WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010800080002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 21, 2016
• Document Release Date: April 28, 2008
• Sequence Number: 2
• Publication Date: May 17, 1974
• Content Type: SUMMARY

Approved For Release 2008/04/28: CIA-RDP79-00927A010800080002-5
NOW N%00
Weekly Summary
DIA Review
Completed.
Secret
Secret
17 May 1974
No. 0020/74
25X1
Copy N? 58,
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CONTENTS (May 17.1974)
1 France: Photo Finish
2 Portugal: Provisional Government
i-st d e erv i-riday morning :ay
ek itn-ough noon on i nursvd'V, It
urcirndied with or prepared icy
,~ ;~cterice arri ec.n,ic~rc~yy.
?eatuieni atltt ti,r~ric_=~C
?t: ~aor is ere Iiteri it-~ _le
4 Cambodia: Political Stirrings
5 China-Laos: Roadbuilding Continues
6 China: Chou Still in the Saddle
7 USSR - Eastern Europe:
Crop Prospects
8 Italy: Divorce by a Landslide
9 Iceland: Election Campaign Begins
EAST AS I A
PACIFIC
1.2 European Free Trade Confederation
14 Romania-Bulgaria: Leaders Talk
MIDDLE EAST
AFRICA
14 Syria-Israel: The Golan Front
15 Israel: Maalot Incident
16 Soviet Economic Aid to Egypt
17 Ethiopia: ConservativesWin a Round
1.7 Cyprus: Growing Tensions
WESTERN
HEMISPHERE
1.9 Honduras: Student Violence
19 Brazil: Press Censorship Increased
25X6
25X6
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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NOW/ SECRET --
France: Photo Finish
f IThe French presidential hopefuls are coming
down to the wire in a dead heat, Giscard and
Mitterrand are both flailing about in search of
new issues, endorsing everything from minimum
wages to indemnification of czarist bonds in a
last-ditch effort to win the crucial floating votes
that will decide the election on May 19.)
Some of the most recent polls show voters
split 50-50. Rival polls have put Giscard mar-
ginally ahead, but the race will obviously be a
close one, Should the election be as close as
predicted, the outcome may hang on the 2.6
percent overseas vote, which will delay the ver-
dict. in the event of
a "photo finish"-one percent or less-ballots will
be recounted. This procedure could cause a three-
day delay in the publication of the official resultsl
[the ideological views of the two candidates
differ sharply, but the distinctions between their
platforms have gradually become blurred as both
Giscard and Mitterrand have sought to appeal to
as broad a spectrum of voters as possible. Giscard
has wooed the working class and suggested a
minimum wage of $240 a month, while Mitter-
rand has promised that he has no intention of
increasing the taxes of middle-level executives or
of fiddling with their private pension schemes.
Both are for "change" and their slogans are al-
most identical: Mitterrand-"A president for all
the Fren h"; Giscard-"The president of all the
French.
"J
trhe most distinctive features contained in
the common program Mitterrand has nego-
tiated with the Communist and other leftist
parties are the nationalization of eight or nine
giant industrial firms and the state control of
private banks and insurance companies. Mitter-
rand has asserted that he would draw the line
there, and that he does not favor wholesale na-
tionalization. By raising the specter of even
limited nationalization, however, Mitterrand has
driven many centrist political leaders, including
Jean-Jacques Servan-Schreiber, and their fol-
lowers reluctantly into Giscard's camp. I
(The televised debate between the candidates
on May 10 was generally conceded a draw, but
during his concluding remarks Giscard struck a
significant blow when he accused Mitterrand of
being a man of the past-a man, by implication,
who not only represents an outdated socialism,
but who also refuses to grapple with the effects of
his "common program" on France's future.
Earlier Giscard had characterized his own first
round victory as the birth of a "great wave of
youth and enthusiasm."i
1) rGiscard is considered by many Frenchmen
to have a better grasp of the complexities of
modern society-to have judged more accurately
the pulse of contemporary France, which he sees,
not as a society of classes, but as an industrialized
"national collectivity." Giscard is gambling that
the prevalent French mood is a desire to change
the existing society, not to create a new
Page 1
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Portugal
PROVISIONAL GOVERNMENT
C )
A broadly based coali(icir? government that
inclddes two communists was sworn in this week
with the avowed aim of guiding Portugal into a
democratic era after nearly 50 years of authori-
tarian rule.
It is a provisional government that will rule
only until elections are held sometime before
April 1975. The military junta, which seized
power last month, will monitor the government's
activities. Under an interim constitutional decree
issued this week, the armed forces will be com-
pletely independent from the government. The
armed forces chief of staff General Costa Gomes
will have equal status with the prime minister.
The 15-member cabinet appears to have rep-
resentatives from all portions of the political spec-
trum, although the absence of political parties in
Portugal for so many years makes it difficult to
pinpoint political affiliations. The foreign, justice,
and information ministries went to members of
the Socialist Party. Alvaro Cunhal, secretary-
general of the Communist Party, was named min-
ister without portfolio, and another Communist
official was appointed minister of labor.
The new prime minister is former bar asso-
ciation president Adelino da Palma Carlos, a
wealthy lawyer and professor who has not been
aligned with any political party. His political phi-
losophy is thought to be right of center.
General Spinola, who assumed the office of
President on May 15, remains the most powerful
man in Portugal. In his inaugural address, he
warned against excesses and bestowed lavish
praise on the Armed Forces Movement. He was
especially complimentary to the "younger
cadres" whose "nobility," he said, "rescued the
country from national tragedy."
In contrast to the blandishments Spinola lav-
ished on the younger officers, the junta an-
nounced yesterday that 42 senior officers had
been placed on the reserve list, bringing to 66 the
number of high-ranking officers who have been
purged since the coup. Among those purged are
several prominent conservatives who do not sup-
port Spinola's notions of self-determination for
the African territories.
These members of the Portuguese provisional government
and their offices are: (L, front to back) Alvaro Cunha],
Communist, minister without portfolio; Mario Soares, So-
cialist, foreign minister; Avelino Pacheco Goncalves, Com-
munist, minister of labor. (Center) Raul Rego, Socialist,
information minister. (R, front to back) Adelino da Palma
Carlos, nonaligned, prime minister; Manuel Rocha, non-
aligned, minister of public works; and Francisco Salgado
Zenha, Socialist, minister of justice.
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In his address, Spinola repeated many of the
promises for a more open society that he made
immediately after the junta seized power. He also
stressed that minorities "whether they be here or
in Africa" should not interfere with the demo-
cratic process. He did not identify the minorities,
but in Africa it could apply both to the white
settlers and the black insurgents. At home, he
probably was referring to leftists who have moved
to take over local government offices and por-
tions of the business community..
P fhe new provisional government in Lisbon
faces a wide array of problems in the African
territories. The insurgent movements have either
rejected outright Lisbon's offer of a cease-fire, or
they have proposed conditions the Portuguese
may find hard to meet. Some white settlers,
meanwhile, are voicing concern over Lisbon's in-
tentions in the territories, and there have been a
few incidents between blacks and whites.
Pn May 13, leaders of the insurgent move-
ment in Portuguese Guinea announced that they
were prepared to begin negotiations with Lisbon
"with or without a cease-fire." The rebel offer,
which gives both sides considerable leeway, in-
cluded the condition that Lisbon recognize the
"right of independence" for the "Republic of
Guinea-Bissau," proclaimed by the insurgents last
fall, as well a for the peoples of Angola and
Mozambique. I
7 JThe junta termed the offer "constructive."
The newly formed government in Lisbon will give
it careful consideration, but may find it difficult
to accept all the rebel conditions. Lisbon prefers
to deal with the three territories separately, and is
likely to make its response applicable only to
Portuguese Guinea. So far, the Portuguese Gov-
ernment has offered the insurgents an equal
chance with newly emerging political organiza-
tions to determine the future of the territories.
Lisbon has recognized the territories' right of
self-determination, acknowledging the risk of
eventual independence, but it hopes for a close
federation with them, particularly with Angola
and Mozambique
' [On the same day the Portuguese Guinea
rebels made their offer, Angolan and Mozambique
insurgent leaders and representatives of black
African governments supporting them, meeting in
Dar es Salaam, called for increased military activ-
ity by the rebels. In Mozambique, the rebels have
recently intensified military action in the central
part of the territory, an area of heavy white
settler concentration, following a brief lull after
the coup last month in Lisbon...
[Unrest is high in the area as a result of the
insurgency and an economic decline. A visit last
weekend by armed forces chief of staff General
Costa Gomes was marred by demonstrations by
angry whites protesting inadequate military pro-
tection. On May 12, an angry rock-throwing
crowd of whites broke up a political rally in a
black suburb of Beira. Blacks retaliated by ac-
costing whites who later tried to pass through the
suburb
rMany Mozambicans believe Lisbon is ready
to offer favored treatment to the insurgents. This
belief has probably been reinforced by knowledge
that Lisbon has commissioned several former
political prisoners, all well-known blacks, in-
cluding a brother of an insurgent leader, to pre-
sent its case to the rebels. The ex-prisoners are
expected to arrive in Dar es Salaam, where the
rebels maintain headquarters, within a few days. 7
./ n Angola, the level of insurgency has been
low for the past few years, and Lisbon is under no
immediate military pressure to accommodate
rebel groups there. The Portuguese Government,
however, is apparently worried that the insurgents
are preparing for a military push in northern
Angola and is augmenting its military forces there
with troops from other parts of the terri-
tory.
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CAMBODIA: POLITICAL STIRRINGS
l TSome familiar political problems upstaged
t e military situation this week. Student and
teacher activists in Phnom Penh, who tended to
their academic pursuits for the past month, have
resumed criticism of the government. Students
decorated some schools in the capital with ban-
ners and posters denouncing the government for
its inability to reduce inflation and curb corrup-
tion, and student leaders called for large anti-gov-
ernment demonstrations. Some teachers have
gone back on strike to protest anew their inade-
quate salaries, while others have been pushing for
another national teachers' congress on May 17 to
voice their lack of confidence in the government
)O Trying to keep the unrest within bounds,
Prim Minister Long Boret announced a few new
measures aimed at easing some of the teachers'
economic problems. Defense Minister Thappana
Nginn, meanwhile, accused the Khmer Commu-
nists of stirring up the students and teachers and
stated that tighter security measures were being
put into effect in Phnom Penh. Cambodian Army
Chief General Fernandez, however, has indicated
that government security forces in the capital will
avoid confrontations with students and teachers
in order to prevent major disorders from oc-
curring.
I C) (Lon Nol has used the unsettled situation to
force another "state of danger" declaration from
the legislature, similar to the one that expired in
early April. The new declaration, which is valid
for six months, gives the government special
powers enabling it to suspend such constitutional
rights as freedom of assembly. The President
presumably intends to use the document, if
necessary, as a legal basis for any moves against
antigovernment elements exploiting legitimate
grievances/
ON THE MILITARY FRONT
11 Khmer Communist forces well north of
Phnom Penh launched their anticipated attacks
against the provincial capital of Kompong Thom.
Sporadic Communist artillery fire caused little
damage, however, and ground assaults against the
city's outlying defenses were repulsed. The at-
tacks did not prevent the airliftin of additional
reinforcements to Kompong Thom
r t fin the southwest, government holdings along
the 90-mile stretch of Route 4 between Kompong
Speu City and Ream have been reduced to two
garrison positions. The army high command is
building up its forces at Ream by pulling addi-
tional units out of Kampot City. Thus far, there
are no indications that the Communists are pre-
paring for any major attacks against the naval and
air bases at Ream or the nearby seaport at
Kompong SomI
J1 \Fighting was light on other battlefronts.
overnment troops north of Phnom Penh at
Lovek have expanded their perimeter against
slowly diminishing resistance, while east of the
capital Cambodian Army defenders at the provin-
cial capital of Prey Veng have faced c ly light
shellings and ground probes.
Government\\
garrisons Kompong
I _ spec
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A UirFKiV SUMMARY May 17. 74
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JCL'1 I Now,
CHINA-LAOS: ROADBUILDING CONTINUES
l..) [The Chinese are continuing to expand their
road network in the northwest as the monsoon
season approaches. Once heavy rains begin, work
will be generally limited to maintenances
'Recent aerial photography shows that a road
being built from Muong Sai toward Nam Bac has
been extended ten miles since December and is
now within five miles of the town. The Chinese
have also erected a construction camp of some 35
buildings at Nam Bac over the past three months,
indicating that the road will be extended at least
that far. 7
Chinese Road Network in Northwest Laos
Ban Xien Kok
J~ \t
SECRET
' [Work also continues at Muong Khoua, where
a large number of buildings have recently been
constructed on both sides of the Ou River. A
pontoon bridge suitable only for foot or bicycle
traffic now connects the two sides, along with a
ferry that has been in operation for some time=
14 [Road clearing operations are going on south
of uong Hai and may link that town with Route
412. Elsewhere, construction of what appears to
be a new village has been noted on the south side
of the Mekong River near Pak Beng. Of the 12
structures observed, four appear to be storage
- Chinese built road
? Communist held location
? Government held location
upng Prabang
uien
Bien
Phu
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SEUKL I
J For years, Premier Chou En-lai has main-
taindd a grueling pace while managing China's
affairs, showing remarkable physical and mental
stamina. Recently, however, he cut back on some
aspects of his job. On May 9, he did not attend a
state banquet given by visiting Senegalese Presi-
dent Senghor. During the visit earlier this week of
Pakistani Prime Minister Bhutto, Chou missed al-
most all of the purely protocol functions and two
substantive discussions as well. The official ex-
planation, and Chou's own, is that he is slightly
unwell because of his old age-he is 76. He has,
nevertheless, kept a fairly active schedule amid a 17
number of signs that his political health is as
sound as ever!
There has been much speculation outside of
China that the 76 year old Premier is being forced
by his political enemies into a state of semi-retire-
ment. The Chinese have been at pains, however,
to counter speculation about Chou's political
demise. The two vice-premiers who stood in for
Chou at banquets for the high-level visitors com-
mented that they were acting on behalf of the
Premier. One of the vice-premiers, Li Hsien-nien,
is Chou's closest associate in the leadership; the
other, Teng Hsiao-ping, has seemed to work
closely with Chou since the former's politica4
rehabilitation a year ago7[Chinese media notes((
repeatedly during the Bhutto visit that the Pakis-
tani Prime Minister was in China at Chou's invita-,
tion. Bhutto's complimentary references to the'
Premier were duly reported by the official Chi-
nese news agency, and the banquet for Bhutto
was officially described as being given by Chou,
even though he was not present. The joint com-
munique issued t the end of the visit mentioned
Chou four times
IChou's wife, who has been ailing for several
years, was unusually prominent during this
period. Portions of her speech to a Vietnamese
women's delegation were even published by the
official news agency. A lesser government official
who is close to Chou has appeared with unusual
frequency-over the years his pattern of appear-
ances has proven to be a reliable gauge of Chou's
political status.)
16 )Chou is clearly not incapacitated. Although
he did not meet Bhutto at the airport, he accom-
panied him later that day to a lengthy session
with Mao. Television coverage of that event
showed Chou looking apparently fit. The follow-
ing day, Chou conducted the initial talks with
Bhutto that lasted nearly two hours, but he did
not participate in the follow-up discussions?
It is possible that Chou has been pre-
occupied of late with domestic business, espe-
cially the ongoing anti-Confucius campaignl[A
member of the inner circle around Mao and Chou
hinted as much by suggesting that Chou missed
the Senghor banquet because he had "more im-
portant matters" to attend to.!
The - anti-Confucius campaign has been re-
cently characterized by increasing factional strife
in the provinces that seems to reflect serious
differences at the top over major policy and per-
sonnel issues. Chou has apparently devoted con-
siderable attention to these problems, and with
some success. There has been a steady flow of
official instructions emphasizing the need for
order during the campaign, and the propaganda in
recent weeks has taken on a decidedly "Chouist"
tons. [On May 7, for example, a local Peking
newspaper lashed out at the extremists who in-
cited rmed conflict during the Cultural Revolu-
tion Most of them have since been purged, but
their most prominent survivor is Mao's wife,
Chiang Ching, who is Chou's major antagonist in
the current campaign. Chiang Ching did in fact
urge young people to take up weapons during the
Cultural Revolution.7
17- [During the past year, Chou has begun to
share some of his duties in the foreign policy
arena with his deputy premiers. No doubt he will
continue to do so, especially with domestic poli-
tics demanding so much of his time and energy.
But a good indication that Chou remains firmly in
the saddle is the fact that his lower public profile
over the last week has not sparked a correspond-
ing increase in the activity of his political ene-
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USSR - EASTERN EUROPE: CROP PROSPECTS
Grain crops are off to a poor start in Com-
munist Europe this year. Bad weather slowed
-Soviet sowing operations in April, while rain in
Eastern Europe has brought only marginal relief
to drought-stricken crops there. The season is still
early, however, and much will depend on weather
conditions over the next two months
t' rThe slow progress of the spring sowing cam-
paign, coupled with above-average winterkill,
raises doubts that the goal of a 206-million-ton
grain harvest will be met. Above average soil
moisture in the eastern part of the spring grain
belt, where sowing is about to begin, bri htens
the outlook in an otherwise cloudy picture./'
Eastern Europe
Sowincl operations in the western USSR I Rai
i
l
n
n ear
y May removed i H
cropsnungary
wer hindered by cold, rain, and snow in mid- and C
h
zec
oslovakia from thitil lit b
e crcas,ut
April, when the sowing campaign was scheduled _r brought only marginal relief to those in other
to shift into high gear. Favorable weather during 77East European countries. Thus far, accumulated
the first week in May permitted a faster pace, but ,a- precipitation has not been enough to restore sub-
by May 6 only about 38 million hectares, 39 soil moisture to normal levels, and more will be
percent of the planned area kA b
a een sown L026id thi
,- requres month if the yields of winter grain
grain. At the same time in 1972 and 1973 th
e
, areas sown amounted to about 41 million and 48
million hectares respectively)
A successful spring sowing campaign is
need d this year to help offset a higher than
average loss of crops sown last fall. In mid-April,
Deputy Minister of Agriculture Kuznetsov esti-
mated that between 5 and 10 million hectares of
the 35 million sown in the fall would require
resowing this spring, compared with the long-run
average of about 4 million
1While wrestling with these problems
Mos-
,
cow has taken steps to assure a smooth grain
harvest. For the sixth successive year, the party's
central committee and the government have
issued a joint decree providing specific guidelines
for the harvest. Reducing losses is of regular con-
cern to the leadership
25X1
- The Soviet grain harvest starts in July and
con inues into October, but is beset by a shortage
of proper machinery, dependable manpower, and
grain drying facilitiesi
his year's decree directs ministries sup-
plying agricultural machinery to speed up de-
liveries, authorizes the state bank to make emer-
gency short-term loans to state and collective
farms, and authorizes the transfer of urban trucks
and urban workers to rural areas to help with the
harvesting 7
last year are to be equaled. Soil moisture at the
end of April ranged from 48 percent below nor-
mal in Hungary to 17 percent below normal in
Poland.
2 Precipitation in the first week of May un-
dou tedly spurred the development of spring-
planted crops---particularly root crops and sun-
flowers-and ensured the germination of corn.
The rains were probably too late, however, to
prevent a reduction in first cuttings of hay in
several countries
Unless the drought is broken this month
,
Eastern Europe's import requirements for the
year ending June 1975 could approach 10 million
tons, the highest level in several years. The
amount of livestock feed on hand in Eastern
Europe almost certainly will not be large enough
to maintain livestock numbers and productivity at
I.
l ast .
ear s
vel
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ITALY: DIVORCE BY A LANDSLIDE
l r rThe lopsided vote for divorce in the Italian
referendum was a sharp rebuff to the dominant
Christian Democratic Party and the Vatican. It
was an unexpectedly large win for the broad
pro-divorce grouping, which included the Chris-
tian Democrats' three coalition partners and the
Italian Communist Party. There was a 59.1-per-
cent vote to retain the 3-year-old divorce law.]
trhe outcome was a particular shock to
Christian Democratic Party chief Amintore Fan-
fani, who led the campaign to repeal the divorce
law. Fanfani pushed his party into the battle,
against the judgment of many other Christian
Democratic leaders-including Prime Minister
Rumor-who preferred to cancel the referendum
by working out a compromise with the pro-
divorce groups. Fanfani, a major figure in the
party for more than 25 years, has shown a re-
markable ability to land on his feet after previous
setbacks. He will have to do some furious rhetor-
ical backpedaling this time, however, because he
strongly implied during the campaign that vote
for divorce was a vote for the Communists./
Fanfani and family
Not enough votes
Frhe Communists will get the major credit
for the victory, although the pro-divorce front
also included Socialists, Social Democrats, Repub-
licans, and Liberals. Communist leader Enrico
Berlinguer was, from the outset, the most active
campaigner for retention of legalized divorce. The
Socialists, fearful of being overshadowed by the
Communists, also worked hard, but the other
parties in favor of divorce did not mount a major
public effort until the last week of the campaign.i
u3 [Since the divorce issue cuts across party
lines, the outcome does not necessarily mean that
the Communist vote would increase in a general
election. The Communists are jubilant, however,
because the referendum tally suggests that they
are in tune with the mainstream of Italian opin-
ion, and that the Christian Democrats are not.
This impression will help the Communists make
more credible the claim that their party-Italy's
second largest-is a respectable, legitimate organi-
zation and therefore entitled to a role in the
national government.1
: 1; rThe Communists are building on this theme
by taking a conciliatory line and stressing that it
is now time to move on to the solution of "more
important problems." Berlinguer will probably re-
turn soon to his "historic compromise" proposal,
which calls for a rapprochement between the
/
ommunists and Christian Democrats.
All party leaders are now trying to figure out
what the referendum outcome implies for the
future of Italian politics. So far, most politicians
have remained silent, but they are probably im-
pressed by the failure of the anti-communist
theme and the sternest admonitions of the
Church to mobilize enough voters to repeal the
divorce law. Many Italians are already interpreting
the result as a vote for modern versus traditional
values. Shortly after the results of the referendum
became known, the headline in the country's
most prestigious newspaper proclaimed: "Italy is
Now a Modern Country." I
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Though stung by the defeat, the Christian
Democrats will remain the major voice in any
political "clarification" that may result from the
referendum. Both the Christian Democrats and
Socialists-on opposite sides of the divorce issue--
stressed during the campaign their intentions to
continue governmental collaboration. If tensions
over the outcome of the referendum cause the
government to fall, however, the ensuing negotia-
tions on the formation of another center-left coa-
lition may be difficult and protracted
ICELAND: ELECTION CAMPAIGN BEGINS
a Although national elections are still almost
six weeks away, statements by the contending
political parties make it clear that Iceland's deteri-
orating economic situation, the controversy over
the Keflavik base, and the fishing limits question
will be the principal issues in the campaign. A
combination of public discontent with the gov-
are linked to the cost-of-living index. Huge wage
increases and a decline in earnings in the vital
fishing industry have also contributed to the
gloomy outlook. The inflation rate may approach
60 percent this year if the wage-price linkage
remains
3 I/ The new government must also renegotiate a
defe se agreement under which the US has main-
tained forces at the Keflavik air base. Last March,
the Johannesson government tabled proposals
calling for the complete withdrawal of US troops
from Keflavik by 1976. Although a more mod-
erate coalition would probably demand some
modifications of the present arrangement, it
would likely be more flexible than the outgoing
coalition. The new government's attitude toward
the base may be influenced by the outcome of a
pro-base signature campaign in February, indi-
catin that a majority of Icelanders support the
base.(
ernment's handling of the economy and a recent ,76 Although the conservative Independence
successful signature campaign in support of the Party will probably remain the strongest single
base appear to have improved the electoral pros- 1 party, the outcome of the election is clouded by
nertc of nrn_1A/oc+orn
tion Independence Party and the Social Democrats
`Prime Minister Johannesson decided to dis-
solve parliament on May 9, after the Liberal Left
Organization withdrew from the center-left coali-
tion because of differences over the government's
anti-inflation program. Freeing wages from ties to
the cost-of-living index and banning wage in-
creases in excess of 20 percent were the two most
controversial proposals in the program. Johannes-
son will continue to head the government on an
interim basis until after the elections on June 307
? Iceland's grave economic situation will re-
quire immediate attention when the new govern-
ment takes office. Johannesson has stated that
until that time he will decree provisional measures
to avert an economic catastrophe. The cost of
imports, especially oil, increased by about one
third in the second half of 1973. The import price
rise has been especially damaging because wages
internal disputes within the major parties. All
three members of the outgoing coalition-the Pro-
gressive Party, the Liberal Left Organization, and
the Communists-are split internally over the base
issue. The Communists, all but a few of whom are
vocal opponents of the base, may pick up some
support from dissident members of the Progres-
sive Party and the Liberal Left Organization]
/If the opposition coalition forms a gov-
ernment after the elections, the chairman of the
Independence Party, Gier Hallgrimsson, would
probably become the new prime minister and
Social Democratic chairman Gylfi Gislason would
take over as foreign minister. In the meantime,
Johannesson, anticipating a government led by
the Independence Party, is trying to steer his
Progressive Party away from the Communists and
along more moderate lines so it will not be frozen
out of the new government.
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ECONOMIC OUTLOOK FOR 1974
The economic situation of the developed
,kcoun ries in the first half of 1974 will turn out
,).somewhat better than forecasters anticipated in
January. Even so, depressed real growth, soaring
inflation, and mounting current account deficits
will dominate the economic outlook for Canada,
Japan, and Western Europe
LJ fIhe revised projections indicate that real
ross national product in the UK, and possibly in
L? apan, is declining in the first half of this year but
is increasing moderately in Canada, France, West
Germany, and Italy. Inflation rates generally ex-
ceed 10 percent, and, except for West Germany
and Canada, the current accounts are in sub-
stantial deficit-7
'- r Most forecasts point to a recovery in the
second half of the year, on the assumption that
'estrictive economic policies will be relaxed or
stimulative policies introduced in a number of
countries. It is also anticipated that investment
will be encouraged by shortages of capacity and
the introduction of energy-conserving processesi
'/ For the year as a whole, real growth of gross
ational product in the developed countries will
robably fall to half the rate of 1973. Japan's
growth will be negligible in the first half. In-
creased investment spending and business pressure
for relief from restrictive policies should increase
real growth to nearly 6 percent in the second half.
The UK's gross national product will probably
plummet by 8 percent in the first half because of
the coal strike, weak consumer demand, and de-
flationary budget and credit policies. The resump-
tion of a normal work week and renewed con-
sumer confidence should result in a spurt of 8-9
percent in the second half,
-f'With the threat of recession diminishing,
however, many governments are hesitant to stim-
late demand for fear of worsening inflation:
? Tokyo is expected to maintain its re-
strictive monetary and fiscal policies at least
until July; if recovery is then evident, policies
could remain tight until the fall)
1-
London has adopted a tighter fiscal pol-
M icy in view of the prospects of a second half
.recovery; the new budget increases taxes by
_$1.6 billion.
? Paris has strengthened price controls,
speeded up tax collections, and kept credit
tight.
Thus, better than expected performance in the
first half of the year could, paradoxically, have
the effect of moderating the projected second
half recovery.
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EUROPEAN TRADE UNION CONFEDERATION
F West European labor will take a major step
toward organizational unity when European
members of the World Confederation of Labor-
the former Christian international-join the Euro-
pean Trade Union Confederation (ETUC) at its
first Congress in Copenhagen on May 23-25. The
ETUC's most sensitive current issue-membership
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for the Italian Communist-dominated labor con-
federation-will not be on the agenda, but is sure
to be debated vigorously in informal exchanges.3
IThe admission of the World Confederation
affil ates was foreseen when the Europeans of the
Socialist-oriented International Confederation of
Free Trade Unions founded the ETUC in Feb-
ruary 1973. The new European group will now
represent almost all trade unionists in Western
Europe-33 million workers in 16 countries-
except those in Communist-dominated union
organizations in Italy and France. To most West
European workers, a unified labor movement ap-
pears to be the way of the future-1
VT_ delegates to the Congress will elect a
n w president to succeed Vic Feather, former
head of the giant British Trades Union Congress.
Contrary to earlier speculation, it now appears
that West German Heinz Oskar Vetter, chief of
several months, possibly as early as July. The
Italians seem to have given sufficient proof that
they are acting sincerely and independently of
Soviet direction in participating in labor initia-
tives at the EC level and in Italy. Their principal
champions have been the Italian Christian Demo-
ycratic and Socialist unions, with which they hope
to form a united Italian labor front. The British
and Debunne's Belgian Socialists have also been
strong supporters of the Italian Communists,
arguing that all West European labor federations
should eventually join the ETUC. West German
opposition seems to be waning, albeit reluctantly.
There is no impetus for early membership of the
more hard-line pro-Soviet French Communist-
dominated labor federation, although this issue
may also be discussed informally in Copenhagen,
and eventual membership is considered inevitable
by most ETUC members.]
.1/ Future encounters with labor organizations
~
stern Europe are still a subject of concern,
in E
but plans are being made for a meeting next
the ETUC's other giant federation, does not want- r?-January similar to the one held at the Inter-
the job. The leading candidates are Belgian Socials ~ national Labor Organization in Geneva last Jan-
ist Georges Debunne and Danish trade union j, uary. Most ETUC members remain opposed to
leader Thomas Nielsen. Another Dane, Peer, Soviet suggestions that pan-European labor co-
Carlsen, is scheduled to be elected deputy generate
secretary, with Belgian Socialist Theo Rasschaert
remaining as general secretary, despite the general
lack of enthusiasm for his past performance?
The ETUC Congress will also adopt an ac-
tion program,, giving priority attention to employ-
ment, price stability, more equal income distribu-
tion, formulation of a common energy policy for
Western Europe, a greater voice for labor in indus-
trial management, and aid to developing coun-
tries. The threat of inflation and the power of
multinational corporations will also be prominent
topics. Help for the fledgling Portuguese labor
movement may be discussed as well; thus far, the
ETUC has left the initiative to individual mem-
bers and to the international organizations.-I
(, f fit now appears that the Italian Communist-
led federation will be admitted within the next
operation should be formalized. The British have
tended to support the Soviet view, much to the
chagrin of the other members
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ROMANIA-BULGARIA: LEADERS TALK
Romanian party chief Ceausescu's talks in
Bul ria on May 11-12 with Todor Zhivkov, his
Bulgarian counterpart, have sparked speculation
about their purpose, mainly because they came
shortly after Zhivkov's whirlwind visit to Moscow
on May 8. The talks were cloaked in unusual
secrecy, but fragmentary information suggests
that the two leaders focused on questions con-
cerning the international communist movement
rather than on economic issues as initially
rumored. 1
The entourages of both leaders consisted al-
most exclusively of party officials responsible for
inter-party and foreign relations. This and the size
of the Bulgarian delegation suggests that the
Soviets may have asked Zhivkov to try to over-
pan-European conference of communist and
workers' artier, a necessary prelude to a world
conclave
i / rZhivkov played a similar role in 1966 when
the Soviets, in preparation for the international
communist conference in Moscow in 1969, called
on him to try to induce the Romanians to attend
a preparatory all-European conference held at
Karlovy Vary, Czechoslovakia, early in 1967.
Zhivkov failed, and the Romanians, along with
the Yu oslavs, boycotted the Karlovy Vary
meeting.
Q [Available portions of the apparently bland
communique summarizing last week's talks hint
at disagreements th
b
ere
y suggesting another Bul-
come Romanian resistance to the Soviet-inspired6j garian failure. The independent-minded Ro-
call for a world conference of communist parties
// manian leader i
.
s apparently determined to con
The Bulgarians at least probably tried to mod- tinue opposing Moscow's format for multilateral
erate Ceausescu's
t
i
s
rong res
stance to attending a communist meetings.
SYRIA-ISRAEL: THE GOLAN FRONT
Military activity on the `y an front n-
creased this week after a quiet weekend. Israeli
fighter-bombers flew strikes against fedayeen
positions inside Lebanon and on the slopes of
Mount Hermon. They also struck once at Syrian
positions south of the Israeli-held salient. Air ac-
tivity over Lebanon was particularly heavy on
Thursday morning when Israeli planes struck
several Palestinian refugee camps in retaliation for
the terrorist incident at Maalot. Artillery, tank,
and mortar exchanges occurred along the front
throughout the week, but were noticeably lighter
than in previous days.
Syria has apparently removed its surface-to-
air missile batteries from Lebanese territory near
Mount Hermon. Officials of the Israeli Air Force
told the US defense attache in Tel Aviv on May 9
that the SA-6 units that were located in Lebanon
had returned to Syria. The Syrian decision may
have been made because Damascus expects a
disengagement to be reached and because the
missiles provided only minimal protection against
Israeli aircraft flying over Lebanon toward targets
in Syria. Israeli air strikes against these batteries
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3 (For the second time in barely a month,
fedayeen terrorists struck at a major urban center
in northern Israel. Three Arab terrorists and 24
Israelis, mostly teenagers, died in the incident on
May 15 in Maalot, a town about five miles from
the Lebanese border. Most of the deaths came
when Israeli troops stormed the school building in
an effort to free 85 student hostages held there
by three fedayeen. The government apparently
decided in the end not to accede to the demands
for the release of 18 terrorists and two spies held
by Israel and for safe passage out of Israel for
themselves.t
,q The terrorists belonged to the Popular
Democratic Front for the Liberation of Palestine,
a small, Marxist-oriented fedayeen group which
heretofore has carried out a few relatively minor
hit-and-run attacks. Although this group has been
among those favoring a negotiated Middle East
settlement, the action at Maalot was in part
clearly an effort to set back progress toward
negotiations
6 {Israeli aircraft retaliated on May 16 with air
strikes against numerous Palestinian camps in
Lebanon. Although Jerusalem claimed its planes
hit only military-related sites, some civilian in-
stallations were also hit, causing civilian casual-
ties.
(The government, on edge and under severe
domestic criticism for its inability to shield Israeli
border settlements from terrorist attacks, placed
its forces in northern Israel on alert after evidence
was found that infiltrators from Lebanon crossed
the border yesterday. This latest incident will
increase domestic pressure on the government to
adopt a hard stance against territorial concessions
which would bring the Arab borders closer to
Israeli population centers'
RABIN GETS MORE TIME
(1- 70-7
'7 0 _ ! ~_1)
Prime (Minister-designate Rabin will have
unti May 24 to form a new Israeli government,
under the extension granted him this week by
President Katzir. Rabin claimed his preoccupation
with the negotiations surrounding Secretary Kis-
singer's effort to secure a Syrian-Israeli disengage-
ment accord made it necessary for him to request
the extra week. Under the law, he could get two
more weeks if he wants them.
Rabin may also have wanted more time to
work out differences generated within the Labor
Party by his plan to form a governing coalition
with the Independent Liberal Party and the Citi-
zens Rights Movement, two small liberal parties.
Such a coalition would give the government only
a one-vote majority in the 120-member Knesset,
making it imperative that Rabin have the Labor
Party united behind him.
Prime Minister Meir, at a meeting of Labor
Party leaders on May 10, came out strongly
against the possibility of including Mrs. Shulamit
Aloni's Citizens Rights Movement in the coali-
tion. Mrs. Meir claimed it would further
strengthen the doves in the government, but her
personal differences with Mrs. Aloni may have
weighed more heavily in the decision. This appar-
ently was recognized by the rest of the Labor
leaders who refused to accede to Mrs. Meir's
wishes and voted to authorize Rabin to form a
coalition with the two small liberal parties. Never-
theless, other Labor members, particularly from
the conservative Rafi faction, probably share Mrs.
Meir's misgivings to some extent, and Rabin must
take this into account.
Perhaps partly because of such internal dif-
ferences, the Labor Party is keeping open the
option of forming a minority government without
the Citizens Rights Movement, hoping to induce
the National Religious Party-traditionally
Labor's major coalition partner-to join later.
Mrs. Meir, for one, favors this course. At this
point, neither side is making much of an effort to
break the impasse over the religious conversion
issue, which is keeping the Religious Party out.
Labor's central committee, after several postpone-
ments, will presumably meet next week to ap-
prove the outcome of Rabin's efforts
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JCI.f iC I
Soviet economic programs in Egypt are con lIn April, an Egyptian economic delegation
tinu~g, despite the suspension of military ship- went to Moscow to discuss the expansion of the
ments. It is now more than five weeks since the ' Hulwan iron and steel complex and the Naja
USSR's last arms delivery to Egypt by sea. On the Hamadi aluminum plant, major ongoing Soviet
economic side, however, the Soviets seem to be-1 aid projects. The Soviets will apparently prepare
honoring existing commitments. Some 1,500 So- feasibility studies. Expansion of the plants will
viet technicians remain at work in Egypt. Never- require additional financing of as much as $250
theless, both side remain cautious in assuming million; new Soviet aid will depend not only on
new undertakings the results of the studies but on the political
I 7IMoscow's position as Egypt's principal eco-
nomic aid donor ended with the 1967 war, when
other Arab states agreed to underwrite the Egyp-
tian economy with $250 million annually in
grants. Since the October war, even more aid has
been forthcoming from a variety of donors. In
contrast, Moscow has not granted any new eco-
nomic aid to Egypt since early 1971, when some
$195 million in credits was extended. Egypt has
used about 70 percent of the nearly $1.2 Ilion
in credits extended by the USSR since 1957
(The Soviets were initially anxious to play a
significant role in clearing the Suez Canal and
rehabilitating war-damaged industries in the canal
area. Moscow, however, was stung when Egypt
decided to turn to the US and the UK for aid in
canal clearance. It now appears that the USSR
will play only a minor role, a any new aid that
may be extended will be small r~j . J
Underwater mine clearance
US training Egyptians
relationship then prevailing between Cairo and
Moscow]
l'/jThe first stage expansion of the Hulwan iron
and steel complex, completed late last year, in-
creased Egypt's annual steel capacity from
300,000 tons to nearly 1 million tons. Hulwan's
present capacity can satisfy more than half of
Egypt's current domestic requirements and, if
completed, the second stage expansi n would
make Egypt nearly self-sufficient in steel
\ 'The Naja Hamadi aluminum plant will begin
trial operations later this year. By next year, the
plant will have a capacity to produce 100,000
tons of aluminum, three fourths of which will be
exported, mostly to the USSR. Proposed plans
call for the plant's capacity eventually to reach
165,000 tons annually.
Moscow also remains involved in Egypt's
fis ing industry, as well as in irrigation, rural
electrification, and other projects. The USSR is to
complete studies this year on improvements to
the Nile River, including plans for construction of
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ETHIOPIA: CONSERVATIVES WIN A ROUND
fNew appointments and shifts of key military
and civilian personnel announced on May 14
represent a victory for conservatives over the mili-
tary moderates, their rivals for power and in-
fluencel
On the whole, the appointments on May 14
app ar more an attempt by the conservatives to
regain a measure of political control than an ef-
fort to reverse the changes set in motion by the
military revolt in February. Nonetheless, the mili-
tary moderates, already angry over the nobility's
intrigues, will regard the appointments as a direct
challenge to their plans for ensuring social and
political change in Ethiopia.?
1 ` Politically the most significant new appoint-
men Is in the armed forces were chief of staff,
commander of the army, and commander of the,.
Third Infantry Division, which is stationed along/
~In addition to changes in the army, the gov-
ernment also announced the appointment of
several new provincial governors general who are
both more capable and more aware of the need
for change than their predecessors but who still
owe their loyalty mainly to the conservative fac-
tion. Several new deputy governor generals were
also appointed from arrpng qualified and
respected provincial officials.
') Meanwhile, the resignation last week of
Minassie Haile as foreign minister points to
divisions within the Endalkatchew cabinet that
may lead to further cabinet changes. F_
believed to be important members of the con-
servative faction. Their appointment will further r'
Minassie, one of the few holdovers from the
strengthen control over the military chain of com- previous government
had Ion
been at odds with
,
g
mand by General Abiye Abebe, the conservative the Prime Minister and other cabinet colleagues,
minister of defense. Abiye and his close associ- _ 1 who considered him indecisive and lacking in
ates, Prime Minister Endalkatchew and Ras Asrate initiative. His resignation will probably have little
K
th
assa,
e president of the Crown Council, have effect on Ethiopia's foreign relations.
emer ed as the real pillars of the present govern-
ment
In the past, both Asrate Kassa, an important
nobl man and one of Haile Selassie's closest
advisers, and Abiye have urged reforms on a reluc-
tant Emperor and the more reactionary members
of the aristocracy. As time passed without mean-
ingful reform, their "progressive" reputations be-
came tarnished, and the younger moderates now
consider them part of the discredited conservative
hierarchy. The moderates distrust Asrate Kassa in
particular as they consider him the chief agent of
those conservatives maneuvering behind the
scenes, playing on personal loyalties and tribal
connections, and dispensing money in an effort to
weaken and divide moderate forces.]
CYPRUS: GROWING TENSIONS
12, Tensions have increased in Cyprus since the
adjournment on April 2 of the intercommunal
talks that have been going on for six years
between the Greek and Turkish Cypriots. On the
Greek Cypriot side, there have been renewed
clashes between supporters of President Makarios
and the followers of the late General George
Grivas, who advocate the union of Cyprus and
Greece (enosis). These pro-enosis forces enjoy the
support of elements of the Greek-officered
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National Guard on the island. Relations between
the Turkish Cypriot and Greek Cypriot com-
munities have also worsened.
Following General Grivas' death last Janu-
ary, members of EOKA-B, his pro-enosis terrorist
organization, became embroiled in a struggle over
who would succeed him and what strategy to
pursue. On April 22, a hard-line faction severely
beat and injured a group of Makarios sup-
porters-the first instance of EOKA-B violence
since the death of Grivas. Reacting strongly,
Makarios formally outlawed EOKA-B, set a dead-
line of April 27 for the general amnesty extended
to all wanted men in January, and announced his
determination to wipe out those remnants of
EOKA-B who remained in hiding. Only a few
turned themselves in before the deadline, thereby
setting the stage for more clashes
~Makarios has also been angered by a series of
arms thefts from national guard stores and by
anti-government incidents involving pro-enosis
elements of the national guard whom he suspects
are in collusion with EOKA-B. The latest incident
involved the theft of light weapons on May 7
from a national guard armory and their probable
transfer to EOKA-B. The theft will probably lead
Makarios to try again to restrict the activities of
the national guard and ultimately replace it with a
full-fledged Greek Cypriot army formed around
his personal military force. Makarios' determina-
tion to break the back of the remnants of EOKA-
B and his attempt to curb the national guard may
well prompt a dispute with the Athens govern-
ment, which views these two elements as indis-
pensable tools for maintaining its influence in
Cyprus
IThe intercommunal talks were suspended by
the Greek Cypriots when the Turkish Cypriot
negotiator refused to disavow Turkish Prime Min-
ister Ecevit's statement in late March calling for a
"federal" system of government for Cypru
~ny system that would preclude majority
Gree Cypriot rule is anathema to Greek Cyp-
riots. They view it as the first step toward parti-
tion of the island. The Greek Cypriots charge that
the Turkish Cypriot side is attempting to modify
the terms of reference for the talks. According to
the Greek Cypriots, the terms of reference pro-
vided for a "unitary, independent, and sovereign"
Cypriot state)
The Turkish Cypriots claim that neither side
agreed to such terms of reference. They have
played down the Ecevit statement, however, in-
terpreting it to mean a functional type of feder-
alism rather than geographic separation of the
two communities?'
~Osorio Tafall, the UN special representative
irlCyprus, is attempting to get the talks resumed
on the basis of a mutually agreed formula. The
Makarios government rejected his first proposal as
too vague, and he is now making a second effort.
Although Makarios probably will permit the talks
to resume eventually, he appears to be in no
hurry. He hopes to extract concessions from the
Turkish Cypriots, who are more anxious to re-
open the talks. Their anxiety has been aroused by
the growth of anti-Turkish sentiment within the
Greek Cypriot community. This has been fueled
by the Ecevit statement and by the Greece-
Turkey dispute over Aegean oil exploration
rights, both of which are being exploited by the
.,pro-enosis Greek officers of the national guard.
.R~Turkish Cypriots became especially alarmed after
an incident on May 9 in a mixed village when
national uardsmen harassed Turkish Cypriot
residents.'
3 By stalling, Makarios is also protecting him-
self rom accusation by national guard officers
and other pro-enosis elements that he is too ac-
commodating with the Turkish Cypriots. Because
tension between the two communities on the
island is usually reflected in relations between
their mainland sponsors, Makarios' abstention
from the talks could stir up trouble between
Athens and Ankara. This would distract the
Greek rulers and strengthen Makarios' hand
against their possible machinations, but it would
also further inflame intercommunal tensions on
the island.
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HONDURAS: STUDENT VIOLENCE
[Amid rumors of a possible coup against
Chief of State Lopez, students last week plunged
the capital city into two days of violence that
nearly brought the army into the streets to con-
trol them. Had the army done so, it might have
gone on to take direct control of the government 4
g 7 IThe demonstrations began as a protest
against Guatemala for its harsh treatment of
workers during May Day observances. The
demonstrations degenerated into riots when one
student was killed, allegedly by a policeman
.The rioting continued into the night of May
8 and resumed the next day. Property damage
amounted to about $200,000, and 43 persons
were injured, some seriously. Police detained 240
persons and are still holding 200 of them)
? t the height of the disturbances, police
began running low on tear gas, and students ap-
peared to be gaining the upper hand. The army
was placed on alert, and a number of unit com-
manders wanted to assist the police. General
Lopez, who is also chief of the armed forces,
would not give the order, however. Had the riot-
ing resumed on May 10, the army would probabl
have intervened, with or without Lopez' permission.
Lopez' failure to reinforce the police is
ano t er example of his indecisiveness, a quality,
that is persuading many military officers and,
prominent civilians that he should be replaced.
Lopez has exercised practically no leadership, and
in times of crisis he appears incapable of making
decisions. Consequently, Honduras, already the
least developed country in Central America, is
falling farther behind its neighbors. I
y' 7Rumors about a coup have been circulating
since last fall, but have gained intensity in recent
weeks. Latest indications are that Lopez himself
has been persuaded that his resignation during or
shortly after some disorder would be a face-saving
wa to retire.
,/ 7 Even though events move slowly in Hon-
duras, some change seems in the offing. Lopez,
who in the past has been largely responsible for
the slow march, may no longer be the key person
in the action. More dynamic leaders within the
military argue that the military must exercise
firmer control-and soon.
25X1
BRAZIL: PRESS CENSORSHIP INCREASED
f? 1Despite earlier hints that President Geisel
was contemplating some degree of liberalization,
the administration has instituted new, tougher
controls on some press organs.]
ep (The government has ordered the publishers
of Veja, a weekly news magazine, to submit all
textual material to Brasilia prior to publication.
Veja had written on topics the government
deemed overly controversial-such as the expira-
tion of certain political restrictions on a number
of once prominent public figures. The effects of
the new censorship order could so hamper the
magazine's roduction schedule as to put it out of
-business.
P. Censorship has been renewed at Opiniao, a
leftist weekly that had recently enjoyed relative
freedom. In addition, full-scale censorship con-
tinues at 0 Estado de Sao Paulo, the nation's
most prestigious newspaper,
25X1
25X1
ICardinal Arns of Sao Paulo, commenting on
the new censorship order, noted that he has "lost
all hope that the administration would end abuses
in the areas of civil and human rights." The Cardi-
nal, long a critic of the military regimes that have
controlled Brazil for the past ten years, added
that arbitrary arrests and torture are continuing.]
Jrhe new censorship order comes at a time
when unrest-primarily among students and
workers --is growing, and it may be intended as a
warning to all critics of the government. The
President may also be responding to pressure
from conservative members of the military hierar-
chy who oppose an liberalization.
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 25X1 Approved For Release 2008/04/28: CIA-RDP79-00927A010800080002-5
Approved For Release 2008/04/28: CIA-RDP79-00927A010800080002-5
 Approved For Release 2008/04/28: CIA-RDP79-00927A010800080002-5
,Secret
Secret
Approved For Release 2008/04/28: CIA-RDP79-00927A010800080002-5