WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011100200001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Document Release Date: December 20, 2007
• Sequence Number: 1
• Publication Date: September 26, 1975
• Content Type: SUMMARY

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Secret
Weekly Summary
Secret
No. 0039/75
September 26, 1975
Copy N?_ 63
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The WEEKLY SUMMARY, issued every Friday morning by the
Office of Current intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It fre-
quently Includes material coordinated with or prepared by the
Office of Economic Research, the Office of Strategic
Research, the Office of Geographic and Cartographic
Research, and the Directorate of Science and Technology,
Topics requiring more Comprehensive treatment and
therefore published separately as Special Reports are listed
in the contents.
CONTENTS (September 26, 1975)
USSR: Zarodov Connection; Art Show
Europe: Communist Meeting Stalled
USSR-Japan: Three Is a Crowd
Portugal: Try, Try Again
Greece-Turkey: Strained Relations
MBFR: Seventh Round to Begin
France: New Fighter Questioned
10 Finland: Another Election Draw
10 East European Chemical Industry
12 Poland: Agricultural Problems
MIDDLE EAST
AFRICA
13 Lebanon: Turmoil Continues
14 Angola: Fighting Back
15 Syria: Sound and Fury
WESTERN
HEMISPHERE
16 Mexico: Echeverria's Successor
17 Panama: Canal Negotiations
18 OAS: Back on Track
18 Venezuela: Nationalization Talks
20 Argentina: Settling In
EAST ASIA
PACIFIC
21 Indochina
24 Timor: Delays and Clashes
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USSR
After a six week absence, party chief
Brezhnev reappeared on September 17 in
Moscow, where he gave a widely publicized
audience to Konstantin Zarodov, the chief editor
of the international communist journal Problems
of Peace and Socialism.
The meeting attracted attention because
Brezhnev rarely grants audiences of this sort.
Zarodov also has been a key figure in a conten-
tious ideological debate. He is the author of an ar-
ticle in Pravda on August 6 that took a tough
orthodox line on the tactics of communist parties.
Zarodov's message was not, as the Soviets
themselves might say, in keeping with the spirit of
detente, and it raised the hackles of the Italian
and French Communists. In its immediate after-
math, seemingly embarrassed Communist of-
ficials were passing it off as a bureaucratic
foul-up.
It seems reasonably clear that Brezhnev was
intentionally, and even ostentatiously, associating
himself with the old-time religion that Zarodov
had come to represent by virtue of his article.
Why Brezhnev acted is not so clear. He may
have simply been making a gesture to that ele-
ment in the Politburo, frequently associated with
the party's ideological doyen Suslov, which has
never felt quite comfortable with the detente line
and its heretical overtones. Brezhnev may have
felt himself vulnerable as a consequence of
foreign policy setbacks: in the Middle East, where
Moscow's detente partner was making significant
gains at the USSR's expense; in Portugal, where
an orthodox Communist party had gone through
a very bad two months; and in the US, where
Moscow perceives a growing cynicism about the
Party chief Brezhnev signs the final document at the European Security Conference
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value of detente that was manifested in the em-
bargo on grain sales to the Soviet Union. Closer to
home Brezhnev had to cope with the psy-
chological, as well as political, impact of a dis-
astrous harvest.
Moscow's problems in organizing a European
Communist Party Conference could have partly
determined the timing of the gesture. The Soviets
have an interest in making their basic positions
known to those other Communist parties, par-
ticularly in Western Europe, who have thwarted
Moscow's attempts to establish itself as the right-
ful leader of a world Communist movement.
It is possible, of course, that more than' a'
gesture is involved-that Brezhnev's move was
not merely tactical, but that it portends a signifi-
cant and perhaps prolonged shift of policy toward
a harder line. This hypothesis puts more weight
on the possibility that Brezhnev has acted out of
political weakness, that there has been a shift in
political sentiment in the Politburo and that
Brezhnev lacks the physical stamina to do
strenuous battle with putative opponents.
So far, however, the circumstantial evidence
does not support this wider ranging interpreta-
tion. Brezhnev saw the US astronauts on
September 22 and was full of good words about
the importance of detente. Gromyko delivered a
relatively restrained speech at the UN. Perhaps
most interesting of all, given the centrality of Por-
tugal to the ideological debate in Moscow, the
Soviets announced that Costa Gomes would be
visiting Moscow next week. It is even possible that
the Portuguese president will be accompanied by
his foreign minister, Melo Antunes, who led the
fight against the Portuguese Communists. If so, it
will be a sign that the ideological hard-liners in
the Kremlin have not won a major victory, but
that Brezhnev has once again pulled off a
successful-if awkward-balancing act.
The largest officially approved indoor exhibit
of nonconformist art in Soviet history opened in
Moscow on September 21, a day behind schedule
and a day after the closing in Leningrad of a
similar and successful, ten-day show.
The ten-day Moscow show comes on the
heels of the first anniversary of last year's
notorious "art massacre," when bulldozers were
used to close down an unofficial, one-day out-
door exhibit. This year, the regime's growing con-
cern over its image abroad and a new spirit of
compromise among the dissident artists com-
bined to produce a somewhat more hospitable
climate.
The opening of the Moscow show was
delayed after some of the 160 artists protested the
city fathers' removal of 41 of the paintings by
walking out with many of the nearly 800 works to
be exhibited. The officials charged that the con-
fiscated paintings violated a previously agreed
ban on religious, pornographic, and political art.
As examples, they cited a canvas with Hebrew
writing, several "scandalous" paintings, and a
portrait of Mao which they called-presumably
tongue-in-cheek-a danger to Sino-Soviet
relations.
In a compromise reached after heated
negotiations the same day, city authorities put
back on exhibit most of the confiscated works,
promising a return of the rest to their owners
when the show closes. The early release of one ar-
tist, not a resident of Moscow who had been jail-
ed on minor charges of hooliganism, was thrown
into the bargain. The nonconformists view the of-
ficial backdown as a victory over heavy-handed
tactics, but both sides in fact seemed relieved that
the conflict had been resolved.
The Moscow exhibit compares favorably with
that in Leningrad, featuring a wide range of
abstract, surrealistic, primitive, and pop-represen-
tational works, both paintings and sculpture.
Despite the official restrictions, much of the art
flirts with subtle religious and semi-political
themes.
In neither city were the early, protracted
negotiations leading to the shows accompanied
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by the same bitterness as last year. Although the
"unofficial" artists--only a few are members of
the artists' union-were not allowed to advertise,
a breakthrough of sorts occurred when Leningrad
radio mentioned the local show three days before
its opening. A Tass English-language broadcast
briefly noted the opening in Moscow, probably in
an attempt to gain favorable publicity in the West.
Both of this year's shows, restricted to local
artists, were negotiated at the local level. The final
go-ahead, however, came from as high as the
Central Committee, demonstrating that ranking
officials clearly wished to avoid a repeat of the
massive tarring of the Soviet image by Western
media after last year's debacle.
Beyond this concern, the regime probably
hopes that its conciliatory tactics will induce the
nonconformists to accept a modicum of official
control over their activities, perhaps eventually
leading to membership in the artists' union. For
their part, the majority of the artists are trying to
bend the official doctrine of socialist realism and
set a precedent for at least some acceptance of
nonconformist art by the establishment. Both
sides remain wary of each other, knowing that the
challenge to orthodoxy represented by the artists'
goals is unlikely to be easily or lastingly resolved.
The artists' experience mirrors in many ways
that of dissidents, Jews, and others on the
troublesome fringes of Soviet society. Those few
who successfully focus Western publicity on their
plight gain reluctant concessions, while the many
without a voice are subjected to harassment or
imprisonment.
This suggests that even though the deter-
mination of Soviet officials to safeguard internal
controls is unchanged, they are slowly and reluc-
tantly gaining a better appreciation of the impact
of domestic events on the USSR's image and in-
terests abroad in an era of detente. They remain
ready to quash any excessive expectations of the
dissidents, some of whom wishfully believe that
the CSCE accords may eventually have a spillover
effect on the Soviet domestic scene. The dilemma
of balancing domestic and foreign interests is not
new to Soviet cultural and ideological watchdogs
and will probably mean a continuation of the
familiar pattern of alternating crackdowns and
EUROPE: COMMUNIST METING STALLED
Moscow has evidently decided to put its
long-sought European Communist conference
on the back burner. The Soviets had originally
hoped to convene the party meeting in May or
immediately after the CSCE summit. The timing
then slipped to late this year, and now the
Soviets claim that they clo not necessarily ex-
pectsuch a meeting before their party congress
next February.
The reason for the delay is the stubborn at-
titude of the Italian, Yugoslav, Romanian, and
other independent-minded parties. They have
effectively blocked Soviet attempts to draft a
document that would commit the participants
to ideological and policy coordination. The
drafting process has been under way since last
year but has made little progress. The
September drafting sessions -have been can-
celed.
Against this backdrop, Moscow has un-
leashed some sharp ideological. attacks against
those who subordinate revolutionary
obligations to bourgeois democracy and those
who fail to recognize the threat to the com-
mun,ist movement posed by Maoism. These at-
tacks have not gone down' well with--the
Italians, Yugoslavs, and others. In launching
them, Moscow may be demonstrating the
limits of its tolerance of their opposition in the
conference preparations. Through these at-
tacks Moscow is also trying to dictate the terms
of ideological debate within the movement. If
the Soviets cannot get acquiescence to their
leadership by means of a European conference,
they could seek to claim it in an open
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Foreign Minister Gromyko
USSR-JAPAN: THREE IS A CROWD
Moscow weighed in with new protests
against the pending Sino-Japanese peace treaty
after the announcement that Japan's Foreign
Minister Miyazawa would meet with Chinese
Foreign Minister Chiao Kuan-hua at the UN on
September 25. Negotiations on the treaty have
been stalled since June.
An authoritative article in Pravda on
September 10 warned the Japanese that there
would be "severe consequences" for
Soviet-Japanese relations if Japan signed a
Sino-Japanese treaty that contained an an-
ti-hegemony clause. On September 17, the Soviet
ambassador in Tokyo called on Miyazawa and
suggested that Foreign Minister Gromyko's visit
to Japan, tentatively scheduled for the end of this
year, depended on how Tokyo handled the
clause. Gromyko probably made the same point
directly when he met with Miyazawa in New York
on Wednesday, and the Hungarians threw their
weight behind the Soviet argument during a
meeting with the Japanese ambassador in
Budapest earlier in the week.
Gromyko's trip to Japan was in doubt even
before it became known that Sino-Japanese
negotiations on the treaty were about to resume.
By implying that the visit is linked to the treaty
issue, the Soviets probably hope to give some
substance to their threat of "severe conse-
quences" ensuing from Japan's agreement to the
anti-hegemony clause.
Moscow has probably not dismissed the
possibility that its objections could, as they did last
spring, help stiffen the Japanese position in the
Sino-Japanese negotiations, but the Soviets have
long since become resigned to an eventual treaty
containing the offending clause. By hanging
tough now, the Soviets could be trying to con-
vince the Japanese that if they accept this clause,
they will ultimately have to make some compen-
satory gesture toward the USSR.
What Moscow would like most would be for
Japan to agree to negotiate the interim treaty of
friendship and cooperation that Gromyko first
proposed when Miyazawa was in Moscow last
January. The Soviets believe such a treaty would
skirt the seemingly irreconcilable Soviet-Japanese
differences over the Northern Territories that
have hampered conclusion of a Soviet-Japanese
peace treaty and politically nullify the anti-Soviet
aspects of the pending Sino-Japanese accord.
Tokyo has consistently rejected any treaty with
Moscow without a resolution of the territorial
problem, however, and is unlikely to accept anY25X1
th
'
e
s agreement to
Soviet suggestion that Japan
hegemony clauses requires some compensatory
gesture toward the USSR.
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President Costa Comes (1) and Foreign Minister Antunes (r) at swearing in of new government
PORTUGAL: TRY, TRY AGAIN
The new Portuguese cabinet-dominated by
anti-Communist military officers and represen-
tatives of the democratic parties-is expected to
shift away from the pro-Communist policies of
the Goncalves regime. The new government of
Prime Minister Azevedo, the sixth since the
military coup last year, faces a monumental task in
dealing with Portugal's pressing economic and
social problems, however, and will be subject to
continuing challenges from both the left and the
right.
The partisan composition of the cabinet
roughly corresponds to last April's election results
and includes four Socialists, two Popular
Democrats, and one Communist. The remaining
eight positions are divided between military of-
ficers and civilian technicians-nearly all of whom
are anti-Communist.
Past cabinets were expected to keep the
government running smoothly, but to leave the
decisions to the all-military Revolutionary Coun-
cil. The council-revamped last week to favor
Major Melo Antunes' anti-Communist fac-
tion-may allow the cabinet a freer hand, but will
be certain to reserve the final word on govern-
ment policies for itself. Unless the council moves
away from weak compromises and consensus
rule, it may serve only as a bottleneck while Por-
tugal's difficulties increase.
The Armed Forces Movement i5 still firmly in
control of the government, but the Socialists will
most likely be held accountable for the
government's performance, particularly in the
economic sector where they gained the most im-
portant post. Party leaders offer no panaceas and
will act under the authority of the political
program presented two weeks ago by
Azevedo-the long-term goal of which is the
"realistic" advance toward a socialist society. The
Socialists prefer to wait until they have received
legitimate authority through elections before in-
itiating strong actions. Socialist party leader
Soares has stayed out of the cabinet with the in-
tention of running in general elections which, ac-
cording to Soares, Azevedo has promised for next
February.
The new government is expected to concen-
trate its efforts in the following areas:
? Establishing a strongly pro-Western
foreign policy in hopes of obtaining badly
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needed financial assistance from Western
Europe and the US.
? Initiating pragmatic measures to halt
further economic deterioration and to deal
with the chaotic situation created by the
Goncalves regime's precipitate nationaliza-
tion and land reform measures.
? Diminishing Communist influence
in labor and the media.
? Re-establishing discipline within the
Portuguese armed forces, as well as keeping
a tighter rein on public order.
The Communists have grudgingly accepted
the new government and their own loss of
prestige. They will officially support the so-called
"government of unity"--at least for the
moment-to retain some voice in government
policy and to maintain their backing in the Armed
Forces Movement. At the same time, however,
the party can be expected to try to mobilize sup-
port to undermine the new government. The
Communist front Portuguese Democratic Move-
ment has already expressed its opposition to the
new cabinet and has promised a "period of social
unrest." Communist leader Cunhal has accused
"reactionaries" in the government of conspiring
to rescind the "revolutionary conquests" already
won through the nationalization of industry and
agrarian reform. Despite government promises to
retain these measures, the Communists have
begun mobilizing farm and industrial workers for
a series of demonstrations and symbolic strikes to
keep the government off balance and protect
these "revolutionary gains."
Both the Socialists and the Armed Forces
Movement are wary of the Communists' armed
strength, but it is doubtful that Communist
militants would mount an armed action at this
time-preferring to weaken the cabinet covertly.
Splinter groups on both the extreme left and the
right might ultimately present more of a threat.
The far left opposes the Socialist-dominated
government and might be tempted to renew
terrorist activities, which have been dormant
since the Salazar and Caetano regimes. Right-
wing forces allied with former president Spinola
have claimed responsibility for a rash of bombings
since the new cabinet was sworn in, including one
that damaged a building where Azevedo was
staying.
GREECE-TURKEY: STRAINED RELATIONS
The impasse at the latest round of intercom-
munal talks between Turkish and Greek Cypriots
earlier this month continues to have reper-
cussions as each ethnic community seeks alter-
native means to exert pressure on the other. The
deadlock in the talks, meanwhile, has increased
the strain between Athens and Ankara at a time
when efforts are under way to solve the more
dangerous Aegean controversy.
The Greek Cypriots, reacting to the refusal of
the Turkish Cypriots to discuss the territorial
question at the last round of talks, have placed
their case on the agenda of the UN General
Assembly. President Makarios arrived in New
York this week to head the Greek Cypriot delega-
tion.
The Turkish Cypriots have responded by giv-
ing their leader, Rauf Denktash, qualified authori-
ty to declare the Turkish Cypriot zone an in-
dependent state. Denktash pressed for such
authority partly for increased leverage in his effort
to forestall an overly unfavorable handling of the
Turkish Cypriot case by the UN, and partly out of
sheer frustration at the successful machinations of
the Greek Cypriots in international forums.
Ankara's unwillingness to take responsibility for
any initiatives in the present politically charged
pre-election atmosphere in Turkey seems to have
contributed to his frustration.
Denktash's soundings in Ankara on behalf of
a declaration of independence received a cool
response from all political leaders except
Necmettin Erbakan, one of Prime Minister
Demirel's rightist coalition partners. Ankara fears
such a move would further isolate Turkey from its
NATO allies and damage the prospects for lifting
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the US arms embargo. A more long-term concern
is that a declaration of independence would
rekindle the Greek Cypriot movement for union
of their zone with Greece, which, if successful,
would put Greek and Turkish forces face to face
on Turkey's southern flank. Ankara doubtless also
reminded Denktash that only a few Moslem states
would recognize an independent Turkish Cypriot
state.
Denktash ran into surprisingly stiff resistance
in his own constituent assembly this week. After a
stormy debate-marked by a walkout of the op-
position Popular Party members-the assembly
gave him authority to declare independence, but
only after consultations with Turkey and "final"
approval by the assembly, and then only in the
event future Greek Cypriot actions warrant it.
Ankara's opposition, along with that of some
elements of the Turkish Cypriot community, will
discourage Denktash from using his limited
authority, at least for the time being.
The lack of progress on a Cyprus settlement
has probably had a negative impact on Greek and
Turkish efforts to resolve bilateral problems in the
Aegean. Negotiators in the talks on airspace
rights, which began last June, have reached
agreement on civilian airflights but the stumbling
block continues to be the question of military air-
flights, along with the extent of Greek airspace
over Greek islands.
Ankara is concerned about the closeness of
some of the Greek islands to the Turkish
coastline. Consequently, the Turks insist on a 50-
mile notification zone that would require Greek
military aircraft flying to and from Greek islands
within the zone to inform Turkish authorities.
Moreover, they now indicate they will
acknowledge Greek sovereignty over only six
miles of airspace around Greek islands rather than
the ten miles they had tacitly accepted in the past.
Athens believes Turkish demands could lead
eventually to encroachments on Greek
sovereignty over the islands in the zone and has
thus far rejected them.
A more crucial test for Greek-Turkish
relations will come in the next few weeks when
MBFR: SEVENTH ROUND TO BEGIN
The seventh round of the MBFR talks in
Vienna will begin Friday, September 26. There
has been little progress toward an agreement
since the talks first convened almost two years
ago. The basic aims of the two sides in the
negotiations remain fundamentally opposed.
The West has proposed larger reductions
for Warsaw Pact forces than for NATO in an ef-
fort to reduce the disparity in size between the
forces in central Europe. The East, on the other
hand, has sought equal percentage reductions,
claiming that other factors compensate for its
numerical advantage. Western negotiators will
be looking for signs of renewed Soviet interest
in the negotiations now that a CSCE agreement
has been signed. The West at this session is ex-
pected to table its long-awaited Option III
proposal to include some US tactical nuclear
weapons in Europe in its reduction package in
exchange for Soviet agreement to withdraw a
tank army and a commitment by the East to a
common ceiling for both WarsawPact and
NATO forces in central Europe.
talks are expected to begin on the terms of
reference for submission of the volatile Aegean
continental shelf issue to the International Court
of justice. The Greeks seem confident of the legal
merits of their case and are therefore likely to
argue that the court be given broad terms of
reference. The Turks have agreed in principle to
submit the case to the Court, but they have given
strong indications they still prefer to settle the
controversy in bilateral talks. They are therefore
expected to insist that the Court be given very
narrow terms of reference and that most issues be
dealt with bilaterally.
With such differences in approach, the talks
may run into the same difficulties that have block-
ed progress in the Cyprus and Aegean airspace
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FRANCE: NEW FIGHTER QUESTIONED
French aircraft designer Marcel Dassault will
continue his attempts to develop his controversial
next generation fighter despite growing domestic
criticism over the plane's cost and questions
regarding a widening French aerospace
technology lag with the US. The plane, dubbed
the ACF (Avion de Combat du Futur), was to have
been built in three versions: a single-seat air-
superiority version, a two-seat deep-penetration
strike model, and a two-seat reconnaissance air-
Despite Dassault's decision to go ahead with
the single version of the aircraft, he will continue
to face crucial decisions in the months ahead. For
example, he has not indicated whether he will
complete development of the WE before
devoting his full attention to the ACF. The mis-
sions of the two aircraft overlap, and the French
air force has expressed a strong preference for the
ACF. A firm commitment to turn immediately to
the ACF would force Dassault to bank heavily on
selling a large number of these aircraft to the
French air force in order to finance the project.
Both President Giscard and Ministry of Defense
officials have expressed dissatisfaction with the
ACF, however, because of its high cost. In its mul-
tipurpose fighter version, the aircraft reportedly
carried a price tag as high as $15 million to $19
million each. A number of knowledgeable French
sources apparently believe that France will be
able to sell enough fighters in the export market
to bring the cost of the aircraft down to a com-
petitive level.
Artist'. conception of ACF
NPi c
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Dassault's previous success has been based
on developing good and relatively inexpensive
fighters. He has minimized financial risk and kept
costs in line by making only modest im-
provements on a proven fighter design in each
new generation of aircraft. This strategy may have
backfired, however, when the F1/E competed
against the truly advanced technology embodied
in General Dynamics' F-16-the US entry in the
recent European F-104 replacement competition.
tout the ACF as a totally
new concept in fighter technology, but this is not
the case. It reportedly will have the same front
fuselage section as the WE, although the
twin-engined ACF will carry more sophisticated
electronics systems and be powered by an im-
proved version of the same M-53 engine
developed for the Fl/E.
more realistic members o the French govern-
ment and the aerospace profession are aware that
the technology lag with the US will probably not
be made up by the ACF. They recognize that the
more limited version of the aircraft, which
Dassault now plans to build, would be no more
than comparable to the already operational US-
built F-15 and yet would not be available until
1980-82 at the earliest.
Adding further to Dassault's problems is the
tight budgetary situation in France. Research and
development money has not been forthcoming
from the government, which is being forced to
juggle funds and establish new spending priorities
for military hardware.
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FINLAND: ANOTHER ELECTION DRAW
Finland's national election on September
21-22, as expected, failed to provide a mandate
for dealing with the country's mounting
economic problems. The elections came six
months early, after Prime Minister Sorsa's
three-year-old Social Democratic coalition, the
second longest in modern Finnish history, fell
apart this summer in a dispute over economic
correctives.
None of the problems has improved in the
interim; indeed, thew have worsened. The trade
deficit is headed toward $2.4 billion this year-e-
qual to 10 percent of GNP-despite measures
designed to discourage imports. Consumer prices
are running some 18 percent above a year ago,
while industrial production is falling and un-
employment rising. The dilemma facing the new
government is that efforts to hold down the trade
The Finnish Parliament
NEW
OLD
Social Democrats
54
40
56
37
Center
39
35
Swedish Peoples
10
9
Liberals
9
6
Christians
9
4
Conservatives
35
33
Rural
2
5
1
13
deficit and inflation would further depress the
economy and weaken public support.
In the balloting, the long-dominant Social
Democrats held losses to two seats, leaving them
the plurality party in the 200-seat parliament. On
the other hand, their principal competitor on the
left, the Finnish People's Democratic League,
which is the electoral front for the communists,
picked up three seats. This reinforces fears across
the political spectrum that the communists may
win the pivotal metalworkers' union election in
November, complicating the next government's
task.
The other eight parties in parliament, all non-
socialist, retain an overall majority. The three
middle-of-the-road parties that belonged to the
last coalition, the Center, Swedish People's, and
Liberal parties, in fact gained enough to out-
number the Social Democrats. Their gains came at
the expense of most of the smaller non-socialist
groups. In picking up two seats, however, the
Conservatives now have the required one sixth of
the seats to block important legislation.
Negotiations for a new coalition will be
protracted. The centrist parties are likely to de-
mand the prime ministership for the Center Party
as the price for reconstituting the old coalition.
The Scial Democrats reportedly will balk. In any
event, they may want to await the outcome of the
union election before committing themselves to a
new coalition and the unpopular measures,
possibly including revaluation, that must be
enacted. On the other hand, the centrist parties
ultimately could form a minority coalition, but the
need to accommodate Conservative views makes
this doubtful.
EAST EUROPEAN CHEMICAL INDUSTRY
Half-year data indicate that the chemical in-
dustries of Poland, East Germany, and Hungary
will probably fulfill or exceed planned growth
rates for the current five-year plan. Bulgaria,
Romania, and Czechoslovakia, while reporting
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production increases for a number of chemical
products, will fall behind. Nevertheless, the
chemical industries have all grown more rapidly
during 1971-75 than East European industry as a
whole.
Performance of the chemical industries was
highlighted by a number of outstanding
achievements during the five-year plan period:
? The opening of the Bulgarian Dev-
nya chemical complex, which includes a fer-
tilizer plant and one of the largest soda ash
plants in the world.
? The start-up of large ethylene plants
in East Germany and Hungary, which are
supplying Czechoslovakia and the USSR
respectively by pipeline.
? The opening of the first stages of the
nitrogen fertilizer plants at Piesteritz, East
Germany, and Petfurdo, Hungary, and the
start-up of the East German Zielitz potash
mine, which soon will account for over one
fourth of total East German production.
Despite the expansion, midyear reports in-
dicate that most of the countries will not reach
fertilizer or plastics production goals for 1975. In
Poland, however, production goals for phosphate
fertilizer and plastics are likely to be exceeded.
Nitrogen fertilizer and synthetic fiber output for
the year-although higher than in 1974-will
probably be below plan. Hungary's production
goals for fertilizer and plastic are unlikely to be
met.
East Germany reported increases in synthetic
fiber and polyvinyl chloride production in the
first half of 1974. This year's potash fertilizer goal
should be reached as the Zielitz potash mine ap-
proaches capacity output, and nitrogen fertilizer
production for the year should be close to target.
Plastics output will probably fall short of the plan;
synthetic fiber production had already reached
the 1975 goal last year.
Production of a number of chemical products
increased in Bulgaria, but problems with new
machinery make achievement of fertilizer goals
East European Chemical Industries:
Planned Average Annual Increase and
Probable Achievements, 1971-75
(Percent)
Country
Un
P
Probable
Achievement
Poland
-
10.4
12.9
Hungary
8.9
10.5
East Germany
8.0-8.5
8.5
Bulgaria
20.6
12.9
Romania
17.5
16.3
Czechoslovakia
9.2-9.9
9.1
for 1975 unlikely. Targets for plastics and synthetic
fibers will probably be reached.
Romania has reported little information
on the chemical industry at midyear. Although
output in 1974 was nearly 20 percent above the
level of 1973, only 89 percent of the target
was achieved. Construction delays have plagued
Romania's fertilizer expansion program, and
fertilizer, output last year reached only 71
percent of the 1974 goal. Plastics production
was 7 percent lower than in 1973, reflecting
reduced feedstocks caused by an explosion at
the Pitesti chemical plant.
In Czechoslovakia, many of the 1975
plastics targets will not be reached because
of problems in the integration of raw materials
and downstream production facilities and
delays in the plant construction caused in part
by labor shortages.
For the 1976-80 plans, the development
of the petrochemical industry-a principal
objective in the current plans-will continue
to receive priority. Emphasis will be placed
on plastics and synthetic fiber production.
Synthetic rubber expansions are planned in
Czechoslovakia, Poland, and Romania. Fertilizer
production will continue to expand, and by 1980
all the countries should be either self-sufficient
or net exporters of nitrogen fertilizer.
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 POLAND: AGRICULTURAL PROBLEMS
Poland's visiting Agriculture Minister Bar-
cikowski met with US officials this week to discuss
purchases of US grain, $200 million in credits, and
a long-term agricultural agreement that would
make Poland more dependent on US grain. Bar-
cikowski agreed that any further discussions on
the grain sales and credits will be postponed until
after the US October grain report is made.
Poland's ambassador to the US recently told
US officials that grain import requirements would
be almost 6 million tons in fiscal 1976 and that
Warsaw is looking to the US for about 4 million
tons, mainly wheat, corn, and grain sorghums.
The remaining 2 million tons of grain will be
purchased from other Western countries. Over
the longer term, Warsaw hopes to import 2 to 3
million tons of grain annually from the US
through 1980.
Because of a severe shortfall in its own crop,
the Soviet Union will not ship any grain to Poland
or its other East European customers from this
year's harvest. Instead, the Soviets reportedly will
provide Warsaw with hard-currency credits to
cover most of its grain purchases.
Poland's need to sustain livestock production
at a time of drought-induced crop shortfalls is
responsible for higher grain imports. Production
of forage crops-especially potatoes-and
pastures have been cut by a late summer dry spell.
In addition, the grain harvest is down 2 million
from the 23 million tons produced last year.
The regime is clearly concerned about dis-
cord among Polish consumers that could result
from agricultural problems. Public disturbances
occurred earlier this year over shortages of meat
and milk products. Attempts to stimulate produc-
tion of these products through higher procure-
ment prices announced last month will fail unless
feed supplies improve.
Warsaw has increased meat and dairy imports
this year and cut exports. Butter exports have
been cut by nearly half during January-June and,
according to Prime Minister Jaroszewicz, have
now ended. Meat exports will be reduced by one
third in 1976. So far this year, Poland has imported
13,000 tons of meat from Yugoslavia and 12,500
tons of butter from Australia and New Zealand.
Meat shortages will persist until the regime takes
some action to dampen the growth of consump-
tion.
The top leadership has spread news about the
bad harvest to condition the public for food price
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LEBANON: TURMOIL CONTINUES
The fighting in Beirut continued throughout
the past week. By September 25, however, the
third attempt since last weekend to arrange an
effective cease-fire appeared to be meeting with
partial success. Some of the combatants-leftist
groups and militiamen of the rightist Christian
Phalanges Party are the main adversaries-began
withdrawing, and street barricades had been
removed from parts of the city.
As many as 900 persons may have been killed
and several thousand wounded in the fighting
that began almost two weeks ago. Property losses
have been estimated at over $2 billion. The
economic damage resulting from the fighting has
seriously jeopardized Beirut's position as the
financial center of the Middle East.
Even if the latest cease-fire, announced on
September 24, should hold, several factors could
bring about new fighting at almost any time:
? The control exercised by the major
religious and political leaders over their
armed followers is by no means complete.
? Lebanese leftists and radicals, es-
pecially Kamal Jumblatt's followers and the
Popular Front for the Liberation of Palestine,
apparently believe that continued conflict is
likely to overturn the present system of
government and pave the way for a leftist-
dominated Muslim regime.
? The radical Arab governments,
notably Libya and Iraq, are likely to increase
their financial and military support to the
dissident groups.
Prime Minister Karami, fearing a reaction by
the moderate fedayeen organizations, which have
not become involved in the fighting, has con-
tinued to oppose the use of the largely Christian-
controlled army to end the fighting. If the latest
attempt to implement a cease-fire finally brings
an end to the fighting, the government plans to
use the army to maintain order.
In midweek, Karami announced the forma-
tion of a 20-member "national reconciliation
committee," equally divided between Muslims
and Christians. The committee met on September
25 for the first time and was to discuss coopera-
tion among all segments of Lebanese society. It
may have considerable difficulty in bridging the
deep divisions between the two religious com-
munities, however. Christian leaders, notably
President Franjiyah and Phalanges Party leader
Pierre Jumayyil, reportedly remain adamantly op-
posed to any modification of the existing political
structure.
As long as the conservative Christian
leadership continues to oppose some shift of
political power to the Muslims, including a revi-
sion of the national covenant of 1943, which
provides for political representation in propor-
tion to the numerical strength of each religious
group in the country, Lebanon will remain
chronically unstable.
it is generally believed that Christian emigra-
tion, a higher Muslim birthrate, and, to a lesser
extent, naturalization of some Muslims have at
least reversed the estimated 55-45 ratio of
Christians to Muslims that existed in 1943. As a
consequence, Lebanese Muslims have been call-
ing for an alteration of the parliamentary quota
system to obtain 50 percent or more of the seats.
For the short term, if some degree of order is
restored, Karami will probably remain on as prime
minister. He continues to have the support of the
principal Muslim leaders, as well as Palestine
Liberation Organization chief Yasir Arafat-an in-
creasing power in Lebanese politics-and the
Syrians. If the situation deteriorates badly,
however, Christian or-more likely-Muslim
political groups might finally abandon their sup-
port for the power-sharing principle of the
national covenant and seek complete power for
themselves.
Damascus has so far avoided taking sides in
the Lebanese conflict and has sought to persuade
the various forces involved to accept a cease-fire;
Syrian Foreign Minister Khaddam, who came to
Beirut last week, has been playing the role of
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chief peacemaker. President Asad, deeply con-
25X1 cerned about the outlook for negotiations on the
Golan Heights, is anxious that the Israelis not have
an excuse to occupy southern Lebanon.
ANGOLA: FIGHTING BACK
The National Front for the Liberation of
Angola late last week recaptured two important
towns northeast of Luanda that it had lost two
weeks earlier to the Popular Movement for the
Liberation of Angola. The success gave the sag-
ging morale of Front partisans an important boost,
but the Popular Movement still holds the
predominant military and political position in
Angola.
The recovery of Caxito and Barra do
Dande-both important road junctions-again
brings the National Front to within about 40 miles
of Luanda. However, the Front clearly must put
much stronger military pressure on the Popular
Movement in the weeks ahead if it is to gain a
meaningful political role in any government that
may be formed between now and November 11,
the scheduled date of Angolan independence.
Cabinda Recaptured\
Barra by FNLA
41 do Dande f axito
LUANDA*\ MPLA
uibala f+nyola
Luso
Skirmishing_-
/ Nova Lisboa
The Popular Movement is bending every ef-
fort to present itself as the only liberation group
capable of assuming power at independence. It
remains in firm control of Luanda, most important
central coastal towns--including Angola's main
port of Lobito-and the exclave of Cabinda.
Popular Movement members or sympathizers
also occupy most of the responsible ad-
ministrative positions in Luanda, including the top
post in an embryonic foreign ministry.
In central Angola, the National Union for the
Total Independence of Angola, the territory's
third nationalist group, continues to fight the
Popular Movement in a holding action, but its
prospects are not bright. Popular Movement
forces reportedly have begun to advance from
Luanda and Benguela in the general direction of
Nova Lisboa, the Union's main stronghold. Some
new skirmishing has occurred near the towns of
Quibala, Mariano Machado, and Luso.
With independence only seven weeks away,
the Portuguese are becoming increasingly
pessimistic that they will be able to re-establish a
nationalist coalition to which they can turn over
the government. Nevertheless, Portuguese of-
ficials give every indication of being determined
to get out of Angola by then, come what may. Last
week, the Portugese high commissioner for the
territory announced that the remaining 22,000
Portuguese troops would be withdrawn by in-
dependence. Lisbon's evacuation of white
refugees from Angola is continuing, but at its
current pace Portugal can not hope to have all of
the remaining 200,000 or so whites out by the end
of October, the targetted deadline for completing
the evacuation.
Meanwhile, OAU chairman Idi Amin, in
response to an urgent plea by Portuguese Presi-
dent Costa Gomes, is intensifying his effort to try
to find a peaceful solution in Angola. He has in-
vited the three liberation group leaders to meet
with an OAU-appointed reconciliation com-
mittee in Kampala early next week, but he is ap-
parently not sanguine that either Holden Roberto
of the National Front or Agostinho Neto of the
Popular Movement will show up.
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SYRIA: SOUND AND FURY
President Asad's regime continues its sharp
attacks on the Sinai accord. More protest
demonstrations were staged in Damascus and
around the country this week. Syrian leaders also
kept up a steady barrage of public criticism of
Egypt, echoing Foreign Minister Khaddam's call
for President Sadat to abrogate the agreement.
The shrill pitch of much of the Syrian criticism
reflects Damascus' frustration and anger over
what it considers Egyptian misrepresentations of
the terms of the recent negotiations. These at-
tacks, however, are primarily designed to accom-
modate domestic dissatisfaction with the accord
and to keep US and Israeli attention focused on
the need for prompt and serious negotiations
between Syria and Israel as a follow-up to the
Sinai agreement. President Asad told Newsweek
editor de Borchgrave last week that he feared the
Egyptian-Israeli accord would "anesthetize" the
situation in the area.
With Egypt's military power effectively
neutralized for the time being, the Syrians are in-
deed fearful that the US, because of domestic
concerns, and the Israelis, because of the promise
of huge amounts of US aid, will have little incen-
tive to pursue serious negotiations with
Damascus. Asad has already indicated that he
believes the US and Israel would like to string
Syria along until next year's US presidential elec-
tion is out of the way. Damascus is determined to
do what it can to prevent that.
In his Newsweek interview, for example,
Asad expressed deep pessimism about the
prospects for successful negotiations with Israel
and raised the possibility that Syria might decide
to resume hostilities on its own. Since the Sinai ac-
cord was signed, however, Asad has also
repeatedly stressed his desire to pursue a peaceful
course as long as that route offers some hope of
progress.
Asad is keenly aware that he has few other
viable options. But for tactical purposes, he is like-
ly, over the next few months, to assume a
belligerent public stance in order to illustrate that
the Sinai agreement has not brought true peace
to the Middle East. Much of the Syrian effort is
also likely to be directed at putting pressure on
Egypt and obtaining the support of other Arabs,
especially Saudi Arabia, so that pressure can be
brought to bear on the US, and through the US on
Israel, to do something for Syria. Earlier this
month Asad sent Khaddam on a brief junket to
the Persian Gulf states to explain Syria's position;
on September 21 he dispatched his special
political adviser to North Africa for the same pur-
pose.
If there are no signs of progress in
negotiations by the end of next month, the
Syrians are likely to threaten again not to renew
the mandate of the UN forces stationed on the
Golan Heights in order to raise tensions and give a
greater sense of urgency to Syria's demand for
movement. In separate interviews both Asad and
Khaddam recently refused to be drawn out on
Syrian intentions toward the mandate, obviously
preferring to keep that weapon sheathed for the
time being. The Syrians, however, almost certainly
do not want to provoke a war with Israel at pre-
sent and would probably quietly renew the man-
date if some form of exploratory talks are under
way before the mandate comes up for renewal in
late November.
How long Asad's patience will last or how
successfully he can control internal pressures for
action after that is almost impossible to predict. As
on other occasions, Asad has been able this time
to deftly divert any jingoistic pressures by taking
the initiative in critcizing the Egyptian-Israeli
agreement, thereby robbing his domestic op-
ponents and the Iraqis of any way of effectively at-
tacking him for his passivity during the Sinai
negotiations. 25X1
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Jose Lopez Portillo
MEXICO: ECHEVERRIA'S SUCCESSOR
The governing Institutional Revolutionary
Party announced on Monday that Treasury
Secretary Jose Lopez Portillo would be its can-
didate for a six-year term as president beginning
next year. Under Mexico's dominant single party
system, his election is a certainty.
The selection and timing of the announce-
ment were unexpected. Most observers believed
the choice had narrowed to Secretary of Govern-
ment Mario Moya and Secretary of the Presidency
Hugo Cervantes. Lopez Portillo may have been a
compromise selection, made only after party
leaders could not agree on either of the apparent
front runners.
Of all the presidential hopefuls, Lopez Por-
tillo is the closest personally to Echeverria and
appears to share Echeverria's economic and social
philosophy. He is regarded as a top-notch ad-
ministrator with left-of-center economic and
political views. The President probably trusts him
to continue the policies and programs he has in-
itiated to achieve continued economic growth
and an improvement in the lot of the poor.
Echeverria has moved to modify the develop-
ment policies followed by Mexican governments
since 1940. While these policies have produced a
sustained real growth rate of about 7 percent a
year, they have at the same time resulted in one of
the most inequitable systems of income distribu-
tion in all of Latin America. Echeverria's recogni-
tion that attempts to correct this imbalance will
have to be pursued during the next presidential
term presumably was a factor in his choice of
Lopez Portillo.
Lopez Portillo no doubt was acceptable to
the influential business and finance community.
Because of his generally restrained performance
in the cabinet, he has allayed the fears of many
businessmen who initially regarded him as a
radical. His associates predict that Lopez Portillo
will tone down the government's leftist rhetoric
and act as a "consolidator," following up on
Echeverria's good initiatives in a more orderly
way.
Lopez Portillo strongly supports the role of
state-owned enterprises in the economy and
favors expanding government credit to
agriculture in an effort to stem the massive migra-
tion of rural poor to the cities. To help the im-
poverished rural areas, he may well advocate
higher taxes on the rich and the middle class.
He has pledged full support to industry and
has promised to obtain credit for industrial ex-
pansion. Lopez Portillo appears to be fully cogni-
zant of the need to foster this wellspring of the
country's economic growth. Still, he will probably
pursue populist policies in the Echeverria vein.
Lopez Portillo subscribes to the Echeverria policy
on foreign investment, welcoming it if it is in ac-
cord with Mexican goals and development needs.
Concerned over losses of foreign capital, he
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SECRET NWIF
decided to go easy on enforcing the tough
foreign investment law enacted in 1973.
Looking forward to large oil revenues, Lopez
Portillo wants Mexico to exploit its large reserves
and become a major oil exporter. He has said that
Mexico will give preferential treatment to
developing nations in the sale of oil, but that such
sales must be at current market prices. He has ex-
pressed concern about the impact of high oil
prices on developing countries.
As he has at past international financial
meetings, Lopez Portillo will continue to support
Third-World causes and push Echeverria's charter
of economic rights and duties of states. He will
probably be less vocal and less inclined to take on
the role of spokesman for the developing world
than Echeverria.
As treasury secretary, Lopez Portillo has
traveled to Washington on occasion as head of
economic delegations. He has been cordial and
cooperative in his dealings with US officials.
Although he has not criticized this country
publicly, he will, like all Mexican presidents, be
alert to any action of the US that might infringe on
Mexican national interests.
PANAMA CANAL NEGOTIATIONS
The government's release last weekend of
confidential US and Panamanian negotiating
positions and escalating student demonstrations
complicate and could imperil the treaty talks.
Despite its tactics and policies, however, the
Torrijos administration appears still committed to
the talks and probably believes it is in control of
the situation.
The Foreign Ministry's public outlining of the
points of agreement and disagreement in the
treaty talks was addressed to domestic political
considerations. The government sought to
demonstrate that it is maintaining the initiative in
the negotiations and continuing to reject US
proposals that might infringe on Panama's future
sovereignty. It also was in compliance with Torri-
jos' pledge to conduct open negotiations.
Recent statements by US officials were inter-
preted in Panama as indicating a hardened US
position, and the latest negotiating round ended
with Panama publicly noting that "very little
progress" had been achieved. In light of this, the
government felt its communique would deflect
possible criticism.
The ministry's release ended by quoting US
Ambassador Bunker as saying that the US
positions "are all negotiable." Panamanian media
have focused, generally positively, on the
government's approach to the negotiations rather
than on alternate courses of action. Thus,
although the government's basic commitment to
the talks is not in doubt, its public contrasting of
major differences-for example, the US proposal
to retain 85 percent of zone territory versus
Panama's offer of 10 percent-will make it in-
creasingly difficult for the Panamanian side to
compromise. it demonstrates that Panama is
banking on significant additional concessions
from the US.
Student reaction to treaty talks
developments, focusing on the statements by US
officials, produced the most violent
demonstrations in recent years. Approximately
800 students stoned the US embassy in Panama
City on September 23. National Guard troops
prevented the students from entering the
grounds but otherwise did not interfere with
their actions. The students, members of radical
groups not under the government's control, also
demonstrated at the Panamanian Foreign Ministry
to underscore their charge that the government is
acquiescing in a sellout of Panamanian interests.
Torrijos and his chief lieutenants in the Guard
probably still believe they can control the general
development of protests, which are highly visible
manifestations of the popular impatience that
Torrijos frequently cites in his speeches. Further
demonstrations, with ossible overnment con-
nivance are likely.
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OAS: BACK ON TRACK
The OAS Permanent Council has reconvened
in an ambitious and positive mood. Latin
American members apparently want to nurture
the current flexibility they believe they discern in
US proposals to the UN, in the resumption of the
Panama Canal negotiations, and in the lifting of
the sanctions against Cuba. The expectations of
the Latin Americans have been buoyed by their
feeling that the lesser developed countries are
beginning to make some headway in winning
concessions in various international debates
between the rich and the poor.
[he delegates are plunging into the OAS
backlog, making a special effort to conclude the
two-year-old business of reforming the in-
ter-American system. They are motivated by a
desire to build on the recent success in amending
the Rio Treaty, by the renewed commitment to
the OAS on the part of critical governments like
Mexico, and by the anticipation of unscheduled
business in the months ahead.
Reading the rapid and sharp shifts from
cooperation to confrontation between Latin
America and the US over the past two years, the
Latins believe they must make the most of any
faint trails through the minefield of contentious
issues that divide the hemisphere. They see an
array of problems that threatens to break the
current spirit of inter-American good will. These
include the Trade Reform Act's provisions that
discriminate against OPEC members in the OAS,
the possibility of a Guatemalan military response
to moves toward independence by Belize, the
fragility of the canal talks, conflicting interests in
Law of the Sea and fishing matters, border ten-
r,ions between Peru and Chile and between Hon-
duras and El Salvador, and efforts to lure Cuba
back into the OAS.
Peru, backed by Venezuela, has already made
clear its intention to press hard over the objec-
tions of the US for OAS approval of the principle
of "collective economic security." Having failed
to insert this language into the Rio Treaty
amendments, Peru wants a separate in-
ter-American treaty that would provide for sanc-
tions against "economic aggression." Peru has
already proposed to amend the opening articles
of the OAS charter to include achievement of
collective economic security among the goals
and purposes of the organization.
The Latin Americans are also hard at work
preparing for a meeting in Panama scheduled for
October 15 at which they expect to establish the
new Latin American Economic System, an
organization designed to allow the Latin and
Caribbean governments, without the presence of
the US, to formulate joint strategy for dealing with
Washington and the rest of the hiehly develooed
VENEZUELA: NATIONALIZATION TALKS
The nationalization of the foreign-owned
petroleum industry is entering a decisive phase.
The Perez administration has already taken the
first step toward setting up a basic organizational
structure for the new nationalized petroleum in-
dustry and is engaged in serious talks with major
oil company representatives on such issues as
compensation, technical assistance, and
marketing contracts.
A Venezuelan oil company executive, who is
also one of the nine directors of Petroven, the
state holding company that will manage the
Venezuelan oil industry after January 1, 1976, has
publicly predicted that the oil concessionaires will
accept the government's compensation terms. He
acknowledged, however, that differences exist on
other matters under review. Even so, he believes
that it is not in the interest of the government or
the companies to be inflexible and is confident
that the parties will come to some agreement.
Government negotiators and officials involved in
the current talks also are confident that problems
will be resolved.
Last week, Finance Minister Hector Hurtado
announced that the government will pay slightly
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less than $1 billion to the companies in ten-year
bonds carrying 6.5 percent interest. The an-
nouncement was made following a meeting with
President Perez, who is taking an active role in the
negotiations. Under article twelve of the oil
nationalization law, the President must submit the
written compensation agreements to a joint ses-
sion of Congress for "consideration and ap-
proval." Leftist legislators will surely accuse the
government of giving in to the companies, but
the governing Democratic Action Party will exer-
cise its majority in the legislature to prevent a ma-
jor or prolonged political controversy. There is no
requirement that the more politically controver-
sial technical assistance and marketing
agreements be submitted for congressional ap-
proval.
troublesome area.
In the meantime, the government has acted
to forestall labor problems that could develop in
the petroleum field similar to those that occurred
in the nationalized iron-ore industry. To prevent a
repetition of the wildcat strikes that cut produc-
tion and threatened serious economic damage to
the country, President Perez has promised that
the privileged position of workers in international
subsidiaries will not be changed without consulta-
tion with the unions. He also offered the workers
half the severance and seniority benefits that
would have been due them if nationalization had
terminated their jobs. The generally conciliatory
posture of the government demonstrates the im-
portance Perez attaches to a smooth transition
from private to state ownership and to his desire
to prove that Venezuela will be able to run the in-
dustry without interrupting production.
Whether the government has in fact succeed-
ed in buying labor peace for an extended period
is an open question. The wildcat strikes that
plagued the iron-ore industry were basically
rank-and-file revolts against ineffective and non-
responsive union leadership, which could be
repeated in the petroleum industry. Potentially
disruptive factors include the internal politics sur-
rounding the Fedepetrol convention scheduled
for December. Many workers are demanding full
payment of severance and seniority payments,
and new union leaders are to be elected. The
white-collar workers' association is also becoming
more militant.
The expiration of the petroleum workers'
contract in June 1976 will be another critical test
of the government's ability to cope with the
petroleum workers in a nationalized industry. The
far-left parties will have an opportunity at that
time to stir up the workers in an effort to em-
barrass the administration. Venezuelan officials,
including Perez, are aware that the government's
problems will not end with the formal take-over
of the oil industry in January. Acutely aware of the
fact that labor problems may be more
troublesome than relations with the private oil
companies, government officials are devoting
more than their usual attention to this potentially
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 Acting President Luder meets with labor leader Lorenzo Miguel (r)
ARGENTINA: SETTLING IN
After an initial burst of activity, the pace of
the new government team headed by Acting
President Italo Luder has slowed considerably.
Within days of assuming executive authority,
Luder replaced the ministers of interior and
defense, as well as President Peron's private
secretary and confidant, Julio Gonzalez. Luder
also replaced the federally appointed chief ad-
ministrator of politically turbulent Cordoba
Province, a widely disliked right winger. In addi-
tion, Economy Minister Cafiero again devalued
the peso slightly and indicated that further
mini-devaluations can be expected. He also an-
nounced a compromise plan to control price
rises.
Now, however, the new team has entered a
period of relative lull. Additional cabinet changes
that seemed imminent have not materialized,
although most observers still consider them in-
evitable. Gonzalez, although out of his top job,
still retains a lesser post he has held for some
months, despite Luder's desire to remove all
Peron's supporters. Moreover, Luder and his
aides have not taken on top labor leader Lorenzo
Miguel. The acting president is known to favor
the removal of Miguel, who has allied himself
with Peron on several occasions. Finally, the
political problems inherent in initiating a severe
rackdown on leftist subversives-particularly the
Montoneros, who are still not universally con-
sidered beyond redemption-continue to delay
definitive action on that front.
The slowdown in the new government's ac-
tivity is probably the result of a desire to proceed
with caution until the effect of the early initiatives
can be evaluated. But there are also indications
that the highly touted team, whose other prin-
cipals are Economy Minister Cafiero and Interior
Minister Robledo, has already begun to en-
counter problems of its own.
The US embassy reports, for example,
widespread speculation that Luder and Cafiero
have clashed at least once over Cafiero's failure to
inform Luder beforehand of the latest currency
devaluation. The embassy also indicates that
Luder and Robledo are seen more and more as
differing over the eventual return or definitive
departure of Peron. Luder is said to oppose her
return to duty, while Robledo favors retaining
her, at least in a figurehead role.
These differences may be minor; indeed,
from all outward indications, the three are still
working well together. But their very
prominence-all are considered potential
presidential candidates for 1977-is likely to be a
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INDOCHINA: FIVE MONTHS AFTER
The end of the fighting in Vietnam ushered in
a new period of uncertainty in Southeast Asia, but
today there is little doubt about the totality of the
Vietnamese, Lao, and Khmer communists' vic-
tories. Despite the continued existence of a
separate South Vietnamese political apparatus in
the form of the Provisional Revolutionary
Government, de facto reunification of South with
North Vietnam was accomplished with the fall of
Saigon.
It has become clear that the new regimes will
be preoccupied for some time by the enormous
tasks of economic reconstruction and political
consolidation. These problems, at least in the case
of Cambodia and South Vietnam, were greatly
magnified by the very abruptness of the com-
munist take-overs. The Vietnamese communists,
for example, did not anticipate the collapse of the
former South Vietnamese government last spring
and were not prepared to assume administrative
control of the country. Initial euphoria following
the fall of the Thieu regime gave way quickly to a
recognition of the serious economic and ad-
ministrative problems confronting South Viet-
nam.
Nearly five months after the fall of Saigon,
South Vietnam remains under a form of martial
law in which North Vietnamese military per-
sonalities make all day-to-day political, ad-
ministrative, and economic directives. The
primary authority, however, appears to be Pham
Hung, fourth-ranking member of the North Viet-
namese Politburo, who is in charge of party and
military affairs in the South. The South Viet-
namese Provisional Revolutionary Government,
which ostensibly serves as a national government,
has no meaningful authority over either Pham
Hung or the military management committee.
Immediately after the take-over, the com-
munists moved to offset the lack of capable and
trustworthy administrators by importing large
Saigon's collapse, nearly one third of North Viet-
nam's bureaucracy had left for the South. Many of
these appear to have been former southerners
who had come north at the time of the 1954
Geneva accords. The communists are also taking
steps to "rehabilitate" former South Vietnamese
bureaucrats and return them to their old
positions.
Communist policies to date have been aimed
primarily at restoring order and the economy. On
the first point, the communists adopted a relative-
ly conciliatory approach in order to mobilize sup-
port. But given the long and bitter nature of the
Vietnamese conflict and the abundance of
firearms in the country, it is hardly surprising that
the communists are admitting to opposition from
a variety of sources, including former government
soldiers, religious sects, and ethnic minorities in
the highlands.
So far, this largely unorganized activity does
not present a long-term threat to communist con-
trol, but the continued presence of 18 of the 20
North Vietnamese divisions Hanoi had in South
Vietnam during the final offensive last spring
attests to the fact that security remains a problem.
The economy is probably a far more
worrisome problem. The communists admit that it
is still in bad shape. Low production and high un-
employment have reduced the level of living
throughout the country.
Considerable help from Hanoi's foreign allies
will be required to get the economy on its feet.
The Vietnamese lack the fertilizer, machinery and
parts, and fuel to become self-sufficient in food
for at least the next couple of years, despite ex-
panded farm acreage. Moreover, industry relies
almost exclusively on foreign materials, and the
country's foreign-exchange reserves are insuf-
ficient to cover more than a fraction of the
South's needs.
The communists so far have not attempted to
make fundamental or sweeping changes in the
South's economic structure. Some banks have
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been reopened and a new currency has recently
been introduced. While the largest industrial
enterprises have apparently been seized by the
state, the communists are depending heavily on
private enterprises to revive the economy.
Refugees, demobilized South Vietnamese troops,
and other urban dwellers are being sent to the
countryside to resume farming, but so far there
has not been a coordinated effort to collectivize
agriculture.
Vietnamese officials, both North and South,
proclaim formal reunification as their foremost
objective. At the same time, they make it clear
that the process will be gradual, following
progress in developing an acceptable communist
administrative structure and in restoring order
and economic stability. Although the communists
are maintaining the fiction of an independent
South Vietnamese state, there is no question that
Vietnam is now one country with one policy.
Cambodia: Uncompromising Victors
Although Cambodian Prince Sihanouk and
Lao Prime Minister Souvanna Phouma ostensibly
continue to share power in Cambodia and Laos,
the non-communist nationalists they represent
have no future in the communist states now
developing there. Little time may remain for these
two familiar Southeast Asian personalities to play
their now largely cosmetic roles.
The Khmer communists entered Phnom Penh
in April with an ideology largely untempered by
experience. Since then they have set far more am-
bitious goals and adopted far more draconian
measures than their comrades in either Laos or
South Vietnam. When faced with the problems of
handling the hard-to-digest economy and society
of Phnom Penh, they chose to get rid of the
problem by forcibly relocating the city's 2 to 3
million people at a heavy cost in human lives and
suffering.
Pathet Lao troops assemble near Vientiane
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Those who lived through the experience,
along with most of the rest of the country's pop-
ulation, are now in the countryside trying to
create what the communists term a modern
agrarian society. Unlike the new rulers in Vietnam
and Laos, Khmer authorities adopted, at least in
the early stages, a policy of fairly widespread
arrests and executions of former government of-
ficials.
Although a trickle of refugees across the
border to Thailand is continuing, there appears to
be no significant organized resistance to the
regime; the armed forces now appear to be as
heavily engaged in reconstruction as in main-
taining internal security.
The policies developed in the "liberated
zones" during the fighting are apparently now
being implemented on a national basis. They in-
clude the establishment of a centralized ad-
ministrative system, the confiscation of all private-
ly held land, the establishment of large
agricultural cooperatives, the nationalization of
industry and commerce, and the de-emphasis of
Buddhism.
This radical program has been hastily im-
posed and has produced serious problems. Not
surprisingly, the city people who were moved to
the countryside have not yet been turned into ef-
ficient farmers; Cambodia, formerly a major
world rice exporter, is in the midst of a serious
rice shortage.
Refugees have reported the widespread oc-
currence of cholera and malaria, and the govern-
ment probably has not been able to obtain or dis-
tribute medicines to deal with the problem.
The political leadership presiding over this
grim situation remains, as it was during the war, a
mystery. Penn Nouth, the aging Sihanouk loyalist
who holds the title of prime minister, returned to
the country only this month and plays no signifi-
cant part in affairs of state. Deputy Prime Minister
Khieu Samphan appears to be serving as Cam-
bodia's actual prime minister.
Samphan's true position within the Khmer
communist pecking order has never been firmly
established. Radio Phnom Penh, describing a
cabinet meeting of September 10, gave
prominence to a report by the deputy prime
minister for national defense, Son Sen. Son Sen
also took a prominent part during the ceremonies
surrounding the return of Sihanouk. Thus, it
seems fairly clear that Son Sen and possibly other
senior leaders have important voices within the
party.
Despite the respect accorded Sihanouk since
his return, the Prince's political prospects are
bleak. In August Phnom Penh named leng Sary,
another top Khmer communist leader, as deputy
prime minister for foreign affairs. This put him
over Foreign Minister Sarin Chhak, a Sihanouk
loyalist, and makes clear that Sihanouk's foreign
affairs role will be limited to that of international
spokesman for the regime.
In order to capitalize on Sihanouk's standing
within the Third World, and possibly out of
deference to Sihanouk's Chinese patrons, the
Khmer communists are probably prepared to
accept a token non-communist role in their
government for an indefinite period. Sihanouk
himself could, however, tire of this charade.
Laos: A Gentler Revolution
The communists are as fully in control in Laos
as are their comrades in Cambodia and South
Vietnam, but the course they took to reach this
point was quite different. The Lao communists did
not sweep into power as a result of abrupt and
total military victory; they assumed power
gradually by taking advantage of the indecision of
the rightists.
Following the fall of Saigon last spring, the
communists began to brush aside the right
wingers in the coalition and met no opposition in
the process. A few months of agitation in the
streets of Vientiane and other places continued
the process. The agitation was directed against
those in power as well as the US. By the summer,
the communists had taken over complete control
of the government, although a number of
politically impotent non-communists were allow-
ed to remain in the cabinet. Today, the com-
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SECRET
munists control all senior positions in the Lao
national and provincial bureaucracies and have
disbanded the Royal Lao Army. The once large
and influential American role has been reduced
to a token diplomatic presence.
The communists, until recent weeks, treated
Prime Minister Souvanna Phouma with cir-
cumspection, although they took care to deprive
him of any significant power. Now they have
begun to step up pressure against both Souvanna
and King Savang, and it seems likely that both will
be forced out by next spring if not earlier.
Communist policy is made not by their titular
leader Souphanouvong or the other communist
officials in Vientiane or Luang Prabang, but by
Kaysone Phomvihan and the other senior com-
munists who ruled from Sam Neua in
northeastern Laos, where they remain very much
under the influence of the North Vietnamese.
Because the Lao communists have been
preoccupied during the past four months with
getting a stranglehold on the existing state organs
and working through the existing bureaucracy,
the "revolution" has come to the average Lao in a
less dramatic and visible manner than in either
South Vietnam or Cambodia. This is changing,
however, as the Lao communists begin to imple-
ment control measures, which, though fairly stan-
dard in communist practice, are a shock to peo-
ple long accustomed to governmental neglect.
The authorities have ordered a national cen-
sus-the first ever-and are issuing identification
papers. Travel restrictions are being tightened
both internally and at the Thai border. People are
being forced to attend political education
seminars. Privately owned firearms are being
seized, and "People's Militia" units formed.
Like their South Vietnamese brethren, the
Lao communists so far have not tried to change
the country's primitive, subsistence economy.
The perennial problems of the economy,
however, have been greatly magnified by the Lao
communist decision to push relations with the US
to near the breaking point and to do away with US
aid programs.
Fhe Lao seem to be counting on economic
assistance from other donors to offset the loss of
US assistance, but it is unlikely that they will ob-
tain the amount necessary. As a result, Laos will 25X1
face chronic shortages of foreign exchange, soar-
ing budget deficits, and inflation as well as short-
ages of such basics as rice.
TIMOR: DELAYS AND CLASHES
The war of words over Portuguese Timor
continues, but there have been no significant
changes on either the diplomatic or the military
front. The governor of Portuguese Timor has
been recalled for diplomatic consultations, and
there are hints that multilateral talks may be held
soon in Lisbon. There is still no official confirma-
tion from any side, however, that negotiations will
begin any time soon. The appointment of Por-
tuguese negotiator Almeida Santos as information
minister in the new cabinet may cause further
delay until Lisbon designates a new represen-
tative. The Indonesians are keeping the pressure
on with public demands that Lisbon act to restore
order in Tirnor.
Indonesian special forces troops have taken
casualties in recent fighting in Portuguese Timor
where they are assisting pro-Indonesia Timorese
against the radical Fretilin forces that now control
most important towns. Some Indonesian soldiers
have been captured, but Fretilin efforts to stir up
an international outcry by publicizing Jakarta's in-
volvement have evoked little response.
President Suharto is obviously impatient with
the slow pace of developments, but he has given
no sign that he is any closer to authorizing an
all-out invasion than before. Lisbon has been
careful not to do anything that might. be inter-
preted by Jakarta as a deliberate attack on In-
donesian interests-and without this Suharto con-
tinues to postpone the decision n i 'tary ac-
tion.
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AMIL,
Secret
Secret
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