WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011400250001-0
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• Original Classification: S
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• Document Creation Date: December 21, 2016
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• Content Type: SUMMARY

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Secret
Weekly Summary
Secret
CI WS 76-050
No. 0050/76
December 10, 1976
Copy N2 1419
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CONTENTS
ep red 1 Middle East
'r'atep Lebanon; Syria-Iraq
echrsodr~,; 1 Africa
Rhodesia
5 International
Oil Price; CIEC
Yakubovsky
6 Europe
Portugal; Spain; France;
Poland
9 Western Hemisphere
Mexico Cuba;
Brazil
11 Asia
Japan; China;
Malaysia-Thailand; India
13 Syria: Foreign Policy Beyond Lebanon
15 Italy: Andreotti's Problems
18 East Germany: The Regime's Problems
20 Sugar: World Supplies and Prices
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LEBANON
President Sarkis named Salim Ahmad
al-Huss, a close adviser on economic
matters, as Lebanon's prime minister on
December 8. The appointment un-
derscores Sarkis' preference for a cabinet
composed of loyal technocrats and his
determination to remain as free as possi-
ble of old-line political factions as he
works on the economic reconstruction of
Lebanon.
Conservative Muslim and Christian
leaders, especially National Liberal Party
chief Camille Shamun, have been pressing
Sarkis to establish a government con-
taining representatives of all the major
religious and political groups, as
Lebanese presidents traditionally have
done. The Conservative leaders hope to
circumscribe the President's freedom of
action and protect their own vested in-
terests.
Little headway was made this week in
resolving the related questions of the in-
troduction of Syrian peacekeeping forces
into southern Lebanon and the collection
of heavy weapons from the various
Lebanese and Palestinian militias. Sarkis
is unlikely to be able to persuade the
Christians to give up their arms or to stop
stockpiling additional weapons until Arab
peacekeeping forces are in a position to
cut off the flow of arms still coming into
Tyre and to begin rounding up arms in the
hands of Palestinian and leftist elements
in southern Lebanon.
Israel reportedly remains adamantly
opposed to the movement of Syrian
troops or any other non-Lebanese force
into the south to occupy the Palestinian
and leftist strongholds of Tyre and
Nabatiyah. The Rabin government may,
for reasons of domestic political expedien-
cy, consider it necessary to take a tough
stand against Syria. The Israelis,
moreover, do not want the Syrians to es-
tablish a toehold in southern Lebanon
even if the Syrian forces do not represent
an immediate threat for fear that they
might not withdraw later.
The Israelis may also believe that
Syrian control over the south might make
the Palestinians too much of a pliable tool
of Syrian policy toward Israel. In any
event, the Rabin government would clear-
ly prefer to see its Christian allies, or a
friendly Lebanese force of some sort, con-
trol the border area, even if it means hav-
ing to contend with occasional terrorist
RHODESIA
The Geneva conference on Rhodesia
continues to focus on the mechanics of
setting up an interim government, but
there are still sharp differences among the
black nationalist delegations, as well as
between the nationalists and the Rhode-
sian government delegation. Rhodesian
Prime Minister Smith returned to Geneva
this week to resume leadership of the
government team.
The Rhodesian guerrilla leaders who
arrived in Geneva last week to participate
in the settlement talks have been playing a
low-key role as part of Robert Mugabe's
nationalist delegation.
Despite earlier indications that these
men might challenge Mugabe's leadership
of the Zimbabwe African National Union
delegation, there has been no sign yet of
such a move. The US mission in Geneva
reports that Mugabe has appeared much
more relaxed and confident since the
arrival of the military leaders.
Joshua Nkomo has told the US mis-
sion that he believes the guerrillas can be
more fully controlled now that their lead-
ers are at the conference. He hopes to
take advantage of their presence by
resuming negotiations begun some time
ago on military coordination between
his own limited forces and the ZANU
guerrillas.
Despite the outward harmony, there are
continuing reports of disunity within the
Mugabe delegation and the ZANU fac-
tion. The US mission reports that there
may be as many as five basic subgroups
within ZANU, and that Mugabe's delega-
tion remains an extremely fragile coali-
tion.
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The Soviet leadership will probably not
allow the posts of first deputy minister of
defense and commander in chief of the
Warsaw Pact armed forces to remain va-
cant very long.
Marshal Yakubovsky, who held those
posts, had been ill for some time before
his death on November 30, and the Soviet
leadership has had several months to con-
sider the problem of replacing him.
The new Warsaw Pact commander in
chief will almost certainly be a Soviet
military officer, despite occasional Roma-
nian complaints about Soviet domination
of the Warsaw Pact command structure.
Like Yakubovsky, the new commander
will also serve as a first deputy under
Soviet Minister of Defense Ustinov.
In the event of war, the Warsaw Pact
commander would hold the highest field
command position in the Soviet armed
forces and would receive his orders from
the Supreme High Command through the
General Staff. In peacetime, he is the first
deputy who usually fills in for the Soviet
minister of defense when the latter is ab-
sent.
On a day-to-day basis, however, the
chief of the General Staff may play a
more important role in deciding policy
matters or advising the Soviet minister of
defense on various issues. The Warsaw
Pact commander is away from Moscow
much of the time, visiting the forces under
his command in Eastern Europe or engag-
ing in other activities that keep him in the
limelight but away from meetings on im-
portant defense questions.
Any one of several high-ranking Soviet
military leaders could be in the running
for Yakubovsky's posts, but the most
likely candidate is General Ivanovsky,
commander of the Soviet Forces in Ger-
many.
Another name frequently mentioned in
Moscow is General Ogarkov, a deputy
minister of defense, who we believe to be
working on systems analysis of Soviet
defense needs.
General Kulikov, chief of the Soviet
General Staff, is yet another possibility.
Other candidates for the top post in the
Warsaw Pact command include Generals
Pavlovsky, Kurkotkin, and Petrov.
n.. n
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CI EC
The participants in the Conference on
International Economic Cooperation
have decided to postpone the ministerial
review scheduled for December 15. The
conference was organized last year to dis-
cuss energy issues and development
problems.
The conference chairmen, Allan
Maceachen of Canada and Manuel Perez
Guerrero of Venezuela, agreed last week
to a compromise formula for delaying the
meeting-a course favored by almost all
of the participants-that circumvented at-
tribution of responsibility for the delay.
The cochairmen asked the representatives
of the 27 countries participating either to
acquiesce in or reject explicitly a decision
postponing the ministerial meeting.
The industrialized countries, particular-
ly the Europeans, feared that the
ministerial meeting might give the OPEC
states grist for their arguments favoring
the oil price increase that is widely ex-
pected later this month. Many of the
developing states, although disappointed
with the lack of progress in the con-
ference, think they may still obtain some
of their demands in later negotiations and
were thus not willing to jeopardize the
scheduling of future talks.
The change in US administrations and
the lack of progress among the EC states
on reaching an agreed position have been
cited by industrialized and developing
states as justifying a delay. Most par-
ticipants, however, recognized that little
substantive progress has in fact been
made in the talks and that a ministerial
conference would have almost inevitably
degenerated into an acrimonious confron-
tation.
The principal differences between
developed and developing countries in the
CIEC discussions include:
? The OPEC countries, faced with ob-
jections from all of the industrialized and
some of the developing states, seek formal
recognition of their right unilaterally to
set oil prices.
? The industrialized and developing
countries still disagree on how to maintain
prices of raw materials while taking infla-
tion into account, although the focus of
the debate over this issue has shifted to
forums of the UN Conference on Trade
and Development.
? The industrialized countries have
PORTUGAL 2 +-2_ 6
The results of the local elections in Por-
tugal on December 12, touted in some
quarters as a referendum on Prime
Minister Soares' Socialist minority
government, are not likely to show a
significant shift in the relative strengths of
the parties.
The vote, the final step in the establish-
ment of a democratic structure in Por-
tugal, will fill some 50,000 positions in
parish and municipal governing bodies.
Nationwide results will be tabulated in a
variety of ways, and each party will
probably be able to find figures it can in-
terpret in a favorable light.
The two-week campaign has aroused
little voter interest, and the turnout is like-
ly to be lower than it was in the three elec-
tions held during the past 20 months. The
lack of interest is due in part to increasing
public apathy toward politics, but even
more to the shortage of funds available to
most of the contending parties and the
prohibition of radio and television cam-
paigning.
The Socialists will probably again
receive around 35 percent of the vote, as
refused to meet the developing countries'
demands for automatic debt relief. The in-
dustrialized countries and those develop-
ing countries that depend on private credit
advocate a case-by-case consideration of
debt problems.
? The developing countries seek a
specific timetable for each industrialized
country to allocate seven tenths of one
percent of its gross national product to
they did in the legislative assembly elec-
tion last spring. Disenchantment with the
Socialists' temporizing, particularly in the
economic field, is growing, but the party
can probably use its control of govern-
ment to offset any defections.
The Socialists benefit from widespread
media coverage that comes as a byproduct
of their control of the government. Also,
the election law was drafted by the
Socialists to work in their favor. Local of-
fices will be filled on a proportional basis,
thus benefiting the Socialists who are
relatively strong throughout the country.
Perhaps the most significant contest is
the one between the two parties to the
right of the Socialists. Both have stepped
up their criticism of the government in an
effort to attract disgruntled Socialists.
The conservative Social Democratic
Center, however, has been more
vituperative than the Social Democratic
Party, which apparently thinks it may be
asked to form a coalition with the
Socialists. The showings of the two par-
ties may provide some indication of the
extent to which a vigorous antigovern-
ment line is a good campaign tactic.
The Communists will probably score
the largest gains, regaining many of the
votes lost to the far left last summer when
the Communist presidential candidate
polled less than 8 percent of the vote. The
Communists are still likely to run fourth,
however, with around 15 percent of the
vote
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SPAIN `2
Radicals failed this week in their efforts
to move the Spanish Socialist Workers'
Party further to the left, but the dilemmas
facing the party remain unsolved.
At the Socialist congress on December
5 through 8, Felipe Gonzalez and other
party leaders turned back radical
demands that the Socialists refuse to sup-
port the government's political reforms
unless the government meets various
tough conditions. The congress instead
called for negotiations with the govern-
ment to ensure that the legislative election
next spring is not manipulated by en-
trenched rightists. The question of
socialist participation in the election was
left unresolved pending the outcome of
the negotiations.
As expected, the congress called for
abstention in the referendum to be held on
December 15. This is largely a sym-
bolic gesture, however, because the gov-
ernment is widely expected to win a com-
fortable majority on its reform pro-
posals.
Party radicals may draw some comfort
from the congress' pronouncements on
foreign policy, although these largely
reiterated earlier party positions. The
congress called for a US withdrawal from
its bases in Spain, denounced US
"imperialism" in Latin America, con-
demned the Spanish retreat from Western
Sahara, and rejected both NATO and the
Warsaw Pact.
Privately, however, Socialist leaders
have shown more flexibility on these
issues, implying that the US bases and
Spanish membership in NATO could be
acceptable if they have the support of the
Spanish people.
After the emotional opening
ceremonies, which featured distinguished
foreign socialist leaders such as Francois
Mitterrand, Olof Palme, and Willy
Brandt, the congress settled down to the
urgent business of patching up differences
in the party.
The Socialist Workers' Party has been
weakened by internal conflicts in recent
months as it searches for an identity that
will distinguish it from the Communists
without alienating important support. The
rapid growth of the party over the past
year has brought in many new members
who are more radical than the leadership
and also more radical than much of the
party's potential constituency-white-
collar workers, small businessmen, and
blue-collar workers.
Socialist leaders are torn between their
principles, which commit them to support
moves toward free elections, and their
reading of the tactical political situation.
They are concerned that their support for
the government's program would allow
the Communist Party to assert with some
credibility that it is the only true represen-
tative of the left.
The congress' resolutions indicate that
the Socialists have not resolved their
dilemmas. The Socialists must come off
the fence soon, however, and they are like-
ly to lose potential supporters regardless
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Spanish Socialist Party leader Felipe Gonzalez (left foreground) meets with Willy Brandt during recent congress
Pane A Xn1cC!1i1 v
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FRANCE
6-53
close collaborator, Interior Minister
Michel Poniatowski. The party has been
struggling unsuccessfully to broaden its
support in order to become a more effec-
tive rival to the Gaullists.
The party's sporadic efforts to merge
with the other two members of the gover-
ning "presidential majority"-the cen-
trists and the Radical Socialists-were
hampered most recently by the weakness
that all three showed in the November
by-elections. This made the Independent
Republicans less attractive as a merger
partner and made the other parties more
reluctant to submerge their own identities
Former French prime minister Jacques
Chirac consolidated his control over the
Gaullist party by pushing through a
reorganization, ratified on December 5,
that included:
? His election as the party's first
president.
? A change in the party's name to
Rally for the Republic.
? An overhaul of the party's gover-
ning bodies to bring non-Gaullists into
some advisory positions.
Chirac's elevation will influence the
maneuvering of both right and left for the
legislative election in 1978 and introduce a
new fluidity into French politics. It will
also further stimulate a trend toward
polarization of the center-right as both
Chirac and President Giscard strive to at-
tract new voters. Giscard's popularity is
now lower than that of any president dur-
ing the Fifth Republic; the Gaullists,
elated by their two first-round victories in
the legislative by-elections last month, are
finding they have less and less in common
with his policies.
Giscard reorganized the leadership of
his Independent Republican Party on
December 2, naming as its president his
in a larger group
POLAND
The Poles have announced personnel
shifts and changes in the five-year plan
designed to help the leadership muddle
through the next six to nine difficult
months. Party chief Gierek and Prime
Minister Jaroszewicz disclosed the
changes at a Central Committee plenum
and at a followup parliamentary session
on December 2.
On the policy side, the changes are
designed-ultimately-to benefit the con-
sumer. Investment funds are to be
diverted from producer to consumer
goods. As a result, housing construction,
food production and processing, and the
manufacture of other consumer goods are
to be given increased emphasis.
The regime promised private
businessmen a more free and stable in-
stitutional environment and increased
government assistance. Gierek also
sought to attract greater support from
private farmers by saying that they will be
able to purchase more land.
The leadership did not promise any im-
mediate relief from shortages of consumer
goods. It faces the difficult task of trying
to convince the population to wait from
two to five years for the fulfillment of its
hopes. In the meantime, the leadership
will have to be particularly careful not to
take any action that could provoke riots
and strikes as happened last June.
The personnel decisions will strengthen
Gierek's hand in the party and the party's
control over government technocrats.
Although Prime Minister Jaroszewicz
remains in power, most Polish and
Western observers agree that he will
probably be replaced sometime in the next
six to nine months.
Two men were promoted to the party
secretariat. Stefan Olszowski resigned his
position as foreign minister and Alojzy
Karkoszka as deputy premier to take up
positions in this key political and ad-
ministrative body. Olszowski, who has
returned to the mainstream of party life,
will apparently be one of Gierek's key ad-
visers.
The two apparent losers were Jan
Szydlak and Jozef Kepa, who became
deputy premiers.
Gierek has now moved them away from
their primary sources of power in the par-
ty. Until their new responsibilities in the
Council of Ministers become clear, it is
not possible to tell how far the two have
fallen.
The new foreign minister, Emil Wo-
jtaszek, will be the administrator of the
Foreign Ministry. The formulation of
foreign policy will o more clearly to par-
ty secretary Frelek.
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Mexico's new vernment is trying to
defuse a potentially dangerous situation
by persuading peasants in the northwest
state of Sinaloa to accept a promise that
their land claims will be accommodated.
According to press reports, some
peasants withdrew peacefully on
December 6 from the rich crop land they
had occupied since last week, but many
others refused to disperse. By week's end,
police and army units were preparing to
dislodge them by force. Peasant leaders
and property owners met in Mexico City
with government agrarian officials to
work out a solution to the land invasions.
An agreement will get President Lopez
Portillo off to a good start in his efforts to
restore confidence and revive the faltering
economy. Businessmen strongly oppose
any further land expropriations of the
kind decreed by former president
Echeverria last month. Lopez Portillo met
with representatives from business and in-
dustry this week in what was probably the
first of a series of meetings aimed at con-
vincing them that the country needs their
help and that his administration un-
derstands their problems.
Although the new president will have to
implement the massive expropriation of
100,000 hectares carried out by
Echeverria in the state of Sonora, he
reportedly wants to avoid such radical
measures in the future.
Reaction to Lopez Portillo's inaugura-
tion address from bankers and
businessmen has been generally favorable.
They welcomed his promises to
streamline the complex federal
bureaucracy, cut government spending,
and reduce foreign borrowing. Lopez Por-
tillo acted quickly to secure the support of
business leaders by announcing that he
would authorize private investments in the
country's basic industries, such as
petrochemical and iron and steel. These
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industries are now almost completely con-
trolled by the state. Labor union officials,
perceiving a less populist cast to the new
administration, have received the promis-
ed changes coolly. They plan to press for
large wage increases next month.
The peaceful and orderly transfer of
power from the ambitious and
provocative Echeverria to Lopez Portillo
has in itself contributed to dispelling the
atmosphere of crisis surrounding the in-
auguration. The beleaguered peso
responded to the changeover by rising to
20.50 to the US dollar at the start of this
week-its best level since late October.
Lopez Portillo's honeymoon will
probably continue until early in the new
year. Although the President has said that
he will need time to deal with pressing
economic and social problems, dis-
illusionment is bound to set in when he
does not perform miracles and when his
administration's programs begin to im-
43 4G
groups
CUBA `I q
The basic power structure in Cuba
remains virtually unaltered despite the
far-reaching institutional changes the
government has undergone in the past
week. Fidel Castro-Cuba's new
president-is in supreme command, and
his younger brother Raul is the un-
challenged number-two man in the
regime.
Osvaldo Dorticos was removed not
only from the presidency, which he had
held since 1959, but also from his post as
chief of the Central Planning Board. The
board is now headed by a young Soviet-
trained protege of Raul Castro's. Dor-
Brazil: Gelsel's Image Enhanced
ticos remains on the 31-member Council
of State and is a vice president of the new-
ly appointed Council of Ministers. Health
problems, rather than political dif-
ficulties, are the probable explanation for
his less prominent standing.
One significant change is the removal
of Raul Roa as foreign minister in favor
of Isidoro Malmierca Peoli. Roa's
age-he will be 70 in April-and health
were probably factors in the change.
Malmierca is 46, has traveled extensively
abroad, speaks English, and was a
member of the pre-Castro communist
party. If the Cuban regime intends to try
to improve relations with the US, it might
find Malmierca a more appropriate
negotiator than the acerbic, bitterly an-
ti-US Roa.
The rest of the leaders continue to be
those who have been close to Castro for
years. All of the members of the party's
Political Bureau, for example, are
members of the governing Council of
State.
The chiefs of the various mass
organizations were also made members of
the Council of State, but this is merely a
formalization of the close relationship
they previously had with the regime
leadership. The second- and third-ranking
officials of the Armed Forces Ministry,
both of whom served in Angola, have
seats on the Council of State.
Veteran Communist Bias Roca and
Raul Roa were "elected" president and
vice president, respectively, of the
National People's Assembly, which was
in session on December 2 and 3. The short
duration of the Assembly's session, in
spite of the amount of business at hand,
indicates that real authority lies with the
Council of State, even though the
Assembly is theoretically the senior of the
two bodies.
The Council of State, of which Fidel
Castro is president, functions as the
supreme organ of government when the
National People's Assembly is not in ses-
sion. Castro clearly has no intention of
allowing the 481-member Assembly to
play a major role in day-to-day governing.
The returns from Brazil's nationwide
municipal elections, held November 15,
have enhanced President Geisel's image.
Tensions among conservative military
leaders critical of Geisel's gradual moves
toward political liberalization have been
reduced by the strong support won by the
pro-government party. The President now
can claim an election mandate for his in-
novative approach to major policy issues.
In the past, the local contests for ap-
proximately 4,000 municipal council seats
and nearly as many mayorships have been
politically insignificant. Early this year,
however, Geisel elevated them to national
importance by proclaiming them a
"plebiscite" on his administration. He
also broke a 12-year tradition of presiden-
tial noninvolvement in civilian politics
and-despite his reserved manner-prov-
ed to be an adept campaigner.
There is no doubt that the President
views the election returns as a national
vote of confidence in his leadership; his
buoyant mood has had a calming effect on
the country. A rash of bombings-at-
tributed to right-wing extremists who op-
posed Geisel's political activism-sub-
sided with the elections, and military
criticism of the administration has soften-
ed noticeably in recent weeks.
It now seems unlikely that Geisel will
revamp the political party system or make
major cabinet changes in the near future,
as many observers have predicted.
Instead, he has been focusing his attention
on more pressing economic issues and
military personnel shifts. In both areas, he
has moved forcefully, making major cuts
in public investment and promoting of-
ficers on the basis of seniority and
professional competence to the highest
ranks.
The respite from criticism and disrup-
tive political maneuvering by dissidents
will almost certainly be temporary. Con-
tinuing economic problems and the
likelihood of a mild recession next year
make it even more likely that, after a
short breathing period, military hard
liners and leading industrialists will renew
their complaints
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JAPAN 4
The sharp setback suffered by Japan's
Liberal Democrats at the polls on
December 5 did not cost them control of
the government, but apparently it did end
Prime Minister Miki's tenure in office.
The party's officially endorsed can-
didates fell seven seats short of winning a
majority-256 seats-in the Diet's lower
house. Nine conservative independents
who won seats have already joined the
Liberal Democratic Party, ensuring that
it will maintain its majority in the Diet.
Six more independents will join or vote
with the ruling party.
Even so, the Liberal Democrats will
still fall short of the 271 needed to main-
tain effective control over all the com-
mittees in the lower house. The party will
now have to bargain and compromise
with a group of young dissidents who
bolted the Liberal Democratic Party
earlier this year-or with the Democratic
Socialists, the most moderate of the op-
position parties.
Despite the Liberal Democratic losses,
the election returns do not indicate any
change in the basically conservative senti-
ment of most Japanese voters. The share
of the popular vote won by conservative
candidates rose to 51 percent, slightly
above the 1972 level. Younger and more
independent candidates did somewhat
better, however.
The voters also rejected militant op-
position candidates in favor of the
middle-of-the-road parties. The Com-
munists won only 17 seats compared to 39
in 1972, once more becoming the smallest
opposition party in the lower house.
Miki is expected to announce his inten-
tion to resign as prime minister fairly
soon, and consultations are already under
way among ruling party leaders to select a
successor. Former deputy prime minister
Fukuda is the front-runner. He was en-
dorsed by a solid majority of Liberal
Democratic members of the Diet before
the election. Despite some efforts by
Miki's supporters to put part of the blame
on Fukuda for the party's poor showing,
he apparently retains the backing of much
of the rank and file.
Perhaps more important, Finance
Minister Ohira, Fukuda's leading ally in
the party, has reportedly reconfirmed his
support for Fukuda. If so, the chance of
any significant opposition to Fukuda aris-
CHINA
52-53
A brief session of the standing com-
mittee of the National People's Congress,
China's legislature, ended on December 2
with the announcement of only one major
personnel appointment. Former Chinese
ambassador to the UN, Huang Hua, who
played an important role in the early
stages of China's opening to the US, is the
new foreign minister. His appointment
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suggests that Peking does not plan any
major departures from its current foreign
policy line.
The position of premier is still held by
party chairman Hua Kuo-feng. Sup-
porters of ousted vice premier Teng
Hsiao-ping may be advocating that the
job be kept in Hua's hands until Teng can
be "rehabilitated" and step into it. These
Teng supporters may include Defense
Minister Yeh Chien-ying, the second most
powerful man in China. Teng's rehabilita-
tion does not seem likely soon but is a
strong possibility over the longer term.
There was no announcement of a new
chairman of the National People's
Congress, a position equivalent to head of
state. Filling this post could be a conten-
tious issue. There are signs that some in
the leadership would like Yeh Chien-ying
to move up to that job, thus leaving the
defense portfolio to ambitious military
man Chen Hsi-lien. Yeh probably does
not want to relinquish his control over the
army. He and some others in the
leadership probably would prefer that the
chairmanship go to Wu Te, a civilian and
leading candidate for the job. Wu,
however, is still a vice chairman.
counterinsurgency operations restored.
The Thai agreed to station additional
troops in southern Thailand, to expand
joint maritime patrols along the east
coast, and to allow Malaysian police and
intelligence units to engage in hot pursuit
into southern Thailand.
The Malaysians also appear to have
allayed Thai suspicions that the Malay-
sian government is secretly supporting the
large Muslim population in southern
Thailand that wants to become part of
Malaysia. The Thai had insisted-as a
condition for joint military actions
against communist insurgents-that the
Malaysians also participate in joint
operations against the Muslim
separatists. The Thai have now dropped
this demand and unconditionally agreed
to restore joint operations on the in-
surgency problem.
The joint border operations are par-
ticularly important to the Malaysians.
The insurgents seek sanctuary across the
border in Thailand, and without
Chairman Hua and Yeh Chien-ying
were treated by the media as separate
from others attending the meeting and
were put on an almost equal footing. This
is an indication of Yeh's importance and
suggests that Hua shares some power with
him. The considerable adulation express-
ed at the meeting, wever, was reserved
exclusively for Hua
SI'A-TA AND
MALA
Malaysian Prime Minister Hussein and
Thai Prime Minister Thanin met last
week and agreed to cooperate more close-
ly in operations against communist in-
surgents in the Thai-Malaysian border
area.
Lower level officials of the two
governments have been negotiating the
problem since early November, trying to
get formal border talks resumed and joint
Bangkok's approval the Malaysians can-
not engage in hot pursuit. Earlier
agreements broke down last April when
the Malaysians bombed Thai territory
without permission.
With the conservatives in Malaysia's
ruling party pressing Prime Minister Hus-
sein to take a tougher attitude toward
communists in general, Hussein will find
it politically useful to point to improved
border cooperation with the Thai.
INDIA 571 5;
India is harvesting a bumper grain crop
for the second consecutive year.
Food grain production reached a record
118 million tons for the crop year ending
in June 1976 and should range from 107
million to 112 million tons this crop year.
Output averaged only 102 million tons an-
nually during the preceding four years.
Good weather has been primarily
responsible for the larger harvests,
although increased use of fertilizer and
better seeds has helped.
Grain import orders were suspended
last spring and are not likely to be resum-
ed anytime soon. Barring a poor spring
crop, which appears unlikely, no new im-
port commitments are likely before
mid-1977.
Two good harvests in a row are severely
straining India's food storage capacity.
Buffer stocks now total 17 million tons
and are likely to increase further. India 25X1
has permanent facilities for some 12
million tons; much of the remainder has
been stored in the open.
The upturn in agriculture-and in the
overall economy-is largely responsible
for the calm political atmosphere that has
prevailed since Prime Minister Gandhi
tightened her hold over the government in
mid-1975. The absence of significant
public discontent has enabled her to con-
centrate on restructuring the government
along authoritarian lines and to postpone
the nation election for a second year,
until 1978.
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The cease-fire in Lebanon has left Syria with considerably
enhanced influence in Middle East affairs. Syria is now bent on
doing all it can to push for resumption of serious Arab-Israeli
peace negotiations.
Syria: Foreign Policy Beyond Lebanon
Syrian President Asa s pose ton at
home and abroad has strengthened
significantly since the Arab heads of state
endorsed the Lebanese cease-fire in late
October.
The halt in fighting-even without
progress toward a political settlement
among the Lebanese-has eliminated
most public expressions of discontent
within Syria, stopped effective pressure
from Egypt and the USSR, and ended
any possibility of conventional military
moves by Iraq.
The improvement in Asad's political
position has already opened the way for
him to focus on foreign policy concerns
beyond Lebanon, and is likely to make
him push harder for progress in
Arab-Israeli peace negotiations. It will
not, however, make Asad any more will-
ing to offer significant concessions to
Israel.
Syria's strategy now is to marshal as
much Arab and international support as
possible to press the US and Israel to
resume serious peace negotiations. To
minimize the political risks and to avoid
the appearance that he is making con-
cessions, Asad probably will work
through Arab states with close ties to the
US, particularly Jordan and Egypt.
The Jordan Strategy
Asad's immediate aim is to strengthen
further his close ties to Jordan. During his
visit to Amman this week, he persuaded
King Husayn to join him in an announce-
ment of their intention to create-some-
time in the future-a federation or con-
federation of the two countries.
The Syrians doubtless believe that such
a demonstration of Jordan's support and
confidence-following Syria's victory in
Lebanon-will remind the US, Israel, and
Asad's Arab critics that Syria is in an in-
creasingly powerful position in the region,
and that its views on Lebanese and Mid-
dle East peace negotiations must be ac-
commodated.
Syrian leaders presumably believe also
that a forceful public reminder of Syria's
powerful position will have a salutary
effect on Egyptian President Sadat, whom
Asad plans to visit in Cairo on December
11. Despite the recent rapprochement
between Syria and Egypt, the Syrians are
not yet confident about dealing with
Egypt and will want to underscore their
ability and determination to play a major
part in forming future Arab policy.
Jordanian leaders value their close
association with Syria because it keeps
them involved in broad Middle East
issues. Despite the urgings of powerful
private advisers to enter into a federation
with Syria, however, Husayn and other
Jordanian officials are inclined to allow
only a modest expansion of existing
military and economic arrangements.
King Husayn probably will endorse the
principle of closer political cooperation.
He will delay indefinitely, however, im-
plementing any scheme that would cede to
others significant influence over Jordan's
internal security or foreign and military
policy.
Coordination with Egypt
Asad is now willing to put aside his
public criticism of the second Sinai accord
while he attempts to work through Sadat
to make gains in negotiations.
The Syrians have long believed that the
Egyptians are inclined to make un-
necessary early concessions in peace
negotiations, but they nevertheless prefer
that Sadat take the lead in arranging a
new round of talks. Asad recognizes that
Egypt has more experience than Syria in
dealing with the US and also prefers that
Egypt suffer the public criticism that
would accompany a failure to get talks
going again.
Working with Egypt also helps Syria in
its relations with the other Arabs. It par-
ticularly pleases the Saudis, who provide
budget support to Syria, fund the
predominantly Syrian Arab peacekeeping
force in Lebanon, and control use of the
Arab oil weapon.
The rapprochement between Syria and
Egypt also helps undercut Asad's radical
Arab critics. The Palestinians and the
Iraqis succeeded in delaying the establish-
ment of a Syrian-backed peace in
Lebanon when they had active backing
from Egypt, but without Egyptian support
they have had to acquiesce in the Syrian
presence. Several hundred Iraqi troops
have already withdrawn from Lebanon.
Politically, the Palestinians will find it
much more difficult to play the Syrians
and Egyptians off against one another as
long as the Syrian-Egyptian rapproche-
ment holds.
This will reduce the chances that the
Palestinians will be able to veto any for-
mula the Syrians and Egyptians may
arrange for an Arab delegation to return
to Geneva, or to use a future meeting of
the Palestinian National Council-the
Palestinian parliament-to reduce Syria's
military or political control of the
fedayeen.
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Syria for months has equivocated
publicly about the utility of reconvening
the Geneva conference, but there is no
doubt that it will be willing to return to
the conference if it believes there can be
significant progress in peace negotiations.
Syria's renewal last month of the man-
date of the UN observer force on the
Golan Heights without significant
political wrangling reflects in part Syria's
interest in avoiding an obstructionist im-
age at a time when the Arabs are pushing
for a resumption of serious negotiations.
Asad is not likely to abandon his posi-
tion that the Palestinians must be
represented at Geneva from the start of
any new round of talks. If he perceives
that progress may be possible on substan-
tive issues, however, he might agree to the
formation of a joint Arab
delegation-which Egypt would sup-
port-that would include Palestine
Liberation Organization representatives
but not have the PLO present as an
organization.
This would have the advantage, from
Syria's point of view, of facilitating con-
trol of the PLO by the moderate Arab
states. It would also have the advantage of
putting both the PLO and Israel on the
defensive. Neither would like such a for-
mula, but both would be concerned about
the possible political costs of rejecting it.
On substantive matters, Syria in the
coming months will press for negotiations
aiming at the return of the Arab
territories occupied by Israel in exchange
for an end to "all forms of aggression,"
Asad is already attempting to bolster
his case internationally by arguing that
Israel's demands that diplomatic, com-
mercial, economic, and cultural ex-
changes be included in a final peace settle-
ment are only obstacles raised to ensure
that no progress is made.
Israel and Lebanon
Asad's successful pursuit of his
Lebanon policy against the wishes of the
Soviets, Palestinians, and several Arab
governments almost certainly has rein-
forced his conviction that perseverance
pays off. We anticipate that the net effect
of the Lebanese involvement, therefore,
will be to make Asad more confident and
more determined than ever to maintain
heavy pressure on the Israelis, and to give
them no excuse to refuse to participate in
negotiations or to turn to military action.
Syria will continue, for example, to
reaffirm its support for the creation of a
Palestinian state. This serves also to dis-
arm Asad's fedayeen critics, who argue
that his Lebanese policy was directed
against the Palestinians.
Troops in Lebanon
The 25,000 to 30,000 Syrian troops in
Lebanon constitute an implicit threat to
Israel, even though they are dispersed
throughout the country and pose no im-
mediate threat to Israel's security. This
military presence probably will remain for
many months even if the Lebanese cease-
fire holds, and will tend to create new
political problems between Israel and
Syria.
Syria has begun to rebuild the Syrian-
controlled Saiqa fedayeen group in
Lebanon, and has moved small units of
the Syrian-dominated Palestine Libera-
tion Army into the Arqub region of
southern Lebanon. These actions are not
directed at Israel, but, because they ex-
pand Syrian control in Lebanon, will also
raise Israeli concern.
The Syrians have indicated in the
Damascus news media their desire to
move their forces into the southern
Lebanese port of Tyre to eliminate the
last important source of resupply for the
Palestinians and leftists, but have delayed
doing so in the face of Israel's stated op-
position to such a move.
If the Syrians conclude they cannot risk
a move into Tyre, they are likely to decide
that continued tension and occasional
skirmishing between the fedayeen and
Lebanese Christian and Israeli forces in
the border area-despite the adverse im-
pact on Lebanese stability-serve Syria's
interests in dealing with Israel.
Continued tension, the Syrians might
calculate, would oblige the Israelis to
choose between a Syrian presence in the
border area and continued insecurity with
low-level fedayeen cross-border terrorism.
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The Italian political situation remains complex, but most
factors in the equation seem likely to drive the Christian
Democrats and the Communists closer together rather than
further apart.
25X1
Italy: Andreotti's Problems
Prime Minister Andreotti is grappling
with the most difficult combination of
economic and political problems to con-
front an Italian government leader in
years.
The essence of Andreotti's dilemma is
that his Christian Democratic minority
government must rely on Communist
cooperation to implement an urgently
needed economic stabilization program,
while at the same time the leadership
is searching for ways to revive a non-
communist governing coalition.
Unable to muster support for such a
coalition among their traditional allies
following last June's election, the Chris-
tian Democrats have been forced to
bargain for Communist abstention in
parliament in order to install Andreotti's
government and enact austerity measures
to halt the spiraling inflation and a large
balance-of-payments deficit.
In return for their abstention-and for
keeping labor protest within manageable
limits-the Communists have received
key parliamentary posts previously denied
them, along with a broader more overt
consultative role in government policy
making.
Thus the dominant feature of the period
since the election has been an uneasy but
growing cooperative relationship between
the Communists and Christian
Democrats.
It is clear that this arrangement cannot
go on indefinitely. Eventually, the two
parties must move toward closer, more
formal collaboration or revert to a
semblance of the old order, the central
feature of which was a much clearer dis-
tinction between the Christian
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Democratic - led governing majority and
the Communist opposition. Both parties
face difficult choices but, on balance, the
Christian Democrats appear to have the
more complicated and risk-laden task.
Communist Goals
The Communists' goals are relatively
clear-cut. Cooperation with Andreotti is
designed to provide simple political
leverage, but also something much more
far-reaching. Communist leaders appear
convinced that unless they work with the
Christian Democrats and demonstrate a
responsible attitude toward Italy's press-
ing problems, they cannot achieve
membership in the government without
triggering unacceptable levels of domestic
and international uncertainty.
The major risk for the Communists is
that their traditional working-class base
will become alienated by the party's ac-
quiescence in austerity measures that will
hit hard at lower income groups. There
has already been considerable evidence of
restlessness among the Communist rank
and file, particularly in the labor sector; at
one point in October, for example, Com-
munist cadres had to fan out into the
northern industrial centers to quell a rash
of wildcat strikes and explain the party's
support for
workers.
the government to the
The risk of weakening Communist
strength among the workers is offset
somewhat by the failure so far of the other
leftist parties to present themselves as
credible alternatives or to develop the
kind of organizations necessary to com-
pete with the Communists' vote-gathering
machinery.
For example, the Socialist Party-the
Communists' most substantial rival on
the left-is mired in internal disputes that
prevent it from projecting an image clear-
ly distinct from that of the Communists.
Even as they proclaim their autonomy
from the Communists, the Socialists say
that they will not join the Christian
Democrats in another coalition unless it is
a broadly based emergency government
that includes the Communists.
In these circumstances the Communists
probably will be able to hold most of their
hard-core supporters, while working to
neutralize anti-Communist sentiment
among other voters by appearing to be the
most important ally of a government
beset by massive economic problems.
The longer the de facto partnership
between the Communists and Christian
SECRET
Democrats continues, the more likely it
becomes that Italians will view any
governmental success as a by-product of
collaboration between the two parties.
This, in turn, would tend to make Com-
munist chief Berlinguer's three-year-old
offer of an "historic compromise" with
the Christian Democrats look less and less
threatening.
The Christian Democrats
While the Communists are playing a
risky game, the Christian Democrats face
a more acute dilemma as they weigh the
probable consequences of closer
collaboration with the Communists
against the implications of an attempt to
put together a government more insulated
from Communist influence.
Perhaps the greatest limit on the Chris-
tian Democrats' freedom of maneuver
stems from their long-time emphasis on
anti-communism, which had made party
strategy to some extent a captive of that
issue. While Berlinguer has for at least
three years been preparing the Com-
munist rank and file for closer relations
between the two traditional rivals, the
Christian Democrats have been proclaim-
ing for decades that they would never go
as far as they have since June toward an
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accommodation with the Communists.
The Christian Democrats managed to
retain their plurality in the June election
by draining right-wing support from the
smaller parties-such as the neo-
fascists-with a tough anti-communist
campaign. Thus, any move toward formal
collaboration with the Communists would
seriously jeopardize the Christian
Democrats' base of support among anti-
communist voters.
Leadership Strained
It would also severely strain the cohe-
sion of the Christian Democratic
leadership. While Christian Democratic
leaders are generally united behind An-
dreotti's economic program, many of
them are nervous about his government's
dependence on the Communists.
Divisions among Christian Democrats
over the communism issue are reflected in
recent developments in the key northern
industrial region of Lombardy. The
Christian Democratic-led regional
government there has entered into a for-
mal "legislative accord" with the local
Communists that goes well beyond the ad
hoc consultative arrangement at the
national level. The regional party leader
has recommended that Andreotti consider
applying the Lombardy model at the
national level-as a way of assuring con-
tinued Communist support without ad-
mitting the party to the government.
Right-wing Christian Democrats in
Lombardy have revolted, however, and
taken over the party organization in
Milan, the regional capital. Their leader,
Massimo De Carolis, recently provoked
considerable controversy by asserting that
the present drift toward cooperation with
the Communists should be cut short by
returning to a policy of confrontation with
them, even if that involves another elec-
tion.
There are signs that these competing
points of view are being debated in the
party's national leadership, although An-
dreotti's tactics appear to have the back-
ing or acquiescence of most influential
Christian Democrats not because they
favor an accommodation with the Com-
munists but because they believe the alter-
natives to the present course are even less
attractive.
Closer relations with the Communists
would create serious internal problems for
the Christian Democrats but, as they look
to the future, the Christian Democrats
can draw little comfort from the fact that
a noncommunist majority still exists in
parliament. The Christian Democrats'
former allies might eventually be per-
suaded to rejoin them in the government,
but any attempt by the Christian
Democrats to push the Communists to the
sidelines would risk incurring the kind of
Communist opposition that would make
Italy even harder to govern.
Even before the June election, Christian
Democratic-led governments found it dif-
ficult to enact programs opposed by the
Communists; with the strength the Com-
munists gained in June, it is clear that any
government that excludes the Com-
munists will still need their benevolence to
secure approval of key bills, particularly
in the economic area.
The Socialists
except in the highly unlikely event that
they elect to go into opposition.
Neither the Communists nor the Chris-
tian Democrats want to force the issue
now, and uneasy rapprochement probably
will continue for at least several more
months. Given the usual caution of Italian
political leaders, it may well take some
decisive event-perhaps another election
or an economic deterioration sharp
enough to subordinate political
differences-to force a further qualitative
change in relations between the two par-
ties any time soon. While it is too soon to
sketch in the details of the relationship's
next phase, most factors in the Italian
political equation seem likely to drive the
Communists and Christian Democrats
closer together rather than further apart.
25X1
The Socialists, whose support the
Christian Democrats must have to form a
noncommunist government, would not be
likely to go along unless the Christian
Democrats were willing at least to seek
Communist support for government
programs. The Socialists want to ensure
that the Communists share some respon-
sibility for government decisions rather
than being left free to criticize from the
opposition.
Apart from that, however, the
Socialists have probably concluded from
their experiences in a succession of
center-left coalitions between 1963 and
1974 that Communist abstention or sup-
port in parliament might frequently be
necessary to offset Christian Democratic
defections during votes on controversial
social and economic programs.
The Christian Democrats thus face un-
palatable choices whether they move
toward more formal collaboration with
the Communists or try to put more dis-
tance between themselves and
Berlinguer's party. Sooner or later, they
will have to choose one sort of alliance,
Communist Party chief'Berlinguer
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The coming months may be difficult for the East German
leaders as they grapple with a complexity of political and
economic challenges.
East Germany The Regime's Problems
Since mid-August a number of
problems have appeared on the East Ger-
man domestic scene, and all of them have
contributed to political malaise and public
discontent. Economic problems, too, have
come to the fore, and informed observers
appear to agree that economic issues were
behind the leadership reshuffle in Oc-
tober.
In all likelihood a Central Committee
plenum will meet to review several critical
problems, including the economic situa-
tion. Some personnel shifts may occur,
although there have been no strong in-
dications pointing in this direction. Party
chief Honecker may follow up the
top-level shifts in the government that
were made in late October with other
moves to strengthen the party's control
over the government's administrative and
economic machinery.
The Leadership
It has not been an easy autumn for East
German leaders, and in many respects the
coming months could turn out to be a
"winter of discontent" for the government
and the population. East German
authorities seem uneasy about issues that
could provoke public displeasure. Accord-
ing to some observers, the public is more
critical and outspoken than it has been at
any time in recent years. In short, the
potential for collision between critics of
the regime and the insecure, oversensitive
authorities is rising.
The regime's ability to monitor the
public mood and ensure that adequate
security precautions are taken is well
proven. The authorities are subject,
however, to miscalculation and overreac-
tion-particularly when West German
media enter the picture-and in recent
months have done more to aggravate
some situations than to ease them.
To what degree the problems that have
come to the surface have provoked con-
troversy and differences of opinion within
the Politburo is difficult to determine.
There seems to be a consensus on broad
issues, but recriminations are doubtless
made when developments take an unex-
pected or adverse turn.
Overriding all other considerations is
the importance to the USSR of a stable,
secure East German regime. This is
crucial to the Soviet ability to deal with
West Germany and Europe in general.
The USSR will stop at nothing to main-
tain stability in East Germany and con-
tinue its ultimate control over events
there.
For the East German regime, and es-
pecially for Honecker, the critical ques-
tion is to ensure Soviet support on a wide
range of inter-German issues. To this end,
the East German party chief
enthusiastically pursues all measures
leading to stronger bilateral ties with the
USSR.
Honecker realizes that his position as
party leader and preservation of the
limited autonomy that the regime has in
domestic affairs depend almost complete-
ly on his ability to ensure internal order.
He has a well-deserved reputation for
painstaking attention to detail and has a
firm hold on the party organizational
machinery.
Taken individually, none of the
problems confronting Honecker is intrac-
table. At least for the moment, he seems
to have them under control. Taken
together, the challenges to the authority
of the state are pervasive and interlocking.
They will require prudent and dis-
criminating attention by the leadership. A
harsh ideological crackdown would risk a
serious public backlash.
The Problems
First of all, the incidents of last summer
in Berlin and along the East-West Ger-
man border focused attention on the ques-
tion of travel and contacts between the
two Germanies.
Church-state relations then became
aggravated-tensions remain high, and
East German officials are still chafing
over the defiant boycott by some of the
church hierarchy of the parliamentary
election in October. Official displeasure
over youth problems is more pronounced,
economic problems continue, and the
regime has now embarked on a
crackdown on the country's more out-
spoken, dissident intellectuals. All of
these issues take on an added air of uncer-
tainty when viewed through the prism of
inter-German relations.
One of the chief concerns of leading
party and government officials at the mo-
ment is the rise in emigration
applications. Such applications are
reported to number in the hundreds of
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thousands, and the congenitally
suspicious communist leaders may see the
challenge as something amounting to a
national conspiracy.
Inter-German relations unquestionably
pose the most vexing problem for East
German policy makers. It is also the one
area where there are probably differences
of opinion among them. Indeed, mixed
signals on this subject from both East and
West Germany are the norm rather than
the exception.
For example, with virtually the entire
Politburo backing him up, Honecker held
a widely publicized press conference at the
Leipzig Fair on September 5 during which
he took a fairly conciliatory position on
the subject of Western travel. In essence,
he tied increased travel to the West to im-
provements in the regime's hard-currency
deficit.
Since the West German election,
however, East Berlin has been taking a
tougher line toward Bonn. The change
may reflect the regime's concern over the
increasingly open, sympathetic attitude of
East German church and youth groups
toward dissident East German artists. The
tougher line could also be a reaction to the
West German media's exploitation of the
situation in East Germany.
It is too soon to tell whether East Ger-
many intends to carry out a full-scale
cultural crackdown; tentative indications
point in thg opposite direction.
Bilateral talks between East and West
German negotiators on "human con-
tacts" continue. The East Germans may
be seriously considering some action to
case the regime's restrictive travel
policies. If so, the current hard line being
taken against what amounts to the "ex-
pendable" fringe element of East German
society will serve as a stern warning for
the average East German who visits the
West.
ment changes have certainly been aimed
at enhancing the party's role in society,
and there may be some additional shifts in
this direction in the near future.
As the past months have indicated,
however, there are forces at work within
East German society that will sorely test
Honecker's capacity for leadership.
The regime's determination to pursue
its distinct economic interests may carry it
to the point of agreeing to further im-
provement in East-West travel
arrangements in return for credits from
West Germany. This could create fur-
ther political opportunities for West
Germany and might even pose complica-
tions in East German relations with the
USSR.
In short, the pressures on the Honecker
regime can only mount as moves toward
Outlook
The assumption of the chairmanship of
the Council of State by the 64-year-old
Honecker in October. brings him to the
summit of his power-he now holds the
same positions previously held by his
predecessor, Walter Ulbricht. The govern-
further relaxation of controls over in-
ter-German contacts conflict with the un-
bending effort of the regime to impose on
its own population a distinctly separate,
communist sense of identity.
I f% -7C
Approved For Release 2008/06/19: CIA-RDP79-00927A011400250001-0
 Approved For Release 2008/06/19: CIA-RDP79-00927A011400250001-0
Approved For Release 2008/06/19: CIA-RDP79-00927A011400250001-0
 Approved For Release 2008/06/19: CIA-RDP79-00927A011400250001-0
Secret
Secret
Approved For Release 2008/06/19: CIA-RDP79-00927A011400250001-0