WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011300130001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 21, 2016
• Document Release Date: January 30, 2008
• Sequence Number: 1
• Publication Date: March 26, 1976
• Content Type: SUMMARY

Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
Iq
Next 1 Page(s) In Document Denied
DIA review completed.
State Dept. review completed
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
`" ' Secret
Weekly Summary
DIA, DOS REVIEWS COMPLETED
Secret
CI WS 76-013
No. 0013/76
March 26, 1976
Copy N2 1409
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
The WEEKLY SUMMARY, issued every Ftid y
i
b
morn
ng
y rn@
Office of Current intelligence? report and analyzessignifi?
ug
noon
:.
,.
on I Flursday. IT
frequently includes material coordinated with or prepared
th
Offi
b
e
y
ce of Economic Research, the Office of Strategi
a
n
C
ic
h
d
artographic
Research, and the t?irectorcate--regfr
Sciencea
p and Technology.
CONTENTS (March 26, 1976)
MIDDLE EAST
AFRICA
EAST ASIA
PACIFIC
WESTER N
HEMISPHERE
1 Lebanon: Back to the Brink
4 Israel: West Bank Calmer
5 Iraq-Syria: Pipeline Dispute
6 Rhodesia: Negotiations; Embargo
8 EC: Luxembourg Summit
9 USSR-Egypt: The Aggrieved Party
9 UK: Decision on MRCA
10 USSR: Building Another Trans-Sib
11 Italy: Christian Democrats' Differences
12 Spain: Opposition Front
13 Greece-Turkey: Aegean Controversy
14 China: Teng Hangs In; Trade
16 Argentina: Junta Takes Over
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor ' eekly
Summary
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
LEBANON: BACK TO THE BRINK
Heavy fighting resumed in Beirut this week as
Lebanese leftists attempted to undermine a
Syrian-sponsored political compromise that
would in effect tie the orderly resignation of
President Franjiyah to the selection of his
successor. Rapidly increasing military pressure on
the Christians forced Franjiyah to flee the
presidential palace for the Christian village of
Juniyah on March 25, and raised the possibility
that he might finally be forced to resign or that
the Christians might announce a plan for par-
titioning the country. The tendency of both sides
to seek drastic solutions in turn raised new
problems for the Syrians, whose mediation effort
has bogged down, but who are reluctant to risk an
Israeli reaction by introducing large numbers of
Syrian regular forces into Lebanon.
Damascus has already sent between 2,000 and
3,000 Syrian regulars into the country to help
restrain the leftists. These forces have cooperated
with-and in some cases been integrated in-
to-units of the 5,000-man Palestine Liberation
Army and the 3,000-man Saiga fedayeen group.
The two Syrian-controlled Palestinian
organizations have moved virtually all their forces
into Lebanon. Syrian regulars are known to be
based in Ayn Sawfar, Khaldah, and western Beirut.
They have restrained some leftist units in these
areas, but have failed to prevent the leftists from
seizing control of most of Beirut's hotel and com-
mercial district and from mounting strong attacks
on the port area, the Christian district of
Ashrafiyah, and the presidential palace at Babda.
The leftists' success has resulted from the for-
mation of an uneasy alliance among the followers
of Socialist leader Kamal Jumblatt, Muslim radical
Ibrahim Qulaylat, and rebel army Lieutenant
Ahmad Khatib. This coalition is being supported
by fedayeen rejectionists and, to a lesser extent,
by Fatah leader Yasir Arafat.
Fatah and other independent fedayeen
groups are motivated primarily by a desire to
protect themselves against the growing Syrian in-
fluence in Lebanon, and by a conviction that they
cannot afford to have remained on the sidelines if
Page 1 WEEKLY SUMMARY Mar 26, 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
A IMN
SECRET
Beirut and Vicinity
L
MILES
!, As
laY
saa
7 h fji,drsut.
heft -a Gha rtes
~Srria`li Forces {~ J J
'Tripoli
,Zagharta
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET "
the Lebanese leftist and Muslim forces come out
on top. Arafat is not believed to be seeking direct
confrontation with Syrian troops or with the
Syrian-controlled Palestinian troops, although his
actions are serving to reinforce the reluctance of
the Lebanese left to cooperate with the Syrian
peace initiative.
The leftists fear that a negotiated settlement
would only strengthen Syria's hand in Lebanon
and result in the election of a strong Maronite
Christian president sympathetic to Syrian and
conservative Christian interests. Franjiyah's im-
mediate and unconditional resignation, the lef-
tists believe, would result in extended political
negotiations and in the ultimate election of a
weak Christian president less inclined or able to
control the left. Jumblatt is now in a strong
negotiating position; although he cannot
decisively defeat the Christian forces, he can pre-
vent implementation of a new cease-fire unless
Damascus sends in still more Syrian regulars.
The continued defiance of Jumblatt and
other Lebanese leftists is creating more problems
for Syrian President Asad at home as well as in
Lebanon. There have been a number of in-
dications this week that Asad's cautious, relatively
evenhanded approach to the Lebanese problem
is encountering opposition within the Syrian
military. Many in the military apparently regard
his efforts to ensure an orderly succession to the
Lebanese presidency as an attempt to shore up
the Christians at the expense of Syria's traditional
Muslim and leftist allies. As more Syrian regulars
have been pressed into service in Lebanon, the
military probably has also begun to worry about
being drawn deeper into the mess or, even worse,
getting into an unwanted conflict with the Israelis.
Asad reportedly has taken some steps to muf-
fle critics of his Lebanon policy in the army and
has tightened security to guard against a coup or
assassination attempt. Thus far, dissension within
the Syrian military does not appear to have reach-
ed the stage where it threatens Asad, who still
retains formidable military forces at his disposal
and is adept at outmaneuvering his opponents. At
the minimum, however, military dissatisfaction is
likely to further complicate his efforts to put
pressure on the Lebanese leftists to accept a
cease-fire.
Despite the political and military risks in-
volved, the Asad regime appeared to be taking
some military actions this week that could por-
tend the introduction of Syrian regulars on a large
scale.
Syria has placed all its military forces on a ert.
Syrian air defense units- bot missile
batteries and anti-aircraft artillery battalions-are
in a high state of alert.
unusual Syrian troop movements in the
Damascus area, where Syria's two armored
divisions are normally stationed.
While some of the military activity may have
been normal training, it may also be a signal that
the Syrians are preparing for some form of
military action. If Damascus decides to intervene
further, it could do so with any one of its five
regular divisions. Damascus also could put
together a task force of units taken from several
divisions, and thereby lessen the impact on Syrian
defenses along the Golan Heights opposite Israel.
Another possible option would be to use the
"defense" companies that are responsible for the
protection of the government, and which are
organized and equipped along regular military
lines.
The Israelis acknowledged privately for the
first time this week that Syrian regular forces have
entered Lebanon, although they have not charg-
ed that the Syrians are in border areas near Israel.
Defense Minister Peres said in January that Israel's
reaction to a Syrian move into Lebanon would de-
pend on the security situation along the border.
Israeli troops near the border have been on in-
creased alert for several weeks, but no unusual
military activities have been detected recently.
25X1
DIA
25X1
25X1
Pa-P 3 WEEKLY SUMMARY Mar 26, 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
ISRAEL: WEST BANK CALMER
The violent demonstrations by Arab students
in the Israeli-occupied West Bank appear to be
subsiding in the wake of a March 21 Israeli
Supreme Court decision upholding police
authority to prevent Jewish prayer services on
Jerusalem's Temple Mount, the site of one of
Islam's holiest shrines. Tensions remain high,
however, and the outcome of a special UN
Security Council debate this week on the West
Bank situation could lead to a new round of
rioting.
Although minor disturbances continue in
several West Bank towns, relative calm seems to
be returning to the area. On March 22, a leading
West Bank moderate, Hebron Mayor Mohammed
al-Jabari, retracted the resignation he tendered
last week to protest Israeli brutality in putting
down riots in his town. Israeli army units have
been withdrawn from Hebron to give Jabari a
chance to restore order. Israeli occupation
authorities have also ended the curfews on Halhul
near Bethlehem, Ram Allah, and al-Birah.
So far eight municipal councils that had also
resigned have refused to follow Jabari's example.
The Israelis-for whom the cooperation of local
authorities in re-establishing order is politically
important-have rejected the resignations and
are pressing Arab leaders to reconsider their ac-
tions. If new anti-Israeli demonstrations occur,
more town governments-there are 24 in the
territory-will probably resign.
The fact that West Bank municipal elections
are scheduled for April 12 complicates the posi-
tion of local Arab officials, who fear they will lose
Palestinian votes by cooperating with the Israelis
to maintain order. Despite the recent distur-
bances, Israeli authorities intend to go ahead with
the elections. If they were postponed, unrest in
the West Bank could increase and the Palestine
Liberation Organization, already popular among
the Palestinians, would no doubt gain additional
support.
agreed to participate even though the PLO was
also invited, resulting in the first confrontation
between the two parties in the council. Foreign
Minister Allon explained that Israel wished to
counter expected PLO propaganda against Israel's
occupation of the West Bank. Israel's participa-
tion, he emphasized, should not be regarded as
any kind of precedent indicating its recognition
of the PLO as a party to Middle East peace
negotiations. The UN debate may touch off new
demonstrations in the West Bank by Arabs anx-
ious to show their support for the PLO.
Leaders of Israel's ruling Labor Alignment are
divided in their assessment of the disorders. Some
moderates, like ex-foreign minister Eban, blame
right-wing Jewish extremists, rather than the
Arabs, for sparking much of the unrest in the
West Bank. They criticize the government for not
taking strong initiatives to appease the
Palestinians.
Hard liners, on the other hand, blame the
current disorders on a politically active minority
determined to provoke trouble. They want the
government to act as forcefully as necessary to
quell the demonstrations, and they criticize it for
not moving more quickly and energetically
against the rioters.
Within the Alignment and the broader
government coalition, there is also disagreement
over the government's handling of an attempt last
December by a right-wing Israeli group to es-
tablish a Jewish settlement illegally at Sebastia in
the West Bank. Arab demonstrators have
repeatedly demanded that the settlers, who were
moved by the government to a nearby military
camp pending a final decision on the matter, be
removed from the territory. Leaders of the
Alignment's left-wing Mapam faction have called
on the government to comply with this demand.
Labor Party conservatives, however, as well as the
National Religious Party, a member of the-govern-
ment coalition, demand that the Sebastia site be 25X1
The UN Security Council began a debate on
the West Bank disorders on March 22 in response
to a request by Libya and Pakistan. The Israelis
made a permanent Jewish settlement. A full
cabinet debate on this matter has been post-
poned until late April.
Panes 4 \NFPVI V ci ftArAADV Mar 26 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
IRAQ-SYRIA: PIPELINE DISPUTE
Baghdad has threatened to stop selling its
crude at export terminals in Banias, Syria, and
Tripoli, Lebanon, following a stalemate in
negotiations with Syria over pipeline transit fees.
Iraq's oil earnings will be sharply reduced for
at least several months if it follows through with
its threat. The financial impact on the Iraqi
economy would be minimal because of the coun-
try's large foreign exchange holdings and surplus
revenue position. The results could be serious,
however, should Syria retaliate by curbing water
flows on the Euphrates River.
Iraq reportedly has advised its major
customers to switch oil shipping operations to
southern Iraqi ports in the Persian Gulf beginning
on April 1. The previous three-year pipeline
agreement with Syria and Lebanon, formulated in
an era of cheap oil, expired last December.
Iraq insists that there be little or no increase
in the 46-cents-per-barrel royalty paid for crude
crossing through Syria and Lebanon. Syria
demands sharply increased transit fees, largely
because of the higher oil income enjoyed by Iraq
since oil prices began to skyrocket in late 1973.
Iraq wants Syria and Lebanon to pay close to
world market prices-$11.85 per barrel-for the
estimated 50,000 to 80,000 barrels per day of Iraqi
crude they take from the pipeline for domestic
use. Syria has refused. Damascus and Beirut had
been charged only $3.06 per barrel under the
previous arrangement.
Iraq is currently developing the capability to
export crude through several other outlets. The
key factor is a pipeline linking the northern fields,
which traditionally export Kirkuk crude through
the Mediterranean, with the southern fields,
which normally ship Rumaila crude out of the
Persian Gulf. The pipeline was completed last
year, and when the pumping stations are com-
pleted, probably later this year, southbound flows
could reach a capacity of 1 million barrels per day.
Until then, the pipeline can move no more than
500,000 barrels per day southbound, about one
half of current exports generally flowing to the
Mediterranean.
Baghdad stands to lose export revenue of
$165 million per month. It would "save" an es-
timated $20 million worth of crude per month in
revenues considered lost as a result of under-
payments for the crude taken by Syria and
Lebanon. They, in turn, would be forced to buy
from other sources about 80,000 barrels per day of
previously discounted oil at commercial rates.
Syria and Lebanon would also stand to lose an es-
timated $14 million per month in transit fees.
Baghdad could also opt to place roughly
500,000 barrels per day of oil through Syria and
maximize the flow of Kirkuk oil to the Persian
Gulf. This would permit Iraq to meet its market-
ing objectives, but there would be no way to
prevent Syria from tapping into the pipeline for
WEEKLY SUMMARY
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET*
RHODESIA
Negotiations Collapse
The collapse last week of settlement talks
between Rhodesian black nationalist leader
Joshua Nkomo and Prime Minister Ian Smith
appears to leave Rhodesia's nationalists with no
option but to pursue their goal of majority rule
through military means. Nkomo, who had been
meeting on and off with Smith in Salisbury since
December, refused to continue the talks because
the Rhodesian Prime Minister would not make a
commitment to any definite time frame for a
transfer of power to the black majority. Smith
claimed his proposals to Nkomo were construc-
tive; Nkomo told the press that they would have
deferred majority rule for at least 10 years.
Since the negotiations broke off, the African
nations most directly involved in supporting the
Rhodesian nationalists, as well as the Organiza-
tion of African Unity, have issued statements urg-
ing nationalist unity and calling for an intensifica-
tion of the armed struggle against the Smith
regime. The four African presidents who helped
to arrange the talks-Kaunda of Zambia, Nyerere
of Tanzania, Machel of Mozambique and Khama
of Botswana-met in Lusaka this week to discuss
the Rhodesian situation. Nkomo and his rivals
from the external wing of the African National
Council, who have been preparing for some time
for an all-out military campaign, also attended the
meeting.
Although details of the meeting are not yet
available, the participants almost certainly dis-
cussed ways to strengthen the military effort
against Smith. The African presidents may also
have tried once again to arrange a reconciliation
between Nkomo's faction and the external
leaders in the interests of forging a unified libera-
tion army. Machel and Nyerere have been taking
the lead in working to strengthen the guerrillas
whose cross border operations into Rhodesia
from Mozambique have been growing since late
January. The two presidents have had difficulty in
working with the exiled politicians, however, and
they have tried to develop new leaders from
among the guerrillas.
Kaunda had quietly encouraged Nkomo's
negotiations with Smith but now appears ready to
provide direct support to the insurgent effort. He
reportedly has made contingency plans for the
guerrillas to stage operations from Zambian soil.
Although the exiled nationalists have publicly
invited Nkomo to join their ranks, tribal and per-
sonal rivalries among the various groups and
leaders remain strong, and the a not likely to
work together effectively.
For his part, Smith publicly stated that he in-
tends to continue seeking a peaceful settlement.
He appealed to Britain for help in arranging a
settlement, but subsequently rejected Foreign
Secretary Callaghan's terms for British involve-
ment. Among the conditions laid down by
Callaghan was a demand that the Rhodesian
government commit itself unequivocally to
accept majority rule and to hold elections within
18 months to two years.
Impact of Embargo
Rhodesia probably will suffer only a tem-
porary setback because of Mozambique's em-
bargo on March 3, but the country's economic
well-being will depend on rerouting a large por-
tion of its foreign trade traffic through South
Africa.
At least 60 percent of Rhodesia's 5 million
tons a year of exports and imports were passing
through South Africa even before the Mozam-
bique move. Most of these goods were carried
over the direct Rhodesian - South African rail link.
This was completed in June 1974 and upgraded in
recent months to the point where it apparently
can handle over 5 million tons annually.
The South African transport net will be able
to handle most of the diverted Rhodesian traffic.
Page 6
WEEKLY SUMMARY Mar 26, 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
The 2-million-ton a year increase above current
levels represents less than 2 percent of total
freight moved by South African railroads. Because
it is concentrated on one or two lines, however,
the new traffic will have to be gradually absorbed
into the South African rail system in order to
avoid disrupting local traffic. We believe that this
process can be accomplished in a few months by
rearranging railroad schedules.
Through emergency traffic realignment
measures, South Africa could handle all Rhode-
sian goods almost immediately. Pretoria is likely,
however, to opt for a more gradual, less con-
spicuous absorption of Rhodesian traffic. It is
openly sensitive to its growing isolation in
black-ruled Africa and is clearly unwilling to
become the sole obstacle to the goal of ending
white rule in Rhodesia.
The delays in transport because of the restric-
tions will temporarily depress Rhodesia's healthy
economic growth. Export earnings, mainly from
agriculture, mining, and mineral processing, ac-
count for about 25 percent of gross domestic
product. These receipts will fall as a result of the
embargo, and political uncertainty will again slow
foreign lending and investing.
Rhodesia will not want to use much of its
large inventories of oil and other key imports.
Tighter import rationing appears certain. Since
the embargo, fuel supplies to both industrial and
private consumers already have been cut by 20
percent under a previously established rationing
system. Cuts will probably have to be made in im-
ports of components for consumer industries
such as automobile manufacturing.
Mozambique, if it does not receive substan-
tial aid inflows, may suffer more from the closure
than Rhodesia. Mozambique will lose an es-
timated $30 to $40 million annually from Rhode-
sian port and rail fees, and possibly as much more
if migrant laborers in Rhodesia are forced to
return home. Together, the losses equal about 10
to 15 percent of total foreign exchange income.
Job losses will be most severe in the port of
Beira. Rhodesian trade as well as traffic that tran-
sited Rhodesia to and from Botswana and Malawi
accounted for more than two thirds of the port's
volume. Maputo will be less affected. Only one
quarter of its traffic moved via Rhodesia. For
Mozambique as a whole, unemployment of rail
and port workers and of workers on jobs depen-
dent on transport activities will run in the
thousands. Mozambique will also face temporary
food shortages. It traditionally has imported corn,
beef, and poultry from Rhodesia. Several months
will be needed to shift to other suppliers.
Botswana and Malawi will also be adversely
affected until adjustments can be made in traffic
patterns. Botswana had been shipping copper and
nickel, its most important exports, across
Rhodesia to Mozambique ports. It will now have
to compete for cargo space on the South African
transport network.
South Africa and Rhodesia have been
Malawi's major sources of imports, together
supplying more than one third of the total. Fer-
tilizer, machinery and equipment, coal, and food
have been the major imports. Almost all were
shipped via Rhodesia to Beira and transferred to
the north-bound railroad to Malawi.
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
EC: LUXEMBOURG SUMMIT
The meeting of EC leaders in Luxembourg
next week has acquired particular importance
because the heads of government were to hold
their first formal exchange on recent proposals to
foster "European Union" and to approve a con-
vention establishing procedures for direct elec-
tions to the European Parliament in 1978. Several
developments have now cast a shadow over the
summit, however, making it certain that the
leaders will have to work harder than ever to
produce solid accomplishments.
The European Council will meet April 1-2 fac-
ed with intensified political turmoil and economic
uncertainty in Italy; new monetary instability
among the Nine, symbolized by France's
withdrawal from the joint currency float;
domestic pressures on President Giscard d'Estaing
that will limit his flexibility; and a lame-duck, or
new, British prime minister.
Economic issues were already assured of an
airing at the summit by London's inscription on
the agenda of possible community-wide ap-
proaches to the unemployment problem, but
Giscard-beset with opposition at home to some
of his European ideas-has now asked for top bill-
ing for the EC's economic and monetary situation.
There seem in fact to be no specific proposals for
dealing with the economic difficulties. Discussion
of the problems could nevertheless shunt aside
the critical longer term political issues unless the
Germans, in particular, are prepared to link the
prospect of greater community economic
solidarity with the need for institutional progress.
A go-ahead on direct elections to the Euro-
pean Parliament, the intended major achieve-
ment of the Luxembourg Council, was already
threatened by a dispute between France and its
partners over how to allocate seats among the EC
members. Paris wants a formula that would ac-
curately reflect the relative populations of the
Nine; France's partners are willing to skew the
representation so that the smaller members are
given a relatively greater voice. No compromises
have been hinted so far in this controversy, and
Gaullists and Communists in France have
meanwhile been stepping up their campaign
against French participation, which they see as an
abandonment of national sovereignty. Giscard's
possible disinclination to face up to this pressure
may partially explain his desire to focus on
economic issues at the summit. A failure of the
summit to initial the draft convention would dim
the prospects for elections two years hence and
be a bad psychological blow to the unity effort.
The maximum that the leaders are expected
to come up with on European Union-the term
used to describe the institutional, decision-
making, and policy requirements of a fully func-
tioning community-are guidelines for further
elaboration of the ideas offered by Belgian Prime
Minister Tindemans in the report commissioned
by the Nine in 1974 and presented this January.
Although Tindemans took a pragmatic approach
to his mission, there is nevertheless controversy
among the Nine-revolving principally around
whether to give more, or less, authority to central
EC bodies-and the leaders may not be able to
give clear guidance to a working group. Without
such guidance, a decision for "further study" risks
being taken as tantamount to burying some of the
EC's most pressing issues.
The most contentious suggestion of
Tindemans-that common policies be im-
plemented at different speeds depending on a
member's economic ability-has become par-
ticularly relevant because of the monetary tur-
moil. France's withdrawal from the monetary
"snake" has left it now on the outside of what, for
Tindemans, was to serveas the basis of a two-level
approach to integration. It seems unlikely that the
Nine were prepared to endorse formally a
differentiated system of policy implementation,
even though the community may work this way
often in practice. The so-called "two-tier" com-
munity would appear even less likely of explicit
acceptance now, since it would only confirm
West Germany as the EC's linchpin.
Discard has recently floated another concep-
tion for assuring expeditious decision making-a
"directorate" of three or four members,
necessary in his view to cope with a community
whose diversity will increase with the addition of
new members, such as Greece and Spain.
Although this idea has been received coolly by 25X1
France's partners, Giscard may still want to raise in
some form the problem of executive leadership
within the community.
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
USSR-EGYPT: THE AGGRIEVED PARTY
UK: DECISION ON MRCA
In Moscow, the media are still picking away
at Egyptian President Sadat along the lines first
outlined in the Tass statement a few days after the
abrogation. Sadat is depicted as the villian of the
piece, a man who who has sold out the Egyptian
revolution and the Arab cause at the behest of the
US. Since Sadat is also anti-Soviet, by implication
the Soviet Union emerges as the champion of
economic and social justice in Egypt and of the
Arab struggle against "imperialism" and Israel.
The Soviets have been careful to make clear
that they want good relations with Egypt and are
following their usual "principled policy" in work-
ing toward that end. The message is that the USSR
is the aggrieved party but will be reasonable if and
when the Egyptians come around to a more
realistic policy. By focusing their attack on the
Egyptian President, the Soviets have moved closer
than heretofore to saying publicly what they have
been thinking privately for some time: that their
main problem in Egypt is Sadat. Their argument
that the person of Sadat is the principal impedi-
ment to further progress in the region is, in effect,
an open invitation to bring him down.
If the Soviets themselves are doing anything
more inside Egypt to topple Sadat, it has not yet
become apparent. On the contrary, they have
taken their latest humiliation at Sadat's hand with
what passes for a Soviet stiff upper lip. Soviet em-
bassy officers in Cairo have been spreading the
word that economic relations will continue as
before, that Moscow will not of its volition
precipitately withdraw economic or military
technicians, and even that discussions of new aid
projects are going forward.
These expressions of normality are probably
not the last word from Moscow. The Soviets have
been very tough on Sadat for over two years and
are not likely to ease up now. Their problem is
tactical and practical: where to squeeze and how
Britain has decided to go ahead with produc-
tion of both the air defense and recon-
naissance-strike versions of the West European
multirole combat aircraft. The decision will give a
much-needed boost to Britain's defense industry,
as well as encourage West Germany and
Italy-co-producers of the aircraft with the
UK-to stick with their plans to use the aircraft. It
could also mark an important step in Europe's ef-
fort to standardize at least part of its military
equipment.
According to Defense Minister Roy Mason,
the UK will build its assigned quota of 385
fighter-bombers, including 165 in the specialized
air defense version. The program, which is ex-
pected to cost Britain an estimated $4.5 billion
over a 10-year period, will provide jobs for about
24,000 British workers.
London's decision to produce the air defense
version will be especially encouraging to Bonn
and Rome. The Germans reportedly had feared
that cost overruns and the UK defense budget
cuts might force the British to drop the more ex-
pensive air defense model, jeopardizing the en-
tire project. The multirole combat aircraft is
Europe's most ambitious multinational weapons
development program. If Italy and West Germany
join Britain in filling their quotas, over 800 of the
swing-wing aircraft will be produced.
The testing program for the new aircraft is
still behind schedule. Problems with the aircraft's
Rolls-Royce engine and the crash last month of an
Italian prototype have slowed the flight-test
program. As a result, production is not expected
to begin before next year.
When the new fighter-bomber is ready, it is
slated to replace large numbers of older aircraft in
the Royal Air Force, including F-4 interceptors,
Buccaneer fighter-bombers, and the Vulcan and
Canberra bombers. Italy and West Germany plan
to use the aircraft to replace many of their aging
F-104 fighters.
Paae 9 WEEKI Y SUMMARY Mar 26. 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
USSR: BUILDING ANOTHER TRANS-SIB
Despite temperatures dipping to minus 70
degrees fahrenheit, construction on. the second
Trans-Siberian railroad-including the building of
base camps, access roads, bridges, the clearing of
right-of-way, and establishment of supply
centers-has been moving-ahead this winter. The
length and construction time for the
Baykal-Amur-Magistral line is roughly twice that
of the Alaska pipeline, built under comparable
climate and terrain conditions.
The Soviets are continuing to give the project
high priority. They have maintained a rapid pace
with no foreign technical assistance but are using
substantial quantities of new construction equip-
ment (trucks,, bulldozers, air compressors, and
tunneling equipment) from the West. Without
substantially more Western equipment, however,
the project will probably not be able to sustain a
rapid enough pace for completion by the target
date of 1982.
In 1975 at the western end of the BAM, near
Ust-Kut, bridges were completed across the Lena
and Tayura rivers and a-40-mile section of the line
was put in operation. About 150 miles to the east,
at Nizhneangarsk, near the northern tip of Lake
Baykal, a village is now taking shape that will
become a major transshipment center for
supplies brought by ship from stations on the ex-
isting Trans-Siberian Railroad at the southern end
of the lake. Work has begun on the drilling of two
tunnels, one west of Lake Baykal and
another-nearly 10 miles long-about 170 miles
to the east.
More than 30 temporary camps have been es-
tablished at approximately ten-mile intervals
along the route of the BAM, and permanent
villages are being set up at 30- to 60-mile intervals.
Existing villages have been greatly enlarged to ac-
commodate workers and their families and ac-
tivities associated with the construction.
Since the completion last year of the 115-mile
branch line connecting the Trans-Siberian
Railroad with the BAM near its midpoint at Tyn-
dinskiy, the latter has become a supply center for
BAM construction operations in both directions
as well as for the branch line being built toward
the large Chulman coal deposits 100 miles to the
north.
At Shimanovsk, 250 miles southeast of Tyn-
dinskiy on the Trans-Siberian Railroad, a plant to
fabricate precast building components for
bridges, industrial buildings, and housing is in
operation. Similar centers are planned for several
other locations. The village of Urgal, almost 500
miles east of Tyndinskiy and some 200 miles west
of the eastern terminus, will become a major
railroad junction and construction supply center.
Five- and ten-story housing blocks and
twelve-story administrative offices are planned.
The logistics of supplying the equipment,
materials, and manpower when needed, con-
sidering the remoteness of the area and the lack
of transportation, will continue to be con-
siderable. The most difficult problem may be in-
centives to attract qualified workers and
specialists to the job as well as living conditions
adequate to maintain morale. It may be necessary
to furnish perquisites and bonuses in excess of
those now provided for workers in so-called Far
Northern areas.
The completion of the-BAM will enhance the
Soviet economic and strategic potential by:
? Providing access to huge deposits of
coal, iron ore, natural gas, oil, and timber.
? Alleviating the traffic congestion on
the Trans-Siberian Railroad.
? Providing an alternate supply line
several hundred miles north of the existing
railroad in the event of future hostilities in
the far East.
n___ 111 urrrvl ~, n, i? 11Aer 'fir. 7r
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
ITALY: CHRISTIAN DEMOCRATS' DIFFERENCES
The Italian Christian Democrats' national
congress, at which deep divisions in the party
were laid bare, ended this week on a note of un-
certainty.
The decision to elect the party leader at the
congress, rather than permit faction chiefs to
choose one behind closed doors as in the past,
served to accentuate divisions instead of resolving
them. The vote showed the delegates split almost
evenly into two groups. Incumbent party leader
Zaccagnini was narrowly re-elected by a coalition
drawn largely from the left-of-center fac-
tions-51.5 percent of the delegates-while the
rest of the delegates, mainly center-right in orien-
tation, supported Defense Minister Forlani, even
though he had officially withdrawn from the race.
The differences between the two groups flow
mainly from their positions on the question of
relations with the Communist opposition. Zac-
cagnini supporters generally see continued con-
frontation with the Communist Party as a counter-
productive strategy. They want to open a dialogue
with the Communists that would cast the
differences between the two parties more in
terms of issues than ideology and possibly lead to
compromises on major questions. Those who
backed Forlani argue that such a policy would
amount to a softening of the Christian Democrats'
traditional opposition to the Communists and
would ultimately make it more difficult to keep
them out of the national government.
The narrowness of Zaccagnini's victory means
that he will probably have trouble implementing
his policy toward the Communists. Zaccagnini's
majority in the Christian Democratic national
council-the party's chief deliberative body-is
slimmer than that of any recent party leader, and
he will almost certainly have to make substantial
concessions to the center-right group that op-
posed him.
Meanwhile, the Christian Democrats are un-
der pressure to decide whether to continue the
one party minority government of Prime Minister
Moro. Lack of confidence in Moro's stop-gap
oc
Zaccagnini
solution has hindered efforts to halt the deprecia-
tion of the lira. The Christian Democrats,
moreover, are reluctant to continue as the only
governing party in the midst of the country's
worst postwar recession.
The Christian Democrats at their congress
emphasized the party's desire for another alliance
with the Socialists, but the Socialists earlier this
month ruled out returning to government before
the next parliamentary election. Unless the
Socialists back down-which seems un-
likely-pressures will increase for an election this
summer or fall rather than in May 1977, as
presently scheduled.
Zaccagnini reportedly believes the Christian
Democrats are ill-prepared to face the electorate
now and is searching for some way to hold off an
election. He seems attracted to Republican Party
leader La Malfa's proposal for a new emergency
economic program, which would enable the
Page 11 WEEKLY SUMMARY Mar 26, 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
Christian Democrats to share the burden of Italy's
economic problems. La Malfa suggests that the
Moro government draw up new economic
measures in consultation with all parties except
the neo-fascists. His proposal has reportedly been
endorsed by the Communists, and many
Socialists, Social Democrats, and Christian
Democrats appear open to the idea.
The chief obstacle to the emergency formula
appears to be the reservations of Zaccagnini's
center-right opponents in the Christian
Democratic party who see it as a variation of his
proposed dialogue with the Communists.
SPAIN: OPPOSITION FRONT
Spanish opposition groups are putting the
finishing touches on an agreement for a united
front that is likely to increase pressure on the
government and further polarize the political
forces in Spain.
The agreement in principle to unite the two
major opposition coalitions-the Communist-
dominated Democratic Junta and the Socialist-led
Platform of Democratic Convergence-was
reached on March 17. Attempts to set up an
organizational structure for the new front, which
may be called the Democratic Coordinating
Group or the Republican Convention, could still
dissolve into renewed wrangling, but the odds
seem to have shifted in favor of a successful
merger.
Differences that had blocked earlier efforts to
form a united front were reportedly resolved
when the Communists suddenly reversed
themselves on several crucial issues. An executive
committee member of the Socialist Workers Party
told the US embassy that the Communists had:
? Abandoned their insistence on the
immediate need for a "provisional
government" of all opposition forces.
? Agreed to the stipulation that the
merger would be temporary in nature, ex-,.
tending only until "democracy" is restored,
and would not constitute an electoral
alliance.
? Given up their insistence that
various Communist-manipulated individuals
and front groups be represented on the
governing body of the new organization.
In spite of these concessions, a successful
merger would achieve the Communists' primary
near-term goal of avoiding isolation at a time
when most of the other leftist parties are about to
become legal under the government's new
legislative proposals. The front would also mark
the first alliance between Communists and the
mainstream of the Spanish Socialist movement in
almost 40 years, implying that the Communists
have finally overcome the bitter legacy of the
Civil War.
The apparent willingness of Socialist and
Christian Democratic groups to form a tactical
alliance with the Communists seems to reflect
growing disappointment and pessimism about the
pace and extent of the government's reform
program. The democratic parties hope that a
united front will eventually force the government
to pay heed to opposition demands.
Other leftist forces are also attempting to
accelerate the pace of liberalization. A self-
proclaimed spokesman for the clandestine
Military Democratic Union announced on March
23 that his group had set a deadline of May 8, by
which time the government had to carry out
effective democratization. If significant progress
had not been achieved by that date, he claimed
the army would "take charge" and turn over the
power to a provisional government of liberalizers.
This would represent a significant change in the
orientation of the Military Democratic Union,
which has not hitherto advocated military in-
tervention in the political arena.
The group is believed to number only 300-400
officers-far short of the backing necessary for a
Page 12 WEEKLY SUMMARY Mar 26, 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
Nwo" SECRET V
successful coup, since the bulk of the army is con-
servative and loyal to the monarchy. More likely,
the statement was part of a campaign to increase
pressure on the government to liberalize.
These efforts by the opposition to force the
government to carry out its planned reforms
could encourage the right to dig in its heels and
form a similar broad alliance to oppose change.
The resulting polarization of the country's
political forces would seriously jeopardize the
government's liberalization program.
GREECE-TURKEY: AEGEAN CONTROVERSY
The opening of the Law of the Sea
Conference in New York last week prompted
political leaders and the press in both Greece and
Turkey to focus attention on their controversy
over control of the Aegean Sea. Concerned that
Turkey's interests may be ignored at the con-
ference, and pressed by its political opponents,
Prime Minister Demirel's weak coalition govern-
ment staked out a tough position that created un-
easiness in Athens and may limit Ankara's room
for maneuver.
As part of a continuing effort to undermine
the Demirel government, Turkish opposition
leader Ecevit recently launched a steady barrage
of attacks on the government's handling of the
Aegean issue, labeling its policy "cowardly" and
"incomprehensibly negligent." Pointing to his
own record as head of the government in 1974,
when he dispatched a ship to explore for oil in the
disputed waters, Ecevit has challenged Demirel to
follow suit. Ecevit also criticized the government
for not getting Greece to agree to settle the dis-
pute in bilateral talks before the start of the New
York meeting. According to Ecevit, this was a
blunder that could adversely affect Turkey's case
at the conference. Convinced that it has a strong
legal case, Athens prefers that the issue be settled
by the International Court of Justice.
To counter Ecevit's charges and maintain
pressure on the Greeks to consent to bilateral
talks, Ankara acknowledged in late February that
a ship was being outfitted to begin seismic
research in the Aegean by late spring. A short
time later, the government was forced to disavow
a particularly provocative statement by the
Turkish energy minister that seismic exploration
would be followed by test drilling near the Greek
oil find in the northern Aegean. A series of
military exercises has been held in the Aegean
this month, however, to underscore Turkish
claims.
At the same time, Demirel and other coali-
tion party leaders declared that Turkey will refuse
to recognize any agreements made at the New
York meeting unless exceptions are made for the
"special circumstances" in the Aegean. Ankara is
particularly concerned that the principle of a 12-
mile territorial sea will be approved by the con-
ference even though Athens appears unlikely to
adopt the new limits. The Turks are worried that
their access to the Aegean would be severely
restricted because of the proximity of Greece's
eastern Aegean islands to the Turkish coast.
Turkish Foreign Minister Caglayangil warned that
Turkey could not tolerate such a situation.
The increase in Turkish military exercises in
the area and the growing preoccupation of
politicians with the Aegean issue drew some
sharp and equally belligerent replies from Greek
opposition leaders and a portion of the press. The
Caramanlis government, however, which is in a
much stronger political position than its Turkish
counterpart, has thus far exercised restraint and
appears to have prevailed on some opposition
politicians and press to follow suit.
Athens did issue a demarche to the US last
week conveying its growing concern about
Turkish intentions in the Aegean. The Greeks
probably prefer to await the results of the New
York meeting before deciding on how far they
will go toward meeting the Turkish demand for
bilateral negotiations.
Page 13 WEEKLY SUMMARY Mar 26, 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
CHINA
Teng Hangs In
The campaign against Teng Hsiao-ping, now
nearly two months old, continues to hold out the
possibility for him to redeem himself by admitting
his mistakes. Chinese officials have frequently
mentioned this option in discussions with
foreigners, presumably to give the outside world
an impression of patience and reasonableness
amid the signs of political uncertainty; the same
theme has periodically surfaced within China.
This offer not only gives Teng a way out of his dif-
ficulties, it also gives his opponents an opportuni-
ty to save face should their efforts to send him
into disgrace fail. Recent articles in the media in-
dicate that Teng's opponents recognize they have
chosen a formidable adversary.
An article in the March 21 issue of People's
Daily, although no less critical of Teng than earlier
material, ends with the statement that "people
are watching" Teng to see whether he will change
his ways and "truly repent."
Whatever his current status, the People's Dai-
ly article stated that Teng "holds a high position
and certain power" and it expressed concern that
he could use this power in the interests of himself
and his supporters. The party theoretical journal
Red Flag also suggested that Teng and his
followers are putting up a struggle, noting that
after their first major setback-presumably when
Teng was blocked from the premiership-they
have fought back "ten times as hard."
People's Daily struck a somewhat defensive
note when it stated that the campaign against
Teng was "necessary" and was winning "great
Teng Hsiao-ping
25X1
25X1
popularity." Although the campaign undoubtedly
is popular among those who came to power dur-
ing the Cultural Revolution but who have since
lost their jobs to veteran officials, response to the
campaign has been at best mixed. Some areas are
pursuing it with a noticeable lack of enthusiasm,
but others seem to be promoting it more
vigorously. The recent appearance of some
provincial officials who, like Teng, were stripped
of power during the Cultural Revolution and sub-
sequently reinstated, indicates the campaign has
not "broadened" in the way its originators may
have hoped.
Minerals and Metals Trade
China's imports of minerals and metals reach-
ed nearly $1.9 billion in 1974, while exports total-
ed less than $290 million. China has abundant
resources of many important minerals including
those that it imports and those in, which trade is
now minimal. Several factors account for the ap-
parent inconsistency between resource availabili-
ty and production. Among them are:
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
? World demand, especially for many
of the nonmetallic minerals, is so low that
the Chinese would have difficulty selling
large amounts at a profit.
? Costs of development are
prohibitively high in some cases because of
location, quality, or inadequate domestic
technology.
China's huge resources of tungsten, tin, mer-
cury, and antimony, for example, are located in
South and Southwest China, where difficult
terrain and high transportation costs would make
further development costly. There is some
evidence that many of the best deposits are ex-
hausted, and increases in output would require
costly exploitation of poorer deposits.
China has not taken advantage of its large
deposits of manganese, molybdenum, fluorspar,
and zinc to develop a substantial export surplus,
largely because of low world demand. Fluorspar
and metal ores are high-bulk items, and overseas
sales are limited to nearby countries because of
high transport costs. Moreover, some imports of
technology probably would be required to
produce the lower bulk metals.
In order to utilize China's huge resources of
low-quality bauxite, a special technology was
developed with the help of the USSR. The
technology requires exceptionally large amounts
of electricity and therefore is expensive. Most of
China's abundant iron ore resources also are of
low quality.
Although China exerts relatively little impact
on the world market, minerals and metals repre-
sent a major component of total Chinese foreign
trade. They accounted for about 15 percent in
1974-only 4 percent of exports but nearly 25 per-
cent of imports. Minerals and metals form an in-
creasingly significant part of China's total trade
averaging 15 to 20 percent of the annual total in
1970-74 compared with about 10 percent in 1965.
In several years-1970, 1971, and 1973-minerals
and metals composed more than 30 percent of
total imports. This proportion fell in 1974 as China
strained to reduce the large trade deficit brought
about by increases in imports of machinery and
agricultural commodities.
Generally, China's trade in minerals and
metals has little impact on other countries.
Among China's major imports, finished steel ac-
counted for only 3 percent of world-wide exports.
Steel exports to China from the two major
sources-Japan and West Germany-accounted
for 9 percent and 2 percent respectively, of their
total sales in 1974. In copper, China's share of ex-
ports from such major producers as Chile, Peru,
and Zambia was 10 percent, 15 percent, and 2 per-
cent, respectively. A huge jump in aluminum im-
ports in 1975 to perhaps 10 percent of world ex-
ports has had little impact on the glutted world
market.
China's exports of tin, tungsten, and an-
timony are of some consequence. Recent in-
creases in Chinese tin sales have been of par-
ticular concern to Malaysia and other Inter-
national Tin Council members. Tin producers
have been trying to hold down production and
exports to keep prices up. Because China is the
worlds largest exporter of tungsten and one of the
three leading exporters of antimony, changes in
Chinese sales of these commodities have a signifi-
cant impact on world prices.
China is making strong efforts to reduce its
dependence on imported metals. Domestic de-
mand, however, is rising rapidly and investment
in the development of minerals and metal
resources continues to lag. In some cases-par-
ticularly copper-importing is less expensive than
expanding domestic output. Thus, China has
found it more lucrative to develop petroleum
resources than minerals and metals to increase its
foreign exchange earnings. The petroleum
resources are relatively accessible and a ready
market is available, especially in nearby Japan, to
absorb sizable surpluses of high-priced
petroleum.
China's efforts to increase exports will be
constrained over the next several years by
problems in developing new supplies and by
weak demand for many minerals and metals.
Moreover, most of its exports are similar to those
of other developing nations, and Peking has voic-
ed support for Third World efforts to raise export
prices by limiting supplies through cartel
arrangements
1 \A/I-f I 1 V ni IPA\AAnv Mar 96 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
SECRET
ARGENTINA: JUNTA TAKES OVER
The new military junta is firmly in place and
giving the impression that it intends to retain
power for some time. Former President Peron,
her secretary and adviser Julio Gonzalez, and
several Peronist leaders remain in military
custody. There have been reports that she will be
tried on corruption charges, but more likely she
will be allowed to go into exile in Spain.
Even as Peron was being deposed, junta
President Jorge Videla was moving to set up the
new government. A steady stream of official
proclamations began flowing from military
headquarters, reflecting the military's continuing
preoccupation with terrorism. So far there has
been little violence, but stiff penalties have been
decreed for anyone who assists the terrorist cause
in any way, and security forces have been ordered
to shoot anyone found interfering with public
services.
Videla and the two other junta members, Ad-
miral Massera and General Agosti, were sworn in
Wednesday morning in a perfunctory ceremony.
The government has banned political and labor
union activity, closed congress, suspended the
supreme court, and begun to appoint military
governors for Argentina's 22 provinces. The in-
terim cabinet is composed of relatively young
field-grade officers from the three services. The
foreign affairs and economy portfolios will
probably eventually go to civilians, while retired
military officers will head the other six ministries.
The junta will have to turn to foreign
governments, commercial banks, and inter-
national financial institutions for help in dealing
with the severe economic problems it inherited. It
will bend every effort to avoid repressive
measures that might damage its international
reputation.
The top military leaders are friendly toward
the US and will strive to improve Argentina's ties
with it. They will be looking to the US as a source
of investment and new capital to cover Argen-
tina's huge debt payments and current account
deficit.
The next several months are likely to con-
tinue to be tough for US firms in Argentina. They
will suffer from labor agitation, sabotage, and
shortages of all kinds. The security risk for US per-
sonnel will remain high.
Like his recent predecessors, both civilian
and military, Videla has begun with the hope of
restoring a sense of well-being to the badly
fragmented nation. Among its stated objectives,
the junta vows "to restore morality and honesty,
to eradicate subversion, and to provide initiative
to foreign and national capital."' Former
governments have failed to put muscle behind
similar rhetoric, and Videla's task may prove even
more difficult. The terrorists and Peronist labor
are still potent forces, and rampant inflation is for-
cing even apolitical workers to support radical
demands for ever higher wages.
The new leaders will need the support of the
foreign and domestic financial communities if
they are to succeed.
Panes 16 wi r vI v QI IAAKAADV Mar 26 76
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
 Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4
Secret
Secret
Approved For Release 2008/01/30: CIA-RDP79-00927A011300130001-4