WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010800010002-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 27
• Document Creation Date: December 21, 2016
• Document Release Date: February 26, 2008
• Sequence Number: 2
• Publication Date: March 29, 1974
• Content Type: SUMMARY

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Weekly Summary
State Dept. review completed
25X1
Secret
Secret
29 March 1974
No. 0013/74
ARC$?VAL RECORD Copy N2 58
AGENC PLUSE To
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rents of the week through noon on T-hursday. It
includes material coordinated with or prepared by
of Economic Research. the Office of Strategic
a;id tfle Directorate of Science and technology.
ciutring more comprehensive treatment and therefore
separately as Special Reports are listed in he
CONTENTS (March 20, 1974)
EAST ASIA
PACIFIC
1 Middle East: Toward Disengagement
3 USSR-China: Rivalry in South Asia
4 EC: Shaken but Not Shattered
5 Ethiopia: Renewed Military Unrest
9 Cambodia: The Battle for Oudong
9 Laos: Up the Down Staircase
10 Korea: Point Counterpoint
7 Vietnam: Priorities in the North
8 Australia: To the Polls
11 Yugoslavia-Italy: The Trieste Gambit
1.1 Hungary: Leadership Shake-up
14 France: Defense Budget
15 Iceland: A Base Offer
15 Communist Cars Invade the West
17 Iraq: Kurds; Grechko Visit
18 Foreign Aid for Sahel Drought
19 Uganda: More Army Bloodshed
19 USSR: High Over the Indian Ocean
20 Bangladesh: Ailing Leader, Ailing Country
21 Per+i: Social Property Law
21 Grenada: A Troubled Economy
Comments and queries on the contents of this
publication are welcome. They may be directed to
the editor of the weekly Summary
MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
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i-..~ SL UKt I N.,y
Middle East: Toward Disengagement
A [The effort to settle the Middle East conflict
enters another crucial stage with the arrival of
Israeli Defense Minister Moshe Dayan in Washing-
ton on March 29. Dayan is to discuss with Secre-
tary Kissinger Tel Aviv's proposals for initial dis-
engagement of Syrian and Israeli forces on the
Golan front; a Syrian representative is expected
to hold similar talks here sometime after Dayan's
departure. Further disengagement on the Egypt-
ian front, the reconvening of the Geneva peace
conference, and possibly the continued avail-
ability of Arab oil supplies to the US are contin-
gent on the successful outcome of the discussions
.6 IThe Israeli press reveals considerable official
and public pessimism over the prospects for disen-
gagement talks. Prime Minister Golda Meir told a
group of visiting American war veterans that she
expected little from the talks in the US. Dayan
himself has expressed reservations about the value
of the Washington negotiations)
Concern over the possibility that the US
mi-ghf urge concessions unacceptable to Tel Aviv
may have inspired recent press stories empha-
sizing that Israel will not agree to withdraw from
any territory captured in the 1967 war as part of
an initial disengagement accord.
G [Syrian Foreign Minister Khaddam told the
Arab League meeting in Tunis this week that a
disengagement agreement with the Israelis must
include the return of al-Qunaytirah
GOLAN FRONT FLARES UP
Syria.
ffk
~fhe level of ar i lery'-
' ,'ti`
3n , and mortar fire
between Israeli and Syrian forces positioned along
the Golan front flared abruptly on March 27 after
several days of relatively minor clashes. Inter-
mittent fighting lasted nearly 14 hours and in-
volved the entire sector of the Israeli-held salient
into Syria. The shelling resumed again the next
day?
-Although the heavy exchange on March 27
was initiated by Israeli artillery, there is little
doubt that the clashes over the past 17 days have
been orchestrated primarily by Damascus. The
marked fluctuation in intensity during this period
suggests that the Syrian motivation is more politi-
cal than military. The Syrian leadership probably
views the continuation of some level of armed
conflict as necessary to maintain a strong nego-
tiating position, as well as to demonstrate to the
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25XlArab world that the regime's basic militancy
against Israel has not been eroded.
Early this week, Damascus announced that
President Asad had accepted a Soviet invitation to
lead a government and party delegation to Mos-
cow during the first half of April. The trip was
apparently arranged during the visit of Soviet
Foreign Minister Gromyko to Damascus early in
March. Asad will undoubtedly confer with Soviet
leaders about Syrian-Israeli disengagement nego-
tiations, and he may press them for more arms.
Although Asad's position at home seems fairly
strong at present, he would probably welcome
another show of Soviet support to further
strengthen his hand against those who oppose his
undertaking to negotiate with Tel Aviv.]
THE PALESTINIAN FACTOR
A iEgypt's President Sadat, meanwhile, has
been relatively inactive on the public scene while
attention has been focused on the Syrian-Israeli
arena. After receiving a high-level Peruvian dele-
gation this week, he was off to Belgrade on March
28 for a two-day visit with President Tito, a
staunch supporter of the Arab position. Early
next week, however, Sadat will receive King
Husayn,
A ~ccording to the semi-official Al-Ahram,
while Husayn is in Cairo, he is expected to give
public recognition to the Palestine Liberation
Organization as the "sole representative of the
Palestinian people"-something he has been ex-
tremely reluctant to do thus far. Husayn almost
certainly intends to discuss Jordan's relations
with the fedayeen and perhaps-with Sadat's
help-reach an agreement with the PLO on work-
ing together in some fashion at Geneva once the
conference resumes. The King, however, is prob-
ably not yet ready to renounce all claims to the
Israeli-occupied West Bank, although he is under
considerable pressure from other members of the
Jordanian royal family and the rest of the East
Bank establishment to do just that.
'' ~ l-Ahram also reported this week that an
Egyptian-Palestinian committee will begin consul-
tations on April 1 to "coordinate a joint stand"
on the role of the Palestinians during the next
phase of the Geneva conference. According to
this account, President Sadat has assigned Foreign
Minister Fahmi to negotiate with the Palestinians,
and has assured PLO leader Arafat that Egypt and
Syria will not embark on an over-all settlement
unless the Palestinians are present at the Geneva
talks
\Sadat's moves to include the Palestinians in
the current round of negotiations are prompted in
part by a need to assuage their constant fear that
they are being abandoned by the Arab states, and
in part by Sadat's desire for Arafat to continue
his private support for Egypt's diplomatic initia-
tives. There is, in fact, little need, to coordinate
Egyptian and Palestinian negotiating strategies at
this time. The two parties are being held back less
by differences between them than by the inability
of either to take further initiatives without Syria's
concurrence.
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USSR.-China
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neighbors to the south have already begun to bear
fruit. Chinese and Malaysian diplomats have all
but agreed on a final version of a joint commu-
nique announcing diplomatic relations. Thailand
is preparing to lift a ban on Chinese imports and
has agreed to begin negotiations on a formal Sino-
Thai trade agreement. Finally, the Soviets are
anticipating that Pakistan's recent recognition of
Bangladesh has removed one of the major obsta-
cles to a Chinese presence on the subcontinent. I
Rivalry in South Asia
A recent increase in Soviet attention to
Chinese activities in South Asia betrays Moscow's
interest in forestalling any improvement in
Peking's relations with its southern neighbors.
The Soviets are also concerned that some recent
events, such as the Chinese seizure of the Paracel
Islands, point to an understanding between
Peking and Washington regarding the region/
Ir The Paracels episode looms large because of
long-standing Soviet sensitivity to any sign that
the Chinese are becoming more aggressive. Mos-
cow's propaganda mill, moreover, has been using
the incident to exploit the traditional distrust of
the Chinese in South and Southeast Asia?
'. )The Soviets have also moved to take advan-,_)
tage of Chinese support for the insurgents in
northeast Burma. On March 1, Pravda ran a long
article that traced the Chinese role in Burma; its
March 21st issue replayed Western press reports
that Peking had moved several thousand more
troops into the area. The Chinese have responded
in kind, and this particular area will almost cer-
tainly be the subject of further propaganda ex-
changes(
VThe Soviets are particularly concerned that
Peking's efforts to increase its influence in South
Asia are abetted by the Sino-American rapproche-
ment. Moscow has publicly charged US-Chinese
collusion over northern Burma and has argued
that Peking's mild reaction to the Diego Garcia
issue proves that Peking favors an expanded role
for the US Navy in the Indian Ocean. Several
Soviet commentaries have charged that US silence
over the Paracels and Chinese approval for the US
base at Diego Garcia resulted from Sino-American
bargaining on ''dividing spheres of influence." )
JThe Soviets realize that, despite their efforts,
Peking's moves to improve relations with its
Chinese Hold Soviet Helicopter
1 C. \Sino-Soviet strains bode ill for an early re-
lease of the crew of a Soviet helicopter downed in
mid-March in northwestern China. Peking has
been engaged in anti-Soviet polemics for several
months, attacking particularly Moscow's "expan-
sionist" foreign policy and its espionage activities.j
11A Communist newspaper in Hong Kong has in
fact explicitly linked the downed helicopter with
an incident in January that led to the expulsion
of Soviet diplomats from Chinal
c) Violations along the Sino-Soviet border are
not uncommon; the Chinese have charged the
Soviets with more than 60 intrusions in the past
year. Nevertheless, this is the first time since
border negotiations began late in 1969 that either
side has publicized such an incident. Previously
scheduled Soviet military exercises near the
border will add to the problem and further delay
the release of the Soviet airmen.
The Soviets are still playing the incident in a
low key. Their second note to the Chinese on
March 28 avoided any threats or warnings. Never-
theless, the note strongly implies that the Chinese
will be responsible for any worsening in Sino-
Soviet relations resulting from the incident -F i
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EC: Shaken But Not Shattered
;=the LC foreign ministers will gather in Lux-
,~rnbourg on April 1 and 2 for their first meeting
since debate sharpened over consultation pro-
cedures with the US. In addition, Britain's Labor
government will be attending for the first time.
Although taking heart that the agricultural minis-
ters last week satisfied the immediate farm-policy
demands of the UK's new government and
,ivoided fresh divisions within the community, the
t::C members are aware that much more difficult
decisions lie ahead!
The agreement on farm prices, reached on
March 23, substantially increased agricultural sup-
ports but allowed a variety of subsidies to keep
retail food prices down. The increase in support
prices should have no immediate effect on the
cost of most farm products, since market prices in
'A-'.C states are generally above the support levels!
a he EC capitals greeted the outcome of the
agricultural ministers' meeting with relief. EC
leaders had speculated earlier that Britain's new
Icaders would seize the occasion to challenge the
basic principles of the community's common agri-
cultural policy.
The igenda for the council meeting in Lux-
mbourg is almost certainly too ambitious for
thorough discussions, let alone decisions, on all
ale items, which include regional policy, coopera-
tion with East European countries, the budgetary
powers of the European Parliament, further nego-
l i.ition of compensation due the US because of
enlargement of the EC, Mediterranean policy, and
a possible UN aid fund for developing countries)
he council meeting will be overshadowed
by Lonclon''s commitment to improve the terms
of its EC membership. Foreign Secretary Cal-
laghan may make specific demands at Luxem-
bourg, and will in any case show part of his hand.
`.ssentially, London is seeking to reduce its net
financial obligation to the community and to
open EC markets wider to commonwealth pro-
ducers of raw materials. The British are at-
tempting to achieve better terms without having
to alter the community treaties radically. Even so,
some of London's aims will require fundamental
readjustments.
I The Labor leaders will apparently not be
satisfied with the previous government's approach
i of trying to increase Britain's benefits under
various community allocations, such as the pro-
posed EC regional fund, as a means of balancing
the UK's financial contribution to the com-
munity:!
aA basic reform of the common agricultural
policy could also work to London's financial
benefit, and EC circles are still nervous about the
extent of British demands. For the French, the
common agricultural policy is the most sacrosanct
of EC accomplishments, and Paris would resist
efforts to modify it
!London may, in contrast, stress a new look
at the terms for assessing member-state contri-
butions. The British favor a close correlation with
an individual country's gross national product]
lAn early resolution of the problems London
is raising about the terms of its membership is not
4 likely. Callaghan hay predicted a "hot summer of
negotiation." The meeting next week should
provide some indication, however, of the reforms
that Britain's partners are willing to contemplate
in an effort to preserve what is left of community
solidarity.]
' This solidarity is still being strained by the
differing national responses to Washington's
desire for a more formal US-EC consultation
procedure. Most EC leaders express the hope that
consultations on foreign policy will be a two-way
affair, but they are not sanguine that Paris will
sanction improved procedures. Pending a decision
on the formulation of a response to Washington,
the EC proposal to offer wide-ranging coop-
eration to the Arab states is being held in abey-
ance at the insistence of several members
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ETHIOPIA: RENEWED MILITARY UNREST
1 3 [Military impatience with the government's
, failure to prosecute corrupt officials and dismiss
discredited senior officers has led to renewed un-
rest. Most of the dissidents, although pressing for
swifter government action, are apparently still
5 willing to back the new regime. These moderate
elements appear to hold the upper hand, but
tension between them and radicals in the military
is likely to persist for some time. The radicals
have split with their more moderate colleagues on
the issue of support for Prime Minister Endalkat-
chew's cabinet
no action would be taken against those invc25X1
in the military rebellio that forced the ouster of
the former government
rOn March 26, police and army units in As-
mara, which line up with the moderates, arrested
Z 20 police officers including the police commis-
'j ( sioner of Eritrea Province and one of the com-
missioner's top assistants. The police officials
,were charged with misuse of
police funds and
'))other abuses of their offices. The dissidents also
reportedly arrested several unidentified air force
officers?
73 Von the same day, Asmara Radio broadcast a
statement in the name of the "northern armed
forces" demanding swift judicial action for senior
military and civil officials charged with corrup-
tion and incompetence. The statement called for
.J the armed forces to be represented when the
courts hear the cases. The dissidents also de-
manded assurances from the new government that
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Thus far in 1974, Peking has signed contracts for
whole plants worth about $250 million in addi-
tion to the $1.2 billion worth of plants it pur-
chased last year.
China's drawings of foreign credits totaled
about $550 million last year and will reach about
$1.4 billion in 1974. The ratio of debt service to
exports will increase sharply this year. If Peking
continues to purchase plants at the $1 billion
annual rate, the debtservice ratio will remain high
for several years with repayments: including in-
terest, rising to more than $1 billion annually.
Nevertheless, if the value of Chinese exports to
the non-Communist countries grows by approxi-
mately 20 percent each year-a likely prospect in
view of the potential for petroleum exports and
the probable continued rise in world prices-the
debt service ratio will remain within manageable
limits.
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( a' )
he deficits arising from Peking's huge agri-
cultural imports and its multi-billion dollar pro-
gram to buy industrial plants are compelling
China to seek ways to finance its trade with the
West.
In contrast to its previous reluctance to in-
cur foreign debt, China has recently expanded its
use of short- and medium-term credit to finance
its trade deficits. China's trade deficit with the
non-Communist countries last year was roughly
$500 million. Continued large deficits are ex-
pected in the next two years. China has signed
grain import contracts covering the next three
years with Canada, Australia, and Argentina, and
additional purchases from the US are expected.
Peking is making strong efforts to increase
foreign-exchange earnings. As part of the drive to
increase exports, prices of Chinese goods have
been raised, the quality has been improved, and
new markets are being opened. Exports of petro-
leum could provide substantial earnings in the
next few years-possibly exceeding a half billion
dollars annually. China also is tapping other
sources such as overseas remittances, deposits in
Chinese-controlled banks, time deposits from for-
eign banks, a greatly expanded merchant marine,
and small-scale tourism.
Barring unforeseen disruptions to the econ-
omy, Peking should be able to finance a growing
import bill without straining its balance of pay-
ments. Continued growth in exports and invisible
earnings will enable China to follow its present
foreign trade policy without drawing down its
estimated reserves of $1.5 billion to dangerous
levels. If Peking shifts policy and follows the
Soviet example of accepting long-term credits and
negotiating self-liquidating loans, even higher
levels of imports would be possible without
greatly increasing annual debtt service.
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claimed that North Vietnam can best fulfill its
revolutionary duties at this time by building its
own economic strength. This theme was stressed
by party leader Le Duan last spring, but pro-
nouncements over the last few months have
fuzzed the issue. Nghi did not rule out the possi-
bility that once North Vietnam has achieved a
degree of economic strength-and perhaps also
once it has completed its current effort to im-
prove and modernize the armed forces-it would
attem t another major military move in the
South
3 X n authoritative article by Vice Premier Le
'`Thank Nghi reinforces earlier signs that recon-
struction and development of North Vietnam,
rather than the struggle in the South, will receive
priority attention for the next couple of yearsl
[The article, published on March 14, was de-
signed to explain to cadre the decisions of the
22nd Central Committee plenum held earlier this
year. Nghi's article stated that the North's "key
task" at present is to rebuild and industrialize its
economy. With unusual bluntness, Nghi asserted
that the North "should not be too bent on main-
taining vigilance and making preparations for
war" lest the reconstruction effort suffer. He in-
dicated at more than one point that he expects
this to be the line through 1974 and 19757
[Nghi emphasized that Hanoi remains as com-
tt d as ever to the southern struggle, but he
y23
S [General Giap, North Vietnam's defense min-
ister, reportedly is suffering from a serious illness
and may be losing some of his influence within
the military and the politburo to a younger man?
5 rGiap began to miss public gatherings last
July, when one report claims that he had to be
helped from the stage after a celebration. Al-
though ceremonial messages continue to appear
over his name, he has been completely out of the
public eye since last fall, when he made an ap-
pearance during Castro's visit to North Vietna
2 S FGiap's incapacity may have resulted in the
tran fer of some of his responsibilities to heir-
apparent General Van Tien Dung, the number-
two man in the army. In recent months, Dung has
gradually moved into a more prominent public
position, turning up at significant events, visiting
sick and wounded troops who have returned to
the North, and writing authoritative articles for
military journals
L';- general Dung is the youngest member of the
polit uro. Little is known of his military outlook,
although Ho Chi Minh is alleged to have praised
him for being more aggressive than Giap. He has
been close to First Secretary Le Duan over the
years,
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" ~he Viet Cong this week surfaced what they
11 called an "important new initiative" for a military
and political settlement in the South. The pro-
L lposal, presented in Paris on March 22 and since
treated to considerable fanfare in Hanoi's media,
is essentially a rehash of the Communists' stand-
ard six-point program unveiled last April,
2V tThe only real difference is the omission of a
call or the return to the January 28, 1973, cease-
fire lines. While Hanoi has not been publicly push-
ing this demand for several months, it has always
L I been included in any comprehensive statement of
Communist programs. Its omission at this junc-
ture is curious in light of the gradual erosion of
Viet Cong territorial holdings:
(, The new version focuses considerable atten-
tion on the necessity for "third force" participa-
tion in a political settlement in the South. It also
~7includes a harsh attack on Saigon's alleged foot-
dragging on prisoner exchanges-standard themes
of recent Communist propaganda
L4 \Both China and the Soviet Union promptly
)f both houses
its for federal
me of his col-
endorsed the Viet Cong proposal, though in some- leagues believe the inclusion of the referendum
what restrained terms. The South Vietnamese re- proposals will lessen Labor's chances to win any
I jetted it entirely, cl iming it was merely a restate- new seats in the Senatel (They reason that the
ment of earlier ones XI Australian electorate--notorious for voting down
referenda-will extend its negativism to govern-
ment candidates
It is unlikely the Communists expect their
I
pfo osal to lead to any break in the stalemated rThe Senate races may result in
some shift of
negotiations in Paris or to any change in the seats between the government and the opposition,
situation on the ground in South Vietnam. They but it is likely that the changes will largely bal-
probably are hoping that the proposal-comple- ance out)lThe opposition Liberal-country coali-
menting other recent propaganda attacks on the )
-9tion has troubles of its own because of internal
US and Saigon-will help refocus international disarray and lack of strong leadership. A poor
interest on the Vietnam war and inhibit US aid to
ing an anti-US international gathering on Vietnam
in Stockholm this week for the same pur-
25X1 poses.
AUSTRALIA: TO THE POLLS
Zq. The Labor government is still avoiding the
risk of general elections, but it will soon have to
undergo a partial test at the poll3. In compliance
ZWwith a constitutional provision req firing the elec-
tion of half the 60-seat Senate by mid-year, Prime
Minister Whitlam has set the vote for May 19j
y`~ f The Labor Party appears to have little pros-
pect of strengthening its parliamentary position;
it has done poorly in recent state and by-elec-
tions, and its standing in public opinion surveys
continues to slip)
2q The opposition-controlled Senate is a major
roadblock to Whitlam's legislative program. Until
a few months ago, the Prime Minister was think-
ing of dissolving both houses of parliament and
calling general elections, but he seems to have
concluded that Labor does not have the support
to take such a course now]
21 `The Prime Minister has coupled the Senate
elections with four referendum proposals de-
signed to strengthen both the federal system and
Labor's prospects in future elections-redistrict-
ing, easing the requirements for jconstitutional
amendment, simultaneous election
of parliament, and new arrangeme
assistance to local governments. So
showing by the government could encourage the
opposition to greater obstructionism, which in
turn might force the government to call general
elections.
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THE BATTLE FOR OUDONG 3 3 There has been no indication that Sihanouk,
[Heavy combat continued northwest of who has resumed residence in Peking, will partici-
hnom Penh near Oudong this week as the Cam- pate in Samphan's talks with North Vietnamese
bodian Army made a major effort to recover th c leaders. Even though Sihanouk has been to Hanoi
town. A 2,500-man government force advancing' twice this year, he probably would like to confer
from the east fought to within a mile of Oudong with Samphan. The two last met a year ago dur-
before being halted by stiff resistance on March ing Sihanouk's visit to Khmer Communist
28. Another relief force is trying to make its way trolled areas of Cambodia.
to Oudong from the south but has made only
rmited progress.) Remnants of the Oudong garri-
on were forced to abandon remaining positions
on the town's outskirts after Communist shell-fire
set off ammunition stocks.(
30, TThe army high command in Phnom Penh is
giving top priority to the operation. Navy con-
voys have moved armor and artillery up the Tonle
Sap River to a beachhead several miles east of
Oudong, and government aircraft have been flying
daily tactical and resupply missions in the areal
LAOS: UP THE DOWN STAIRCASE
3 6 Pathet Lao chairman Prince Souphanouvong
has dispatched his plenipotentiary representative,
Phoumi Vongvichit, to Vientiane to resume pri-
vate discussions with Prime Minister Souvanna on
the formation of a new coalition government.
Phoumi arrived back in the Lao capital on March
3 ~. [The Khmer Communists also attach consid- 27, following a six-month stay at Lao Communist
erab e importance to Oudong. Broad coverage of headquarters in Sam Neua, and his return is signif-
its capture continues in propaganda, and Siha- -, icant. He previously served as the principal Pathet
nouk himself has sent a public cable of congratu- Lao official during the difficult negotiations lead-
lationsI ing to the February 1973 peace agreement and its
implementing protocol the following September
CONSULTATIONS IN HANOI
6- 'Both Souvanna and Pathet Lao negotiator
3 2 A delegation headed by Khmer Communist Phoun Sipraseuth have publicly stated that
"de5uty premier" and "defense minister" Khieu Phoumi was returning to complete arrangements
Samphan began an official visit to North Vietnam on the membership of the coalition cabinet and
late this week. The visit comes at a time when the its advisory political council. Phoumi will prob-
Communists' dry season offensive is falling well 37 ably also attempt to resolve with Souvanna the
short of expectationsj[ln addition to Samphan, few procedural difficulties still impeding effective
3 the delegation is composed of leng Sary-the neutralization of the twin capitals of Vientiane
prominent Khmer Communist official who has and Luang Prabangg
not been heard from since he left Peking for
Cambodia last November-and several other Com- 3 7[Souvanna hopes that Phoumi's visit will lead
munist furctionaries:) to a meeting in Luang Prabang between himself,
11 11
'3 -7 [This is the first known trip outside Cam-
bodia since the war began for the 42-year-old
J' Samphan, who has gradually emerged as one of
3 5 -the top leaders in the insurgency. While in Hanoi,
he is certain to discuss future insurgent strategy
and tactics and may use the occasion to request
additional military aid from the North Viet-
namese. The subject of negotiations is also likely
to be on the agenda-)
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Souphanouvong, and the King to consecrate
the new coalition before the Lao new year begins
in mid-April. The King's recent decision to sup-
port Souvanna's opposition to a special session of
the National Assembly, publicly announced in
Vientiane this week, appears to clear the way for
the Prime Minister to form the coalition by direct
royal investiture without prior legislative ratifica-
tion. The Pathet Lao are in favor of this coalition
scenario.
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, 9 ISince Seoul and Pyongyang began direct arrangements for policing the armistice-stem-
talks on national unification two years ago, each ming from the possible termination of the UN
has put forward proposals designed less to unify Command-Pyongyang wants to stake out its ne-
Korea than to serve partisan objectives. The gotiating position. In effect, the North Koreans
South, fearful of broadened contact with the are putting on record their opposition to meas-
tightly controlled and rigidly indoctrinated north- ures limited to remodeling the Military Armistice
erners, has advocated only the most limited so- Commission and are reaffirming their opposition
cial, cultural, and humanitarian exchanges. The to a continued US military role on the peninsula.
North, seeking better access to audiences in the Ho Tam's proposal for turning the, armistice into
South, has pressed for broadened political con- a peace treaty, however, is probably only an
tacts. To weaken the South militarily, Pyongyang opening gambit in what could become prolonged
has also pressed for new security arrangements and complex negotiations on the UN Command
involving termination of the UN role in Korea, issue.
mutual force reductions, and total withdrawal of
US forces. The US military presence in South ?~ ~By appealing to Washington over the head of
Korea has been persistently singled out as the Seo 1, Pyongyang is also pressing the South Kore-
main obstacle to unification.] ans to consider seriously various Communist pro-
posals for bilateral North-South agreements.
j~ rfhese conflicting objectives led to an im- While Ho Tam characterized the present North-
passe in the talks months ago. But each side sees South dialogue as "meaningless," the North ap-
some advantage in continuing the dialogue, in pears anxious to resume formal meetings and is
part to meet domestic needs and in part to avoid ready to resume Red Cross talks with the South
forfeiting the diplomatic initiative to the other. as well
Thus, in January, Seoul offered the North a non-
aggression pact calling on both sides to avoid 3h' Seoul's official response to the Ho Tam pro-
military confrontation and to respect the 1953 j pos I has been predictably negative; the South
armistice agreements.I ron March 24, North Ko gKorean spokesman characterized it as Pyong
rean Foreign Minister Ho Tam responded in a 3 lyang's effort to communize the South. Privately,
lengthy statement before a meeting of the Su- however, the South Koreans appear intrigued by
preme Peoples' Assembly Pyongyang's renewed interest in the talks and by
the re'atively flexible language in Ho Tam's state-
For the first time, Ho Tam proposed direct ment.
3 ego'tiations between Pyongyang and Washington
fi for a peace treaty to replace the existing armistice 3 0 \Seoul will remain cautious about any North
arrangements. He called upon the US to withdraw d' Korean overture that appears to move the talks
its troops from the South (and to abstain from ~(forwarcl. The regime in the South, is anxious not
any further military involvement thereafter), to to undercut its claims of North Korean hostility
terminate the UN Command mechanism headed and intransigence, allegations that, have served so
by the US and, in effect, to end military support well in defusing domestic unrest in recent weeks.
for the Seoul government. Ho Tam maintained So long as the likelihood of discontent remains
that he was appealing directly to the US because high-particularly on college campuses-Seoul will
South Korea had persistently obstructed a peace maintain a hard line toward Pyongyang while at
treaty and national reconciliation, and because- the same time keeping the door open for a re-
in his analysis-the US held the key to progress newal of formal talks. In future discussions with
h
rln advancing their proposal, the North Ko-
reans appear to have two main, interrelated objec-
tives. Anticipating a change this year in the
owever,
Pyongyang, the ROK government must,
also weigh the effect an improved atmosphere on
the peninsula would have on UN consideration of
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.d L. V I l L. I
YUGOSLAVIA-ITALY: THE TRIES GAMBIT
Belgrade is keeping p the p assure in its
dispute with Rome over Zone B in order to drive
home the message that Yugoslavia will resist any
foreign claims on its territory.
Last week, the Yugoslavs rejected Italian
Prime Minister Rumor's efforts to restore the
good bilateral relations that prevailed before the
dispute became public in early March. Belgrade
views Rumor's general expression of goodwill as
unsatisfactory and says that only a flat renuncia-
tion of the Italian claim will be acceptable. The
Yugoslavs are also threatening to revive their
20-year-old claims to Zone A in Italy and to
release the contents of secret talks with Rome-a
move that could embarrass the Rumor government.
The Yugoslavs have been doing a little saber-
rattling for effect. Air Force and naval com-
manders inspected units in the area this week, and
national television covered the arrival of fresh
border troops and some tanks at the town of
Koper in Zone B.
Belgrade's reaction may in part be aimed at
other neighbors who might be tempted to revive
irredentist claims or otherwise to intervene in
Yugoslavia. High-ranking military officers in Bel-
grade have privately told US diplomats that the
"signal" is aimed at "any and all" countries that
threaten Yugoslav territorial integrity.
Domestic political concerns also contribute
to the bluster. Belgrade has organized a wave of
protest meetings throughout the country. Tito
probably believes that national elections in April
and a party congress in May will run more
smoothly if problems at home are obscured b a
wave of patriotic fervor.
?-International boundary(1970)',.,
O MILES 5
HUNGARY: LEADERSHIP SHAKE-UP
11c \The shake-up in the top Hungarian leader-
ship last week dealt a major setback to Budapest's
liberal economic and cultural policies. Over the
past year, the Kadar regime had done much to
satisfy demands from domestic conservatives and
from Moscow for more orthodoxy. Clearly, it
was riot enough. Kadar has now had to trim the
strength of the staunch advocates of economic
reform and cultural flexibility, most significantly
by replacing the party secretaries responsible for
these areas./
fin so doing, Kadar demoted two of his
closest associates-Rezso Nyers and Gyorgy
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Aczel---and struck at policies that had become they
twin pillars of Kadarism as cautiously practiced
or more than a decade. While the moves may at
last mollify his critics, they could also whet their
appetites for further changes in policy or person-
ne1J Indeed, additional shifts in the central party
Sapp ratus are already under way, and Kadar
clearly must adopt a more conservative tack in
4 domestic policy
0 Whe immediate issue at the party plenum
that implemented the shake-up was the economic
reform and its preferential treatment of agricul-
ture at the expense of urban workers This topic
undoubtedly flared into a discussion of "negative
social and economic phenomena" (acquisitive-
ness, conspicuous consumption, managerial
Reso Nyers
Gyorgy A czel
Politburo member and architect of the
economic reform. Removed from party
secretariat.
Politburo member and director of cul-
tural policy. Removed from party secre-
tariat.
Lajos Feber Politburo member, deputy premier, and
spokesman for agriculture. Retired.
NiklosAjtai Deputy premier for science and tech-
nology. Retired.
Istvan Sarlos Chief editor of party daily, Nepsza-
badsag. Relieved, to head the Patriotic
Peoples Front.
Karoly Nemich Politburo member and dark-horse candi-
date to succeed Kadar. A moderate, but
less committed to some reform goals.
Moved into party secretariat, apparently
in place of Nyers.
Imre Gyori Agitation and propaganda specialist in
the late-1950s, and apparent conserva-
tive. Replaces Aczel on party secretariat.
Zoltan Komocsin Politburo member and conservative for-
eign affairs spokesman. Assumes addi-
tional duties as editor of party daily
Nepszabadsag.
haughtiness), which the conservatives have long
criticized as ideologically unacceptable spinoffs of
the decentralized economic reform. The discus-
sion, moreover, came against the backdrop of
generally increased Soviet pressures for ortho-
doxy in Eastern Europe. Moscow's, concerns may
have thus indirectly precipitated the debate and
emboldened the conservatives to bring the issue
to a head/
L4' [Kadar still retains the levers of power, and
apparently still is the Soviet choice to run the
country. Although his options are now more
closely circumscribed than they have been since
the early days of his rule, he has taken personal
charge of updating policy for the next party con-
gress in March 1975. Clearly he hopes to weather
the setback and limit the damagg.
1/ (Abrupt policy changes seem out of the ques-
ion as even the staunchest conservatives realize
the disruptive potential of such a course. In all
likelihood, however, more constraints will be
placed on the managers, more attention paid to
the urban worker, and increased strictures put on
intellectuals. The hand of the central economic
authorities is also likely to be strengthened, but it
is too early to predict how much this will gut the
economic reform and its emphasis on local initia-
tive and decentralization
4 f Kadar has until the next party congress to
worlt out compromises with his critics. He is
adept at such give-and-take and has used it as a
key political tool throughout his 18-year tenure.
In Kadar's favor is the fact that', his domestic
critics do not present a solid front. Kadar may
well emulate the "salami tactics" of his Stalinist
predecessor, Rakosi--not to purge, 'but to "slice
off" issues and critics piecemeall
V The Soviets, of course, can set the limits of
Kad is actions. If Moscow is intent on extracting
further concessions from him, it can give the
conservatives a relatively free hand. Nevertheless,
stability in Hungary is a clear priority for both
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Budapest and Moscow and, for the moment, the
memory of 1956 may be sufficient to temper
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a'jbaris has authorized 38.3 billion francs for
defense in its 1974 budget-the equivalent of
about US $8 billion at current exchange rates.
This is an 11-percent rise over the outlay for
defense last year, but there will be little change in
defense spending in real terms, because the in-
crease will be almost entirely absorbed by
inflation
57 The authorized defense expenditures ac-
tuali'y represent a slight decline in comparison
with last year if measured against France's gross
national product. The allocation this year is about
3 percent of the GNP, a slight further decline in
the percentage of the GNP expended for defense
from the high in 1959 of 5.78 percent. This
decline was briefly halted in 1972 and 1973 when
the figure held steady at 3.1 percent of GNP1
S s Operating costs will absorb the lion's share
of he military budget-53.3 percent. Personnel
expenditures, which account for about three
quarters of the operating costs, will again rise this
year because of inflation and recently authorized
increases in pay. Enlisted men's pay has been
boosted and financial incentives have been of-
fered officers to stay in the service:]
S S In capital expenditures, French nuclear
forces continue to receive high priority. The
strategic nuclear forces are to receive about a
third of the total appropriations for new equip-
ment. Research and development costs for future
strategic systems, and the navy's expansion of its
nuclear-powered ballistic missile submarine force,
will absorb a considerable portion of the available
funds. France's fourth missile submarine is ex-
pected to be launched in Aril, and construction
of a fifth will begin shortly.
7 {The capital expenditures portion of the
budget also provides for further expansion of
France's tactical nuclear forces. Sums for tactical
nuclear weapons are five times greater than last
year-the equivalent of about US $130 million. A
considerable portion of this amount will go to the
production of the Pluton, a surface-to-surface
tactical nuclear missile system that will become
operational with the army this year:,
5-71Spending for conventional forces will remain
at about 1973 levels, although some modern-
ization of these forces will becall'rried out. The air
force, for example, will receive additional Jaguar
and Mirage 5 fighter-bombers as well as Mirage Fl
interceptors. The navy will begin construction of
four destroyers and two corvettes, and will
continue design work on a nuclear-powered
helicopter carrier. The army will receive more
new tanks, armored personnel carriers, self-
propelled artillery, and helicopters.]
LITTLE CHANGE IN DEFENSE SPENDING
IN REAL TERMS-NUCLEAR FORCES
RECEIVE HIGH PRIORITY-CONVEN-
TIONALS ALLOWED SOME MODERNIZA-
TION-A NEW SUPERSONIC FIGHTER-
BOMBER IS AUTHORIZED.
S-51Perhaps the most significant new item in the
1974 budget is authorization for the air force to
begin development of a new supersonic fighter-
bomber. This aircraft, scheduled for its initial
flight in 1976, is expected tojcost the equivalent
of US $16.8 million each. Planned as a multi-
purpose fighter, it is intended to replace the
Mirage IIIE interceptor and possibly the Mirage
IV strategic bomber during the 1980s.}
r7 lover the past several months, France, along
with several other NATO countries, has expressed
a need for improved antitank and antiaircraft
weapons, better air support', and more sophisti-
cated military electronics. This concern is a direct
response to lessons learned in the Middle East war
last October. The 1974 budget provides for only
limited research and development in these areas.
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ICELAND: A BASE OFFER
-(? JThe Icelandic Government's first official
proposals for revising the defense agreement rep-
resent Reykjavik's maximum demands and are
described as a "basis for discussion." The propo-
sals were leaked last week by Communist leaders.
Speaking before parliament on March 25, Prime
Minister Johannesson conceded that the Icelandic
position could be altered during subsequent
rounds of negotiations, and that the "final out-
come" might not correspond to his government's
latest demands]
51 Under Reykjavik's plan, the US would be
required to withdraw all of its forces from the
NATO base at Keflavik. The pull-out would occur
in stages, with one quarter of the troops being
withdrawn before the end of 1974 and further
withdrawals occurring every six months until the
entire force will have departed by mid-1976. The
base would become an emergency NATO airfield
with a small civilian caretaker staff, and would be
under the protection of Icelandic police. 7
(,O (The future of the Keflavik base has been a
divisive issue in Iceland. Disagreements within the
ruling tripartite coalition of the Progressive Party,
the Liberal Left Organization, and the Commu-
nists have forced repeated postponements of ne-
gotiations after the first round ended last Novem-
ber. A nationwide signature campaign sponsored
by supporters of the base this winter was surpris-
ingly successful. Johannesson's review of his gov-
ernment's new proposals sparked a heated debate
in parliament and elicited a sharp response from
the opposition Social Democratic and Independ-
ence Party leaders, who favor retention of the
base. More significantly, a deputy of Johannes-
son's own Progressive Party declared he would
not support the government's move against the
base, raising the possibility of other defections
that might deprive the coalition of its parlia-
mentary majority.?
(~C The hard line taken by the Johannesson gov-
ernment suggests that these initial proposals are
intended in part to improve Iceland's bargaining
position. Beyond this possible consideration,
however, the Progressives and Liberal Leftists
evidently felt compelled to placate the Commu-
nists with a tough line. They may hope to dis-
suade the Communists from bolting the coalition,
thus bringing down the government, at least until
later in the year. Iceland will celebrate its 1,100th
anniversary this summer, and moderate leaders
may hope to avoid an embarrassing interregnum
or a bitter political campai n at that ti e.
F~
COMMUNIST CARS INVAfE THE WEST
The increasing rate o Soviet and Eastern
Eur pean auto sales in Western Europe is causing
concern, particularly in the UK, where the impact
has been greatest. British imports from the USSR
doubled last year and are expected to double
again in 1974. Imports from Eastern Europe are
also growing steadily. British dealers complain
that Communist-made cars-the Soviet Moskvich,
the Czech Skoda, and the East German Wartburg
with price tags of $1,700 to $2,100-are much
cheaper than comparable Western-made cars.
Moreover, this year two new models, the Soviet
Lada and the Polish Fiat 125, both built under
license from Fiat of Italy, are being marketed in
Western Europe at prices several hundred dollars
below similar Italian-made Fiats.
Although imports of cars from the Commu-
nist countries amount to less than one percent of
Western Europe's 12 million annual output, they
are increasing rapidly as new dealerships are estab-
lished. Last year, Western Europe imported
106,000 cars, about 50 percent more than in
1972;leading importers after the UK were France,
Finland, and West Germany.
This year, for the first time, Soviet sales may
outstrip those of other East European manu-
facturers. Moscow is setting up dealerships for its
Lada in the UK, France, West Germany, and
Austria; Soviet dealerships already are operating
in Belgium, Switzerland, Finland, and Scandi-
navia. Last year, about 20,000 Ladas were mar-
keted in Western Europe and the number this
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Typical Prices of Communist
Cars in the West
Moskvich (USSR)
$1755
Wartburg (East Germany)
1910
Skoda
(Czechoslovakia)
2085
Fiat 125
(Poland)
2200
Lada
(USSR)
2315
Exports of Communist Cars
to Western Markets
USSR
41,000
Czechoslovakia
33,000
Yugoslavia
17,000
Poland
10,000
East Germany
5,000
Total
106,000
year could rise to 100,000; total Soviet car out-
put is expected to reach 1 million cars.
Communist automotive industries have
limited experience with modern production tech-
niques, so that their cars are lower in quality and
workmanship than Western counterparts. The
Moskvich brake system is not satisfactory by Brit-
ish standards, for example, and the Wartburg was
built with defective front wheel bearings that
necessitated a recall. Moreover, most Communist-
made cars, even those built under Fiat license,
lack the smooth riding and easy handling charac-
teristics of Western models.
Despite these drawbacks, buyers in the West
are attracted by the cheap prices, economy of
operation, and rugged construction of the Com-
munist-made cars, which are built to last on rough
roads and are often featured as "country cars."
The low prices of Communist cars are becoming
even more attractive as inflation drives up the
price of cars made in the West.. On the British
market, for example, the price of a Moskvich has
changed little since 1970, whereas other car prices
have increased 10 to 20 percent.
The Soviet automobile industry is already
bearing much of the burden in Moscow's attempt
to increase sales of manufactured goods in the
West. After 1975, when Soviet planners expect
domestic demand to moderate, exports to West-
ern Europe could reach even higher levels. Else-
where in Eastern Europe, Poland is pushing ex-
ports of the Fiat 125, Czechoslovakia is doubling
the size of its industry to boost exports, and
Yugoslavia, already burdened with a mounting
inventory of unsold cars, is seeking to increase
exports to the West. The long run success of these
Communist export programs will depend on the
ability of domestic industries to turn out high-
quality cars backed up by reliable service. Mar-
keting cars in the West is certain to become more
difficult in the years ahead as regulations on emis-
sion control, safety, and fuel economy im ose
new burdens on Communist roducers.
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KURDISH AUTONOMY BY DECREE
(~Jn sr .t~ecrr~)
Baghdad is apparently attempting to im-
plement its Kurdish autonomy plan by decree
rather than by force. On March 26, the govern-
ment's deadline for Kurdish acceptance of the
plan, President Bakr issued several decrees de-
signed to set the basic plan in motion. The de-
crees, announced over Radio Baghdad and relayed
to the international press by the Iraqi News
Agency, provide for:
? regional elections in the Kurdish area by
October 1 and the formation of an 80-
member Kurdish legislative council;
? an "appeals district" in the rebel area,
presumably to deal with Kurdish complaints
against the government;
? a 30-day amnesty period for all Kurds
who had once served in the Iraqi Army or
civil service but had since defected to the
rebels.
Other decrees presumably will follow if the
area remains calm. The wide play being given the
decrees suggests they are intended more as propa-
ganda than as serious attempts to resolve the
dispute. In any case, implementation of the plan
will be opposed by the Kurdish rebels. Their
leaders rejected the government's autonomy plan
earlier this month, and there is no sign that they
have changed their views.
Claims by both sides to the oil-rich Kirkuk
oil region remain the major obstacle to an easing
of the situation. Rebel leader Barzani claims the
area belongs within Kurdish jurdisdiction and that
oil revenues from the area should be split evenly
between the government and the Kurds. Baghdad,
because of the importance of Kirkuk oil to the
Iraqi economy, claims the majority of the in-
habitants of the Kirkuk area are not Kurds and
regards the issue as non-negotiable.
Scattered skirmishes are continuing
heavy fighting could break out
both sides seem to be moving cautiously. The
government, which is continuing its military
build-up in the vicinity of Kirkuk, now has more
than three divisions ready to move against the
Kurds if necessary. There is no indication, how-
ever, that an all-out attack on tribal strongholds is
imminent. The Kurdish rebels also have mobilized
but, for the moment at least, do not appear ready
to take offensive measures.
(3 jMarshal Grechko was in Baghdad this week,
charged with strengthening Soviet-Iraqi ties. With
their influence ebbing elsewhere in the Middle
,5East, the Soviets attach even greater importance
to keeping Iraq as one of their most dependable
friends in the region?
~ 5 IThe status of Soviet military aid was
prob bly a major topic of discussion. Iraq was the
third largest recipient of Soviet arms in the
Middle East in 1973, after Egypt and Syria.
Soviet naval visits to the port of Umm Qasr may
have also been discussed. Soviet use of this port
increased considerably during the past year.
(v5 )The Kurdish problem, which threatened to
heat up during Grechko's stay in Baghdad, was
probably also on the agenda. Moscow has publicly
backed Iraq's plan for Kurdish autonomy and
Grechko may have offered advice on how to
resolve the issue
'' IGrechko may also have encouraged Iraq to
settle peacefully the border dispute with Iran.
c.rWhile Moscow leans toward Baghdad rather than
Tehran, the Soviets in public have stayed neutral
and have tried to maintain good relations with
both
The communique following Grechko's visit
.
-3
makes no mention of either the Kurdish roblem
and or the border dispute with Iran.
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FOREIGN AI FOR SAHE DROUGHT
(,G - 7
Despite sive foreign relief commitments,
food supplies are still critically short in five of the
six countries of the famine-stricken African
Sahel--Chad, Mali, Mauritania, Niger, and Upper
Volta. The continuing drought is as disastrous for
crops this year as last, and Ethiopia and several
other East African countries recently joined the
list of afflicted nations. Only Senegal, which was
stricken last year, has had nearly adequate rainfall
this year.
As they did last year, donors are concen-
trating on immediate relief needs, especially food.
Last year, most aid came from Western donors.
Communist countries provided less than 10 per-
cent of the total; the US contribution was about
30 percent, and the EC's 22 percent. Donors
committed themselves to provide 620,000 tons of
grain (almost half by the US), but only about
450,000 tons were delivered in time because of
lagging shipments by donors and inland transport
problems.
The amount of grain committed for 1974
should satisfy estimated import ''requirements of
approximately 600,000 tons for, the Sahel coun-
tries in the first nine months of 1974. Pledges of
high-protein foods, money, and relief supplies
should also be adequate. Distribution of food to
outlying areas has been slow, however, and as in
1973, may again result in widespread food short-
ages. UN Secretary General WaIdF eim pointed out
after a recent trip to the region that transporta-
tion and internal distribution are now the major
problems rather than obtaining new shipments.
Meanwhile, longer term corrective programs
such as irrigation and reforestation are being
started, but they require substantial time to
implement. A study by the USN Development
Program of medium- and long-term economic
development requirements is under way, but it
will not be cornfeted until 1975.
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UGANDA: MORE ARMY BLOODSHED
3[-President Idi Amin continues in control after
a othher violent clash between his supporters and
opponents in the tension-ridden Ugandan Army.
The latest bloodshed occurred against a back-
ground of increased tribal and religious animos-
ities stimulated by Amin's determination to elimi-
nate all potential rivals and to convert Uganda to
a Muslim stater
'VThe circumstances surrounding the shooting
betty en army elements in Kampala on March 24
remain obscure. The regime attributed the "con-
fusion" to a prominent Christian officer, Briga-
dier Charles Arube, who was accused of having
duped soldiers of an elite unit into occupying key
installations. Government broadcasts said that
loyal troops had quickly restored order and that
Arube had committed suicide.1
g2, Other versions, which appear more credible,
say the trouble began with the kidnaping of
Arube by security officials at Amin's behest.
Troops from the Lugbara tribe, sympathetic to
Arube and having other grievances against Amin,
reportedly storimed several installations, including
the prison where it was believed Arube was being
held, before beiing crushed
'q [Initially, the Lugbara supported Amin, af
member of the small Kakwa tribe, against other
tribal groups, but during the past year Amin had
come to suspect their loyalty and began removing
them from key military positions. As a result,
Lugbara hostility to Amin grew, reaching a high
point two weeks ago when a popular Lugbara
officer and former foreign minister was kidnaped
and murdered by Amin's men. Press sources re-
port that Amin has now begun a large-scale purge
of Lugbaras from the army .1
Fq Tribal friction within the military has been
intense ever since Amin took power in a coup in
January 1971. Men and officers from several
tribal groups have, in turn, been purged and some-
times killed as Amin has pushed forward members
of his small Kakwa tribe. In recent months, Amin,
a member of Uganda's small Muslim minority, has
added to tensions in the army by deliberately
removing Christian officers from troop com-
mands. Amin's vendetta against Christian officers
appears to have been stepped up as he has pressed
for political and military ties with the Arab coun-
USSR: HIGH ABOVE THE INDIAN OCEAN
he Soviets, using an SL-12 space booster,
placed a satellite in a geo-s nchronous orbit for
the first time on March 26.
`t VThis may be the first step in a program to
develop a geo-synchronous communications satel-
lite. On several occasions since 1969, Soviet space
scientists have spoken of placing such a satellite
over the Indian Ocean for international communi-
cations. In this orbit, most ground stations in the
Soviet Union could relay messages via a single
satellite 24 hours a day. US communications sat-
ellites are in similar orbits over the Atlantic and
Pacific Oceans.
The Soviets have also mentioned placing
Q
~rrfet orological and scientific payloads in geo-
synchronous orbits. A variety of other mission:25X1
could be performed by satellites in such orbits,
including strategic early warning and intelligence
gathering.
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BANGLADESH: AILING LEADER, AILING
Ed
(0S6UACEd
Decision-making in troubled Bangladesh will
be virtually paralyzed during the absence of the
country's founding father, Prime Minister Mujibur
Rahman, who flew to the Soviet Union last week
for medical treatment. Mujib, who may be seri-
ously ill, left behind a fragmented administration
and a deteriorating law-and-order situation.
In a health bulletin issued in Moscow on
March 25, Mujib's illness was officially described
as acute bronchitis, and it was said that treatment
would require a minimum of three weeks. Ru-
mors have circulated in Dacca and elsewhere on
the subcontinent that Mujib may have a heart
condition or lung or throat cancer. Another possi-
bility is pulmonary tuberculosis, a disease he has
had in the past.
The Prime Minister has insisted on retaining
in his own hands the entire decision-making
authority for his government. Cabinet members,
grouped into competing factipns, presumably will
mark time until their leader's return. Minister of
Commerce Syed Nazrul Islam is acting prime min-
ister, but he exercises little real authority. Should
Mujib be removed from the political scene in the
foreseeable future, a disruptive struggle for power
could result, with little indication as to who
would emerge victorious. No other political leader
can claim even a small part of ,the massive popular
support that Mujib enjoys.
Murders, many politically motivated, con-
tinue in Bangladesh. Two pominent leaders of
Mujib's ruling Awami League were killed in a
48-hour period on March 22f23. At least several
hundred persons have been killed for political
reasons since independence in December 1971.
Additionally, bands of politiiical extremists are
roaming through rural areas, often attacking
police stations in attempts to secure arms. Non-
political crimes are also on the!, increase because of
bad economic conditions.
On March 17, an anti-government demon-
stration in Dacca by the largest of the opposition
parties, the Jatiya Samajtantrik Dal, resulted in a
clash with police, several deths, and many in
juries. The party's two leaders were promptly
arrested on charges of foment'ng violence. As has
happened in the past when opposition parties
precipitated violent confrontations with the gov-
ernment, the Awami League and its satellite
organizations responded, apparently setting fire
the following day to the Dacca headquarters of
the Jatiya Samajtantrik Dal party.
The public is presently heaping much of the
blame for the economic ills' of the nation on
neighboring India. The government, under-
standably, has not been unwilling to see New
Delhi tagged with the responsibility-however un-
warranted-for shortages and ',high prices. Anti-
Indian feelings, however, may eventually be re-
flected in growing resentment of the Hindu
minority in Bangladesh, with the possibility of
communal violence that has long plagued
Bengal.
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'y 2 wring his most recent press conference,
President Velasco indicated that his military gov-
ernment is ready to promulgate the long-delayed
q0 social property law. This will complete the re-
gime's basic blueprint for restructuring the coun-
try's economy:
be long and painful. One of the first problems the
regime must face is the extent of government
control. There are indications that the military
has learned some lessons from its experience in
attempting to develop a base of popular support
gffthrough its national mobilization agency,
)SINAMOS. Basic distaste for military tutelage and
$9, draft of the law was made public lastcr6 the regime's often heavy-handed tactics have
August and aroused considerable debate, in- created opposition among the poor-the very
qb cluding criticism by some top generals. Velasco
has denied charges that the law is an attempt to
communize Peruvian economic life. The character
of the program, however, will probably leave little
doubt that the government plans to strengthen its
control of the nation's economy. When the law is
implemented the social property system will be
added to the three existing operational "sectors"
into which commercial enterprises have been
divided:
? "basic:" industries under exclusive state
control;
? "industrial communities" that even-
tually will allow workers to control fifty per-
cent of individual businesses;
? completely private business limited to
the smallest firms.
people in whose interests it claims to be working.
In addition, independent businessmen are likely
to resist efforts to convert to or compete with
social property enterprises]
~6 (Nevertheless, the government, particularly
President Velasco, appears committed to the
social property concept in some form. If neces-
sary, the regime probably will force private busi-
nesses to go along. The risks of further opposition
and possible economic disruption would thereby
be magnified, a prospect that is likely to prompt
the government to operate gingerly during the
initial phase of the new program.
In addition, since 1970 the government has
carried out an extensive agrarian reform program, q1 [Political factions attempting to topple the
whereby private holdings are being transformed oppressive and economically irresponsible regime
into worker-dominated cooperatives.( q of Prime Minister Eric Gairy have brought the
island's economy to a standstill. Striking dock-
,Fq SAs envisaged in the draft law, the governq "workers have curtailed imports of foodstuffs and
rient will provide financing for workers to estab- petroleum products and have blocked agricultural
9o lish social property enterprises in any business not exports. Urban and rural unemployment is
set aside for state control. In addition, a large mounting rapidly. The continuing instability has
portion of the profits from the enterprises will be practically halted the normally thriving tourist
plowed back into a central fund to provide capital industry, which provides more than half of the
for new enterprises. Apparently, the government island's national income
hopes that the social property sector eventually
will become the dominant element among small
and medium-sized businesses) 93 JWith the economic decline, the government
faces serious problems in finding the $1.5 million
The transition of the social property concept needed monthly to pay salaries and meet other
from a basic: law to a viable program is likely to -obligations. Tax revenues have all but
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disappeared. UK budgetary aid, which had been
granted annually, ended when the island became
independent on February 7, and other types of
foreign grants and loans have dried up. The Prime
Minister has been seeking, unsuccessfully so far,
new aid from the US and the UK]
95 rairy has already proven him~self unequal to
the task of economic planning and unwilling to
effect accommodation with his political op-
position. Private investment, a necessary in-
gredient in economic recovery, is unlikely to rise
as long as Gairy remains in control, and Gairy is
not likely to be ousted in the immediate future,
Unless Gairy turns his efforts to economic
p I a n i ng, sounder management, and accom-
modation with the opposition, the economic situ- C Time is on the side of the opposition,
ation will continue to deteriorate. Only reopening how ver. Despite his support among the rural
the ports and a return to normal conditions will o5poor, the pressures for Gairy's resignation are sure
halt the downturn and revive tourist trade. Sea- to increase as economic conditions deteriorate.
men and dockworkers, whose three-month strike Gairy would not be able to hold out for long if
has thoroughly disrupted the economy, have participants in the pre-independence general
offered to return to work if Gairy will reopen an strike, augmented by unpaid sch '9ol teachers and
investigation into police brutality. Gairy has civil servants, should combine for es in a renewed
ignored even this moderate condition.) effort to oust him.
UN: SPECIAL SESSION APPROACHES
46 JTAlthough the special session of the General
Assembly on the problem of raw materials and
development opens on April 9, preparations are
far from complete. The Group of 77-in fact, 96
developing countries who coordinate policies
within the UN framework-is still divided on the
question of including on the agenda an examina-
tion of the impact of higher oil prices on the
economies of developing states. The developed
states, for their part, are increasingly aware of the
potential of third-world countries to control raw
materials, and the possibility that raw material
suppliers might organize additional cartels. The
industrialized states would, in general, prefer that
the session not undertake any moves that might
lead to a substantial re-ordering of world eco-
nomic relationships
--A [The terms of the session, called by Algerian
resi ent Boumediene, are based primarily on
resolutions passed at the fourth nonaligned
conference held in Algiers last September. These
resolutions, drafted largely by Algeria, call for a
new economic equilibrium between developed
and developing states, and for the nonaligned
states to assert greater control over their natural
resources
the Group of 77 and the nonaligned nations
l~Ave met almost continuously since the session
was formally called in an attempt to develop a
common position for the conference. They have
formulated a far-reaching but noi-specific declar-
ation of principles that includes:
? international cooperation, to banish dis-
parities among nations, with special concern
for the needs of the least-developed states;
? recognition of every coiuntry's sover-
eignty over its own resources and domestic
economy;I
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97 ? regulation and control of multinational
co porations;
? an end to colonial and racial domination
of developing states and assistance to over-
come such domination;
? transfer of technology; and
? reform of the international monetary
system and development of preferential trade
privileges for developing economies.!
rNo agreement has been reached, however, on
the most sensitive issue-the effect of the increase
in energy prices on the economies of the de-
veloping states. Oil-exporting members do not
want the session to focus on oil, while the oil-
importing states of Africa, Asia, and Latin
America insist on discussing the oil problem. The
issue of higher oil prices is the first major test of
nonaligned solidarity in the face of competing
national interests since the summit last
Septem berg
i~ The stand of the oil-producing states may be
strengthened by continued interest in a French
proposal for a separate UN conference on energy
matters. The French UN delegation-with Al-
gerian approval-recently reaffirmed Paris' con-
tinued interest in such a meeting, originally pro-
posed before the Boumediene initiative. The
French intend to explore the question in various
UN regional economic or anizations before
calling for a world conference
[The oil importers among the developing
states as well as the more moderate countries in
the Group of 77 feel that the approach taken in
the declaration of principles may not only pro-
voke a confrontation with the developed states
but could also fail to provide practical solutions
to development problems. A nine-member group
is meeting to draft an alternative proposal. The
group, which includes oil producers as well as
importers, will seek to develop specific economic
points for General Assembly consideration. The
working group will present its findings to the
Group of 77 on April 47
179 Among the developed countries, a change of
focu in how to deal with the question of re-
sources is affecting their policies toward the third
world and slowing their attempts to develop a
policy for the session. This change is illustrated
by the shift in emphasis in the EC's preparations
for negotiations with the associated and would-be
associated African, Caribbean, and Pacific states.
The EC Commission is now thinking of programs
that would provide assured supplies of raw ma-
terials to EC members-as a quid pro quo for
guaranteed minimum purchases at established
prices from the developing exporters. Earlier, it
had been considering programs that would have
provided development aid through revenue sup-
plements to exporters during lean years?
q( [On April 1, the EC will consider a proposal
forml~lated by the EC Commission for an inter-
national fund to provide aid to those developing
countries most affected by the increase in oil
prices. As envisaged, the $3 billion fund, to which
the EC would contribute $500 million, would
also receive money from the US and oil-producing
states. The commission's intention was for the
proposal to be presented to the General Assembly
as a community initiative, but approval by all the
Nine now seems unlikely
0. 1bivisions among third-world countries may
mitigate the overwhelming voting superiority of
the Group of 77 and the nonaligned in the Gen-
eral Assembly, and thus soften or even turn back
radical proposals. Complete frustration of the
developing countries' desire for recognition of
their being "short-changed" on raw materials
trade, however, could provoke the kind of rich-
poor confrontation that the industrialized nations
hope to avoid. In such an atmosphere, some of
the developed countries could become more in-
terested in vying for third-world favor than in
maintainin solidarit
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