held concurrently with
the national balloting also reflected a shift away
from the Alignment toward more conservative
parties. In Jerusalem, for example, the Alignment
lost its absolute majority on the municipal coun-
cil, although it still remained the strongest party
Arab voters stayed away from the polls in
ilkdroves, partly as a result of threats from Pales-
tinian guerrillas and calls by Egyptian and Jor-
danian media for a boycott. Many of those who
did vote reflected the rise in Arab nationalist
sentiment that has occurred since the recent war
by switching their support to Rakah, the Arab
Communist Party, which has long espoused the
Arab cause. These additions helped Rakah gain a
fourth Knesset seat. In the Jerusalem elections,
only 11 percent of the city's eligible Arab voters
cast their ballots?
IN GENEVA: LOOKING FOR PROGRESS
~~ i With the Israeli election now completed, 2
Egypt will look for quick progress toward a dis-
engagement of forces along the Suez Canal. Cairo
wants this both to satisfy its own need for an
Israeli withdrawal and to serve as a salutary
example, for the benefit of doubting Syrians, of
the wisdom of the decision to proceed with nego-
tiations. Although content to let the initial
sessions of the military talks in Geneva proceed
slowly in anticipation of the election, Cairo is
unlikely to view the process of governmental
reorganization in Israel as sufficient reason for
further postponement of an agreement on dis-
engagement.1
~ The Egyptians used the slow start of the
talks to advantage, attempting to pin down the
basic principles that will govern disengagement
before turning to the specifics of territorial delin-
eation. This is undoubtedly an effort to establish
clear guidelines for the talks in order to prevent
some of the inconclusive haggling that marred and
ultimately caused the breakdown of the Kilo-
meter 101 talks
~. CEgyptian and Israeli military negotiators
apparently reached general agreement on some of
their respective negotiating principles at the first
three sessions on December 26 and 28 and Jan-
uary 2. There remains, however, a major diver-
gence of view on at least one Israeli principle, that
of "mutuality." Tel Aviv insists that any Israeli
withdrawal under a disengagement formula be
accompanied by a reciprocal Egyptian with-
drawal, while Cairo is equally insistent that the
territory it has retaken on the canal's east bank
remain under its full military control.
~~ L ~airo media commentary on the Israeli elec-
tion, although thus far sparse, has reflected mis-
givings that right-wing gains will in fact lead to
Israeli procrastination. Cairo's message is clear:
that the Egyptians cannot tolerate further dally-
ing and have the military strength necessary to
achieve Egypt's goals forcibly if this cannot be
accomplished through negotiatiori~~Although the
Egyptians have not, in public commentary, tied
the election question directly to the disengage-
ment talks, the media's constant reminders that
Egypt has a force to be reckoned with on the
canal's east bank are an indication that Cairo does
not intend to relinquish that bridgehead
~leavy artillery fire erupted along the Suez
front on January 2 after several days of relative
quiet. The firing took place throughout the day
and apparently was more intensive than previous
sporadic incidents. Eight Israeli soldiers were
wounded in the shelling. It was not clear which
side began the shooting, but harassing artillery
fire provides Cairo with a means of pressuring Tel
Aviv and keeping world attention on the battle-
front. Artillery fire also was exchanged on the
Syrian front and three Israelis reportedly were
killed there.
25X1
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Peking Rotates Military Regicln Commanders
Pan. w,
?. ?r
1i7k1cti3tJ
~sINKIANG
[ H'E'iG~TU
Nepal. _ ,,~,,,~ .~ S~e::~wan
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~;,y
_ '
Province Boundary !
LAN-CHOU ~._ Han lisien-chu
NAN-CHING 4-.Ting Sheng-
WU-HAN ~.-Yang Te-chih-
General Political _
Department, Peking
~~e~iui~Ki~?ng
'~. ~I{L(~-YANG
Kir a
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~sinan ~' sea
an-chin
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hanghai
F;'asa
China
SP,a
t
t El YI i3!? /'~ g- '~
'"ti 4.A 7 ,~ TAi 'A
!('UN-MIND xwa~e~sf ? t(w ~?ung r~" l
-- Hsu Shih-yu--~- CANTON
--Tseng Ssu-yu TSINAN
Page 4 WEEKLY SUMMARY
------ Pi Ting-chun---~ FU-CHOU
~~ anton
-1~~~+?.~ - ~ Hong KOOg
.j' ~ atao roe)
~,.z~ fPart.)
~.
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SECRET
CHINA: THE BIG SWITCH
1~ Over the years, dramatic purges, advances,
and put-downs of Chinese leaders have become
almost commonplace. The startling shuffle of top
regional military leaders that was revealed this
week, however, is absolutely unprecedented and
must rank near the top of the inscrutable moves
made by Peking in the seemingly endless jockey-
ing for position among power-holders in China.,
)'~ (Seven of the eleven commanders of Peking's
regional military forces-its main-line armed
strength-were switched from one regional post to
another, in several cases leaving power bases they
had held since the 1950s. One of the command-
ers,Chen Hsi-lien, was pulled out of his strong-
hold in Manchuria and sent to Peking, doubtless
to be under the eye of the central leadership
although he may retain an ability to make some
mischief at the center. Hsu Shih-yu, who held a
strategic regional post in east China, traded places
with his neighbor in the Canton Military Region,
an assignment of less importance.
I5 CFrom all appearances, it looks as if Chou
En-lai and his associates masterminded the move,
doubtless with the close collaboration of Mao,
who is known to endorse reduction of military
influence in party affairs. Actually the reduction
of the authority of these military commanders,
who garnered their power in the course of sup-
porting the restoration of order after the excesses
of the Cultural Revolution, has been under way
for some time. Military membership on the Cen-
tral Committee and Politburo was substantially
reduced at the Tenth Party Congress in August
[ ~ The move will almost certainly result in con-
fining the shuffled leaders to their military duties
for the time being and reduce their ability 'to
influence civilian affairs in their new areas. Six of
them had held the top civilian posts in their
headquarters' province and had greatly influenced
the implementation of government policy
throughout their regions. Peking, perhaps slowly,
but doubtless surely, will give the civil posts to
civilian provincial figures, a process which has also
been radually under way during the past several
yea rs~
/5 rWhile the moves testify to Chou's upper
hand in party councils, the measured nature of
the switches reveals that the military is still a
powerful force in China with an important role to
play. No leaders were purged, and the shuffle was
a carefully balanced tradeoff. The moves seem to
indicate that the top party leadership has en-
dorsed the continuation of existing defense policy
and authority in China. Some continued military
influence on civilian policy can probably be anti-
cipated, but the ability of the armed forces to
bring extensive pressure to bear has been greatly
reduced for some time to come"`(
/S- rThe careful, measured nature of the shuffle
suggests that a majority of the military leadership
in China was in agreement with the switches,
although there may have been strong resistance
by one or two of the commanders in the months
prior to the move. It can be speculated that they
have been given some assurances by Chou and his
associates on the political cast-if not the iden-
tity-of the civil leaders to be appointed to the
vacated first secretaryships. And some agreements
may have been reached on the men to be ap-
pointed to the post of minister of defense and
other key military jobs at the center, which have
gone unfilled since the purge of Lin Piao and his
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WEEKLY SUMMARY Jan 4, 74
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SECRET
JAPAN
MIDDLE EAST PRESSURES EASING ~~ rather than distribution, would continue to hit
e so
d h th -
t
$ `Japan is emerging from its first ser ous brush
an
Japan and Western Europe har er
called "unfriendly" countries-like the US.~
with Middle Eastern politics with heavier eco-
nomic commitments and a profound h~~pe that it ~ 3 Some Japanese believe that the US may even
has found the key to a "friendly" relationship see some benefit in the current oil crisis because it
with the oil-producing Arab states. In Tokyo's tends to increase US economic strength relative to
view, the period of intense Arab pressure on Jap- Japan and Western Europe. Other Japanese be-
anese foreign policy-with consequent strains in ~~lieve that the cool US attitude toward Japan's
b 22 Id in
ou
Japanese-US
;).~ Japan has courted the Arab oil suppliers
with pro-Arab political statements and travel di-
plomacy. Two formal statements sufficed to get
Tokyo off the hook-the first, on November 22,
called for Israeli withdrawal to pre-1967 bound-
aries; the second, on December 13, demanded an
immediate Israeli pullback to the October 22
cease-fire lines. Although Arab spokesmen fre-
quently requested further Japanese mcves to fol-
low up these expressions of generalized support,
the Arab leadership has not chosen to press the
matter. The Arab nations were more interested in
the pressures Tokyo might bring to bear on US
policy. With almost 45 percent of ,Japan's oil
coming from their wells, Arab leaden no doubt
hoped that Tokyo's economic dilemma would
translate into pressure on Washingtcn-even if
Japan did not openly criticize US policy in the
Middle East.
~'L ~To underline Tokyo's interest irr the Arab
cause, a mission headed by Deputy Prirne Minister
Miki was dispatched in mid-December to visit
eight Arab capitals. Miki's explanations of Japa-
nese Middle Eastern policy and his offers of aid
and technical assistance helped pave the way for
Japan subsequently being declared a "friendly"
country by Arab leaders
~~~-' ~To Japan's pleasant surprise, its zccession to
the Arabs' "friendly" list was accompanied by the
OAPEC announcement that oil shipments to
Japan would, in effect, be restored to Fire-October
levels. The initial public euphoria in Japan, how-
!, ever, quickly gave way to the sober recognition
that the nation will still not get all the oil it needs
and that the cost will increase sharply. A major
Japanese newspaper suggested that A~ab oil stra-
tegy, because it focused on control of production
,
be overt pro-Arab statement on Novem er c
nflict with the US
.
time, lead to even more co
They claim, somewhat defensively, that if Secre-
tary Kissinger had offered more assurances about
the prospects for a Middle East solution during
his visit to Japan in November, Tokyo probably
would not have made such clear cut statements in
support of the P,rabs. In view of the serious
economic repercussions generated in Japan by the
initial Arab oil cutbacks, Tokyo probably would
have felt compelled to take such a pro-Arab
stance regardless of any verbal assurances from
the US~
~okyo may now feel that it no longer has to
c~pe with the sort of intense pressure the Arabs
brought to bear in November. In addition to its
own certification by the Arab leadership, Tokyo
probably judges tl~~at the initiation of Arab-Israeli
peace negotiations and the evident concern
among conservative Arab leaders lest they damage
the economies of their Western friends will mod-
erate Arab use of oil as a weapon
~g ~At this point, therefore, it is likely that
Japan feels constrained to do only enough to
convince the Arabs of continuing support for
their case against the Israelis. This may amount to
more active Japanese diplomatic backing for the
Arabs in the UN Or additional public statements.
At this point, however, the Japanese certainly do
not foresee any requirement for a diplomatic
break with Israel or for any other drastic move
likely to cause serous friction with the US's
~`~ Economic assistance will be Tokyo's most
effective way of demonstrating support to the
Arabs. Such aid is likely to be dispersed rather
liberally, despite the expected limitations caused
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by a slowing of Japan's economic growth. Tokyo
will move quickly to implement pledges made
during the Miki mission, and a variety of new
aid-related delegations will be dispatched shortly.
Trade Minister Nakasone, the most outspokenly
pro-Arab member of the Tanaka cabinet, for ex-
ample, will make substantial offers of assistance
during his upcoming trip to Iran and Iraq, al-
though neither was part of the oil boycott
p1 (~~y far the largest new offer is a loan pledge
of $140 million to Egypt to help pay for clearing
3 Cthe Suez Canal. The loan terms offered by Dep-
uty Prime Minister Miki are the most generous
S~ Japan has ever extended. Moreover, the loan is
not tied to purchases from Japanese suppliers
Tokyo also is considering loan requests total-
ing roughly $1 billion from Iraq, Jordan, Libya,
Algeria, Sudan, Morocco, and Tunisia. The gov-
ernment and private banks will probably extend a
$500-million credit to Iraq to finance oil refinery
pipelines and a liquefied petroleum gas plant.
Although they do not need money, Saudi Arabia
and Libya would like Japanese technical assist-
ance.
Even before the Arab oil cutback, Japan was
supplying increased amounts of capital to the
Middle East. Earlier this year, the government
concluded its first loan agreements with Arab
countries-a $30-million project loan to Syria and
a $10-million commodity loan to Egypt. Since
the onset of the oil crisis, Japan has promised to
speed disbursement of these loans. Tokyo is also
financing the $780-million purchase by a Japa-
nese firm of a share in a West European oil
concession in Abu Dhabi?
OIL ALTERS THE EGONOMIG OUTLOOK
~etting on the Arabs' list of friendly coun-
tries should ease Tokyo's energy pinch, but
sharply increased oil prices foreshadow financial
INVESTING`MORE ABROAD
Japan's direct investment abroad has in>
creased' rapidiy since 1971, when, in response
to growing international pressure to reduce its
foreign exchange reserves, the.: government re-
moved most controls on the 2xport of capital..
Foreign investment now amounts to-