WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011500040001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 21, 2016
• Document Release Date: February 1, 2008
• Sequence Number: 1
• Publication Date: January 28, 1977
• Content Type: SUMMARY

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January 28, 1977
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CONTENTS
1 Europe
Spain; France; Dissidents in
Eastern Europe; Yugoslavia
4 Middle East
Egypt; Arab States -
Palestinians; Lebanon;
Turkey; Iraq
7 Asia
India; China-Japan; Korea
8 Africa
Rhodesia
9 International
EC; Cocoa
10 Soviet Agriculture: A Comparison with the US
12 Argentina: Economic Accomplishments
13 Western Europe: Labor in the Board Room
Comments and queries on the contents of this
publication are welcome. They may be
directed to the r of the Weekly,
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 SPAIN
V
Serious new political violence this week
by extremists of both the right and the left
will complicate Prime Minister Suarez'
efforts to lead Spain to democracy. He
will probably move ahead, however, with
his reform program designed to bring a
broad range of political tendencies into
the new system.
Seven persons were killed in Madrid in
a two-day period early in the week. The
victims included four Communist labor
lawyers who were gunned down on
January 24; responsibility for the murders
was claimed by a right-wing group that
calls itself the Apostolic Anti-Communist
Alliance. Left-wing extremists, for their
part, kidnaped a general who heads
Spain's highest military court. The same
extremists have been holding a high
civilian official whom they kidnaped six
weeks ago.
The terrorist acts, especially the killing
of the lawyers, fueled student
demonstrations in the capital and two
days of protest strikes by thousands of
workers in Madrid, Bilbao, and
Barcelona. Communist and most other
leftist labor leaders who called the
workers out insisted, however, that their
protest actions be confined to work sites
so that their presence in the streets would
not provide a pretext for further attacks
by rightists. Opposition political leaders
lent their direct support to the
government's pacification effort.
Suarez demonstrated his resolve to
clamp a tight lid on the violence by rein-
forcing police in the capital with reserves
from outlying areas and giving them
wider search and arrest authority by in-
voking part of the 1975 antiterrorist law.
He also canceled a planned trip to the
Middle East. By midweek, the
government's effort coupled with the
restraint shown by the major leftist
groups resulted in restoration of a
measure of calm in Madrid.
Both the government and the leftist
leaders remain concerned, however, about
possible new terrorist acts by the radical
right. Their fears were heightened by a
threat issued by the Anti-Communist
Alliance on January 26 to wreak in-
discriminate vengeance on the Spanish
left if the two hostages being held by the
left extremists are harmed.
The opposition's campaign for amnesty
for the approximately 200 political
prisoners has added to the strains imposed
on the government by the terrorist acts
and the protest demonstrations. The
government apparently is not averse to
releasing most of the prisoners, but does
not want to appear to be giving in to the
demands of either kidnapers or
protestors.
Suarez is continuing to maintain close
communication with the opposition
leaders. He met with six of them on
January 24 to discuss the proposed law
under which a legislative election is to be
held this spring.
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FRANCE 7 --- / Z
French. Gaullist leader Jacques Chirac's
annoLincement last week that he will be a
candidate for the municipal council of
Paris has caused a deep split within the
government coalition and again brought
to the surface the rivalry that exists
between President Giscard and his former
prime minister.
Prime Minister Barre, a technocrat
who normally has Gaullist sympathies,
immediately attacked Chirac's move as
divisive and beneficial to the opposition,
as did non-Gaullist members of the
government. Giscard broke his silence on
January 26 in a publicized speech to his
cabinet in which he harshly criticized
Chirac and implicitly ruled out Chirac as
a coalition candidate. Chirac subsequent-
ly issued a statement stating he would not
step down.
Minister of Industry and Research
D'Orrano, Giscard's personal choice to
lead the council campaign and later to be
elected by council members as mayor, had
already announced that he would stay in
the race, thus putting himself on a colli-
to show some results and he was up 10
percentage points in the polls. Giscard's
rating had inched up 2 points to 41 per-
cent.
Mirage Deal with Egypt /, -,
France and Egypt are still neogtiating a
new fighter deal, and recent French press
reports indicate that the two countries are
now discussing a direct French sale of 52
Mirages to the Egyptian air force. The
deal would be independent of negotiations
that are going on between France and the
Arab Organization for Industrializa-
tion-an arms production consortium-
for establishing a Mirage assembly
plant in Egypt.
Paris has been negotiating since late
1975 with Egypt and the other members
of the consortium-Saudi Arabia, Qatar,
and the United Arab Emirates-for a
large number of fighters. The negotiations
have dragged on largely because the
Arabs have not been able to decide
whether to buy fighters outright or to try
to assemble the majority of them in Egypt
under license. Earlier this month, French
Defense Minister Bourges visited Egypt
reportedly to work out details on a
sion course with Chirac. D'Ornano's
strategy is reportedly being dictated by
Giscard and the minister of interior; he
faces an uphill task.
If Chirac sticks to his intention to run,
he is likely to get a seat on the municipal
council, but he is not assured of gaining
the politically and economically powerful
post of mayor. The non-Gaullists on the
council could get together and block his
election, although this is unlikely.
If Chirac gains the Paris post, it would
give him the continued national
prominence necessary for a possible later
try for the French presidency. In addition,
his chances to dispense patronage would
be vastly increased and the Gaullist party
would get a boost. The Gaullists have
generally welcomed Chirac's move.
Chirac's claim that he is entering the
race to prevent a leftist takeover of the
French capital is exaggerated. The leftists
are expected to make only moderate
gains.
Chirac's candidacy has come at a time
when Giscard and his followers were
breathing a little easier. Prime Minister
Barre's anti-inflation plan was beginning
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Mirage F-1 assembly plant near Cairo
that would operate under French direc-
tion.
Both the French and the Egyptian
governments are eager to conclude a
fighter agreement soon. The Egyptians
would like an agreement that calls for the
rapid delivery of some completed Mirages
directly from France to replenish Egypt's
dwindling fighter inventory but allows for
the majority of the fighters contracted for
to be assembled in Egypt over a period of
several years.
France's Dassault aircraft-design firm
would prefer to sell fighter planes outright
rather than become involved in long-term
manufacturing programs in an unstable
region. Dassault and other French firms
connected with the program have agreed
nevertheless to give the Arab consortium
assembly rights for a French fighter
provided the French government
guarantees their investments. Paris thus
far has balked at such an arrangement.
The success of an assembly or manufac-
turing project ultimately depends on the
conservative oil states' willingness to
finance Egypt's aircraft industry. The
Arab Organization for Industrialization
was formed to reduce Arab dependence
on foreign arms suppliers, and member
states must accept certain penalties in
order to secure production rights and the
accompanying technology transfers.
The cost of building fighter aircraft in
Egypt would be higher, and the planes
would be assembled at significantly
slower rates than if they were purchased
outright from Europe. Moreover, the
Arabs would continue to be dependent on
Western Europe for high-technology com-
ponents
Coping with Dissidents in Eastern Europe
The dissident problem is continuing to
occupy the attention of Soviet authorities,
who last week relaxed pressure on some
prominent dissidents a bit, but threatened
sterner steps against others. Soviet
propaganda on the human rights issue
continues to reject alleged Western in-
terference in Soviet internal affairs while
claiming compliance with the provisions
of the 1975 Helsinki accords.
Early last week, the KGB reportedly
lifted its tight surveillance of Yury Orlov,
who last May founded an unofficial group
that monitors Soviet compliance with the
accords. Neither Orlov nor two other
leaders of the group have been questioned
since just after their apartments were
searched on January 4.
The KGB is said to have confiscated
much incriminating material, some of it
planted, during the apartment raids.
Orlov and his colleagues intend to lay low
for a time, but reportedly are determined
to continue their efforts.
Moscow dissidents were concerned that
Orlov's group might be blamed for the
bomb explosion on January 8 in the
Moscow subway. Although the Soviets
have privately played down the incident,
Soviet media have taken no public line on
the bombing and thus have not foreclosed
any future course of action.
The dissidents' concern was probably
intensified by the reported questioning on
January 19 of Vladimir Albrecht, acting
secretary of the illegal Moscow branch of
Amnesty International; Albrecht was told
he was a suspect in the bombing. Albrecht
was not held, but the interrogation was
probably intended as a warning to his
group, which only the day before had
issued a public appeal calling for the free-
ing of Czechoslovak and Polish dissidents.
The Husak regime is increasing
pressure on Czechoslovak dissidents who
drew up and signed a human rights
manifesto called Charter 77, which was
published in Western Europe early this
month. The action of the dissidents is the
most direct challenge raised by advocates
of a more relaxed system since the trials
of some 50 known opponents of the
regime in 1971 and 1972.
Czechoslovakia
The regime has brought formal charges
against four well-known dissidents for
having maintained contacts with "enemy
forces and emigre centers abroad." In ad-
dition, a nationwide media campaign is
now in progress against the signers of the
charter. It includes attacks in the party
daily and in provincial newspapers
protesting the existence of the group and
its manifesto. Local television is inter-
viewing feature writers, intellectuals, and
workers who oppose the charter.
Prague has not mentioned Charter 77
in connection with accusations against the
four men who have been charged. In fact,
the authorities reportedly have told some
of the involved dissidents that signature of
the manifesto was not grounds for legal
prosecution. The filing of formal charges
against the four probably will be read
in intellectual circles as a firm warning
to other individuals in the Charter 77
group that they also can be indicted.
Both the regime and the dissidents have
very much in mind the conference to be
held in June in Belgrade to review im-
plementation of the Helsinki accords. The
dissidents see the period before the con-
ference as their best opportunity to
dramatize the case for greater liberaliza-
tion in all fields. They hope the increased
attention to human rights issues during
this period will make it difficult for the
regime to deal with them severely.
The authorities, for their part, probably
do not want to embark now on any
systematic witch hunt. Any such effort
would undermine the regime's contention
that it is complying with the accords.
The regime may nevertheless believe it
has no choice but to quiet the most out-
spoken dissidents-through intimidation
and harassment if possible, but through
trial and imprisonment if necessary.
3 WEEKLY SUMMARY 28 Jan 77
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YUGOSLAVIA
Political infighting and presuccession
maneuvering in Yugoslavia probably have
contributed to the delay in naming a
replacement for Premier Bijedic, who died
in an airplane crash on January 18. Presi-
dent Tito's decision to cut short his Mid-
dle East tour and return to Belgrade on
January 20 in part reflects the importance
he attaches to filling the vacancy.
Bijedic was the highest ranking cabinet
representative of the influential Muslim
minority. As head of government, he
played an important economic role, par-
ticularly in selling the regime's cautious
fiscal policies to republic leaders who
want a more expansionary program.
Bijecic was not a major political figure,
however, and in fact was slated to be
replaced sometime this year. Tito
reportedly has been considering putting
Foreign Minister Milos Minic, a trusted
personal friend, in the job. Selection of
Minic, a Serb, would lead to pressure to
find another top post for a Muslim.
Mini.-'s elevation also would affect the
political fortunes of Stane Dolanc, the
ambitious number-two man in the party
and a putative rival to Minic. Dolanc
might have mixed feelings about Minic in
the premiership, but would be powerless
to oppose Tito's will.
Dolanc, however, would try to in-
fluence the selection of a new foreign
minister because he has a vital stake in es-
tablishing his authority in foreign policy.
He reportedly has been working hard
toward this end since last summer.
In addition to some shifting in the
civilian leadership, there are prospects for
change; in the Yugoslav military
hierarchy.
The US military attache in Belgrade
reports that generals Djoko Jovanic and
Franjo Herljevic, who have filled key
national security jobs since 1974, are to
retire sometime this year. Their depar-
ture could spark a shakeup in the high
command and lessen the military's overt
role in internal security affairs.
Herljevic will probably retain his post
as interior minister. With his status
reduced, however, he will have difficulty
ignoring complaints about his repressive
tactics as he has been accustomed to
doing.
The government's quick reversal of
austerity measures and employment of
army troops to quell demonstrations
triggered by the measures brought a sur-
face quiet to Egypt after two days of
serious rioting last week. The riots have
called into question not only President
Sadat's understanding of the depth of the
political problems facing him but even his
ability to survive in office.
One benefit Sadat's regime apparently
gained from the disturbances is a soften-
ing of the conditions required by the
President Sadat (right) at special cabinet meeting following price riots
International Monetary Fund for a $140-
million standby loan for Egypt which has
been under negotiation. Fund represen-
tatives reportedly are now willing to
accept the almost $400-million increase in
the Egyptian budget deficit that results
from the government's reinstatement of
price subsidies to end the rioting. The
Fund had previously pressed hard for the
elimination of the subsidies.
Sadat is nevertheless likely, at a min-
imum, to have considerably less room for
maneuver in domestic policy making.
At worst, it is possible that some military
officers, already discontented over
military and economic problems and
further encouraged by last week's chaos,
are planning a move against the President
in the belief that he can no longer govern
effectively. Army troops loyally sup-
ported the government during the riots,
but it is by no means certain they would
stand with it a second time.
Sadat's apparent lack of understanding
of or control over developments last week
raises the question of whether he realizes
the depth of popular discontent over
WEEKLY SUMMARY 28 Jan 77
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economic problems or would recognize
serious military dissatisfaction with his
rule. He clearly did not anticipate the in-
tensity of the demonstrations, indicating
that he either had not been told of, or
simply did not heed, gathering evidence of
popular unhappiness.
Government authorities and media are
putting out the line that the
demonstrations were organized by Marx-
ist and communist agitators, apparently
to avoid acknowledging that they in fact
began spontaneously, and to make ex-
cuses for the security services' initial in-
ability to control them. Officials beneath
Sadat may have been able to persuade
him that such agitators are the sole source
of trouble.
On January 23, the regime's leading
newspaper also charged the Soviets with
helping fuel the trouble by refusing to
reschedule Egypt's debt to the USSR.
The accusation followed recent Soviet
commentary linking the cause of the riots
to Egypt's open-door olic toward
Western investors.
ARAB STATES -
PALESTINIANS Zq" 2
Jordan and the Palestine Liberation
Organization have agreed under pressure
from Syria and Egypt to seek an end to
their bitter feud dating from King
Husayn's expulsion of most of the
Palestinians from Jordan in 1970 and
1971, and to begin talks on a common
strategy for Arab peace negotiations with
Israel. Preparatory discussions took place
on January 19 between Husayn and two
PLO representatives.
the talks will
be confined to political coordination and
relations between Jordan and a possible
future Palestinian state. For their part,
PLO leaders describe the talks as an ef-
fort to "freeze" differences with Jordan
and to emphasize that the initiative has
been taken on the basis of the 1974 Arab
summit meeting in Rabat, which affirmed
the PLO as the sole legitimate represen-
tative of the Palestinians.
If the talks continue, they are likely to
focus on the role of the PLO at a
reconvened Geneva peace conference.
Egyptian President Sadat and Syrian
President Asad have been searching for a
formula that would permit Palestinian
representation and get around Israel's
refusal to negotiate directly with the PLO.
The two Arab leaders have been con-
sidering the possibility of including the
Palestinians as part of the Jordanian or a
joint Arab delegation.
Asad, meanwhile, has continued to
pressure the PLO to be more flexible and
to agree to a unified negotiating position.
In an interview in Time magazine last
week, Asad said that refusal by the PLO
to attend the conference would not "cause
paralysis" among the other concerned
Arabs-a marked departure from his
position of last year when he demanded
that any Arab-Israeli territorial
negotiations must involve the PLO.
Egyptian President Sadat still publicly
insists that the PLO must participate in
the Geneva conference as an equal party,
but his real position on the Palestinian
issue is probably more flexible. He
probably would favor PLO participation
as part of a Jordanian delegation and
might agree to a compromise that would
exclude the PLO from initial meetings,
but allow it to participate later.
LEBANON 3 3 2
Syrian troops from the Arab
peacekeeping force moved into southern
Lebanon for the first time early this week,
presumably to begin collecting weapons
from Palestinians in the area. The Syrians
will probably move cautiously in order to
avoid arousing Israeli fears of a massive
Page 5
advance; they thus far remain north of the
Litani River.
the Syrian con-
tingent consists of one battalion. Israeli
military officials showed some uncertainty
but no deep concern about the Syrian ad-
vances during a discussion early in the
week with the US defense attache in Tel
Aviv. Public Israeli pronouncements have
been guarded.
The Israelis emphasize that they will
not . tolerate Syrian forces near their
border, but the press has been careful to
note that the troops are still north of the
Litani.
The Syrians have probably been plan-
ning for some time to go after Palestinian
weapons caches in the south. They are
likely, however, to move as they did
elsewhere in Lebanon last year-in slow,
careful steps, measuring Israeli reaction
as they proceed and hoping for tacit ac-
quiescence as it becomes clear that the
collection of weapons is the sole objective.
Probably in a further effort to get this
across, the Syrians' move south coincided
with efforts by them in other areas of
Lebanon to search out weapons cached
despite Lebanese President Sarkis' order
to all combatants on January 12 to turn in
arms
WEEKLY SUMMARY 28 Jan 77
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RP
TURKEY2
Disputes among the four parties in
Turkey's "nationalist front" coalition
government are intensifying in anticipa-
tion of the parliamentary election
scheduled for October. The government
will probably survive until then, although
there is a chance it may fall after the
budget bill is passed in March.
Tht sharpest and most serious friction
is between the two principal leaders of the
coalition, Prime Minister Demirel, head
of the Justice Party, and Deputy Prime
Minister Erbakan, free-wheeling leader of
the trE.ditionalist Muslim National Salva-
tion Party. Specific bones of contention
have included:
? Collaboration by the Salvationists
with the opposition Republican People's
Party to secure a higher salary increase
for civil servants than Demirel favored
and to force through, over Demirel's ob-
jection, a postponement of municipal elec-
tions from June to September.
? Erbakan's award of New Year's
bonuses only to white collar employees in
the state economic enterprises his party
controls. Demirel criticized the action.
? Lobbying by the Salvationists for the
resignation of the head of Turkey's radio
and television facilities because of his
allegedly partisan performance. Demirel
continues to support him.
Now foreign trade policy, which in the
past has been routinely approved by the
cabinet, has become a matter of conten-
tion between Demirel and Erbakan. The
Prime Minister wants to continue a policy
of gradually lifting trade restrictions, par-
ticularly with respect to the EC. Erbakan
objects, claiming that Turkish industrial
development suffers from the
government's willingness to adopt a
progressively more liberal trade policy
without demanding that the EC fully
reciprocate.
Erbakan's concern over trade policy
has also been motivated by the belief that
the importation of capital goods
necessary for the development of his pet
industrial projects could be disrupted by
domestic political pressures unless
specific reference to these items is made in
the statement on trade policy for this year
that is now before the government. Er-
bakan is well aware that Demirel is loath
to support his projects, many of which fall
outside the government's overall develop-
ment plan and are designed primarily to
win Erbakan political support.
Demirel has tried to play down this dis-
agreement with Erbakan, and the two
leaders apparently reached some com-
promise at a cabinet meeting earlier this
week. The details of the compromise have
not yet been announced, but Demirel
presumably was sensitive to past criticism
from members of his own party who have
IRAQ
A new oil pipeline from Iraq through
Turkey to the Mediterranean was opened
this month. The Iraqis will be able to ex-
port more than half the production from
their large northern fields via this route.
The new, 1,000-kilometer pipeline has a
capacity of 700,000 barrels per day. This
is about 500,000 barrels less than the line
through Syria that carried all production
from Iraq's northern fields until last April
when it was closed because of a dispute
between Iraq and Syria over prices and
transit fees. The subsequent opening of a
pipeline linking Kirkuk with the Persian
Gulf enabled the Iraqis to resume exports
from the northern fields at a reduced
level.
The pipeline through Turkey will give
Iraq greater flexibility in choosing export
markets and methods of delivery. It will
also increase Iraq's export capability,
since the line to the Persian Gulf cannot
handle all the production from the
northern fields.
Iraq undoubtedly will use the new ex-
port outlet to make up part of the losses it
is taking because of its current reluctance
to openly compete with the lower priced
Saudi crude in the Persian Gulf area.
Since no previous prices have been set for
crude shipped through Turkish ports, Iraq
will have an opportunity to lower prices
without openly breaching its support of
the recent 10-percent OPEC price hike.
Some lowering of prices will almost cer-
tainly be necessary to utilize the new
pipeline at full capacity.
WEEKLY SUMMARY 28 Jan 77
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P
INDIA 2 ?4D
Indian Prime Minister Gandhi's deci-
sion to hold a parliamentary election in
mid-March, announced last week, was
made in the hope of taking advantage of
her present strengths and the disarray of
her opposition. At present, the country's
economy is relatively buoyant, and there
appears to be little opposition to the 19-
month-old state of emergency.
The four largest non-communist op-
position parties are attempting to create a
united front, but conflicting ideologies
and personalities will limit their chances
of forming an effective counter to
Gandhi's ruling Congress Party. Selection
of candidates to oppose Congress Party
nominees will be a real test of opposition
unity. Moreover, the opposition parties
lack the financial support the Congress
Party is able to extract from the business
community.
The pro-Soviet Communist Party of In-
dia, an ally of Gandhi's party in several
states in the last national election in 1971,
is in an awkward position. The Com-
munists' recent criticism of Gandhi's son
Sanjay for his generally pragmatic and
often conservative economic and social
proposals has angered the Prime
Minister. Without elective arrangements
with the Congress Party, the Communists
stand to win considerably fewer seats in a
new parliament than the 24 that they held
in the last one.
Gandhi probably sees the election in
part as a chance to stifle international
criticism of her original decision to im-
pose the state of emergency and jail her
opponents. The state of emergency has
not been rescinded. for the election,
although some emergency regula-
tions-such as press censorship and
restrictions on political activity-have
been relaxed.
The government retains the option of
tightening restrictions at any time before
or after the balloting. Gandhi said as
much when she announced the election.
She asserted that the country had been
brought back to health, but she warned
her opponents that the government could
tolerate no relapse
CHINA-JAPAN Zl1-~4-
The new leaders in Peking and Tokyo
have apparently ruled out early progress
on the proposed peace and friendship
treaty between China and Japan. Both
sides have reiterated their long-standing
uncompromising positions on the treaty.
Talks on the pact, which would formal-
ly end the state of war that has technically
existed between the two countries since
1937, snagged nearly two years ago on
Chinese insistence that a treaty include an
implicitly anti-Soviet statement opposing
"hegemonism." The Japanese agreed to
such a clause in a 1972 communique that
announced the resumption of
Chinese-Japanese diplomatic relations,
but have been reluctant to include it in the
proposed treaty. There are differences
within the ruling party in Japan over the
hegemony question, as well as pressures
The firmness of these Chinese views on
the hegemony issue is probably designed
to demonstrate the continuity of China's
major foreign policy objectives, especially
regarding opposition to what China sees
as Soviet expansionism. The new Chinese
leaders almost certainly recognize that
any modification of the demand for an
anti-hegemony clause might be inter-
preted as a softening of Peking's stand
against the USSR, an impression the Chi-
nese are plainly anxious to avoid.
On the Japanese side, Fukuda, while
repeating both publicly and privately his
desire for early agreement on the treaty,
has shown no sign of conciliation on the
hegemony issue. A Japanese Foreign
Ministry official last week said that
Tokyo saw no need now to modify the
previous administration's stand on the
matter. Former foreign minister
Miyazawa advocated a four-point state-
ment that would enable the Japanese to
water down the anti-Soviet nature of the
clause.
The Foreign Ministry official
suggested, however, that Tokyo might be
prepared to compromise once serious
negotiations resume, but he provided no
hint as to when he thought that might be.
He said the Japanese did not expect any
movement from the Chinese side because
of Peking's preoccupation with internal
matters
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KOREA (; $ I
North Korea renewed on January 25 its
long-standing proposals for arms reduc-
tions by the Koreas, as well as for politi-
cal talks. South Korea's ruling party
immediately rejected Pyongyang's over-
ture.
In a letter addressed to various political
groups in the South, the North Koreans
said they were prepared to cut force levels
drastically and meet with Southern
representatives at an early date at Pan-
munjoni or any other agreed site for con-
sultations aimed at reducing tensions and
producing eventual reunification.
At the same time, the North Koreans
sharply attacked the authorities in the
South and demanded that President Pak's
government, in effect, renounce its basic
foreign and domestic policies and accept
the North's approach to reunification.
The North Koreans apparently hope to
regain at least a measure of the initiative
in the diplomatic sparring between the
Koreas. They probably consider their
proposals an indirect rejection of Pak's
recent call for a North-South nonaggres-
sion pact.
Kim []-song's regime probably also
wants to demonstrate some flexibility and
moderation with an eye to securing ad-
ditional international support. Several
high-level North Korean officials have
been traveling abroad in recent weeks, ap-
parently trying to gain backing for North
Korea in the annual competition with
South Korea in various international
forums.
In recent years, North Korea's han-
dling of the key issue of North-South
political discussions has appeared incon-
sistent. At times, high officials have de-
nounced Pak by name and virtually ruled
out talks with his government; on other
occasions -the letter this week is a case in
point-North Korea has taken pains to
avoid ruling out talks, provided its con-
ditions ~.re met. This inconsistency
reflects the North's desire to appear
reasonablit while pressing political and
d'pIUNCODED'ks against the South.
British envoy Ivor Richard (left) with Bishop Abel Muzorewa
Rhodesian Prime Minister Smith's re-
jection this week of Britain's latest
proposals for a settlement of the Rhode-
sian dispute will cause all the parties in the
dispute to put greater emphasis on the
military struggle.
In a speech on January 24, Smith said
that implementation of the proposals
recently conveyed by British envoy Ivor
Richard would lead to immediate control
of the country by a "Marxist-indoc-
trinated minority." He said he remains
committed to the settlement terms he an-
nounced last September.
Smith's action makes it unlikely that
the Geneva conference on a Rhodesian
settlement, which recessed in December,
will start up again any time soon.
Richard, the conference chairman, told
the press he sees no purpose in reconven-
ing the talks unless Smith changes his
position.
Smith also indicated in his speech that
he would seek a separate settlement with
blacks he regards as moderates. He may
intend to deal with a new black political
party that has apparently been sponsored
by the government and perhaps with the
nationalist faction headed by Bishop Abel
Muzorewa. Muzorewa's group was
angered by the recent endorsement of a
rival nationalist organization by the five
African states that are directly involved in
the Rhodesian problem. It is doubtful,
however, that Muzorewa is ready to
negotiate openly with Smith.
The five front-line presidents, for their
part, realize that the nationalist guerrillas
lack the capability to defeat the Rhode-
sian security forces in the near future and
will be seeking new assistance for the
Rhodesian nationalists, especially from
other African states. The defense com-
mittee of the Organization of African
Unity is to meet soon to consider
measures to assist the front-line states and
the nationalists.
Most OAU members do not have the
Page 8
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resources to provide troops or other sub-
stantial assistance. A signficant number
of African countries are nevertheless like-
ly to make at least limited commitments
of financial aid or military supplies. Some
of the front-line presidents may also con-
sider accepting more aid from the USSR
and Cuba.
The Rhodesian government appears
certain to continue its cross-border raids
on the guerrilla camps in Mozambique.
The raids have disrupted plans the
guerrillas had last fall to increase their ac-
tivities inside Rhodesia. F-
EC All 7 ~ f
EC foreign ministers agreed last week
to exclude after January 31 Soviet, East
German, and Polish trawlers from the
EC's fishing zone in the North Atlantic
and North Sea if those countries refuse to
enter into negotiations with the Com-
munity on long-term fishing agreements.
The nine-member Community established
an exclusive 200-nautical-smile fishing
zone on January 1.
Individual EC members will be respon-
sible for enforcing the decision on behalf
of the Community. It is doubtful,
however, that the Nine can patrol the en-
tire zone effectively.
According to EC officials, the Soviets
and the East Europeans not only have ig-
nored temporary three-month quotas on
their catches, imposed by the EC on
January 1 pending the negotiation of the
long-term agreements, but have even in-
creased fishing operations in EC waters.
The Communist countries have already
taken about the total tonnage they were
allotted for the three-month period.
The EC will require the Soviet Union,
East Germany, and Poland to designate
which ships have been fishing in EC
waters and the catch of each so far this
year. If a state agrees before February 1
to negotiate with the Community, a
limited number of that state's boats will
be allowed to continue fishing in EC
waters. Any catches in excess of the tem-
porary quotas would be deducted from
annual quotas once they are negotiated
with the Community.
The EC is anxious to avoid a crisis with
the Soviets over this issue. It apparently
felt compelled, however, to take strong
action given the exclusion of some EC
fishermen from other Western states' 200-
nautical-mile zones in the North Atlantic
and the North Sea and the urgent need to
conserve fish stocks in their own waters.
East Germany and Poland indicated
earlier that they would negotiate fishing
agreements with individual Community
members, but the Nine have insisted that
the EC Commission is the only body em-
powered to conduct such negotiations.
The Soviets added a new dimension to
the fisheries issue by adopting last month
a 200-nautical-mile fishing zone of their
own. The Soviet zone includes both the
Baltic and Barents seas-areas not includ-
ed in the EC zone but nonetheless fished
by West Europeans.
COCOA -2,
Short supplies, poor crop prospects,
and increased consumer demand probably
will continue to drive up cocoa prices.
Current high prices for coffee are suppor-
ting this trend.
New York prices for cocoa, which have
averaged $ 1.65 a pound so far this year,
currently are 54 percent above what they
were last August, when the previous
record level, set in 1974, was first sur-
passed.
In December, the US Department of
Agriculture predicted that world cocoa
bean production for the marketing year
ending September 30 would decline for
the second year in a row and reach only
1.4 million tons. This would be 7 percent
Page 9
below last year's production.
Poor weather conditions and other
production problems in West Africa,
where two thirds of the world crop is
grown, may lead to a further reduction in
the estimate for this year. Output is also
down slightly in Brazil, the only major
producing country where production has
increased since 1972, the peak year for the
world crop.
The decline in African output since
1972 stems largely from low fixed
producer prices. In addition, governments
have done little to help the many small
farmers improve cultivation practices and
eradicate disease. Only in Ivory Coast is
the government trying to stimulate
production.
Brazil's long-run outlook for produc-
tion is more favorable. Despite disease
and weather problems in recent years,
cocoa plantings have been expanding.
Producers are permitted to sell directly to
private exporters and are responding to
higher prices as well as government
production and marketing programs.
Nevertheless, production will expand only
gradually because new plantings require
about eight years to reach maturity.
By the end of the current marketing
year, world cocoa stocks, which have been
generally declining since 1964, are likely
to fall to a level of 350,000 to 400,000
tons-about three months' supply. The
supply situation will remain tight at least
through most of 1977, and prices will re-
main high until stocks can be rebuilt.
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The growth rate of Soviet farm production since 1950 has
been more than double that of the US, but has come at a much
higher cost in money and manpower.
Soviet Agriculture: A Comparison with the US
The average annual rate of growth of
the value of Soviet farm production over
th. past 25 years has been 3.5 percent,
more than double that of the US. As a
result, the USSR's farm output has grown
from approximately 60 percent of the US
level in 1950 to about 85 percent of US
output in the mid-1970s.
Soviet growth came at a much higher
cost in terms of men and money; US labor
Western
Nebraska
Central
Russian
Upland
Manitoba North Dakota
Wyoming
Nebraska
North
Caucasus
productivity in agriculture remains
roughly eight times greater than the
Soviet level. Moreover, the two countries
pursued different goals: until recently, the
US has aimed at limiting production
whereas the USSR has tried to maximize
output.
Soviet agriculture is characterized by
severe environmental limitations. Most of
the sown area is climatically comparable
with the Northern Great Plains in the US
Central Alaska
West Siberia
and Canada. Generally, the USSR's land
lacks adequate heat, moisture, and
nutrients. More than 30 percent of the
land area is too cold for agriculture, and
an additional 40 percent is so cold that
only hardy, early maturing crops can be
grown. A wide range of crops is possible
only in the warmer, southern areas.
Collectivization of Soviet agriculture
divided farm organizations into a social-
ized sector and a smaller, private sector.
The nearly 48,000 state and collective
farms account for about 75 percent of
total agricultural production; private gar-
den plots account for the remainder.
Comparative Investment
Since 1950, Soviet investment in the
farm sector has grown at an average an-
nual rate of I1 percent. Agriculture's
share of total investment rose from 13.5
percent in 1950 to more than 20 percent in
1975; the comparable share in the US was
about 5 percent in 1975. In value terms,
Soviet investment in 1975 was equivalent
to about $50 billion, compared with
roughly $9 billion in the US. However,
most Soviet-produced equipment and
materials are less efficient than those
produced in the US. The difference in the
amount of investment between the two
countries reflects in part the enormous
gap in relative levels of agricultural stocks
and the Soviet attempt to achieve a level
of capital intensity similar to that of the
U S.
In the USSR, the combined productivi-
ty of land, labor, capital, and other con-
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ventional agricultural resources has been
more than a third greater on the average
in the 1970s than in 1950. As a result,
agricultural output has grown by 130 per-
cent since 1950, while resources devoted
to agriculture increased only 75 percent.
Factors explaining the higher productivity
include new technology, better manage-
ment, higher levels of training, and
greater material incentives.
Nearly all the gain in productivity oc-
curred before 1970; since then, production
increases have been attributable solely to
the use of additional resources. The
stagnation in the growth of productivity in
recent years-highlighted by the poor
harvests in 1972 and 1975-is a growing
concern for Soviet planners.
The annual growth in productivity in
US agriculture since 1950 has been con-
siderably above the yearly average for
that of the USSR-1.5 percent per year
for the US compared with I percent for
the USSR. The level of total resources
devoted to US agriculture has remained
practically unchanged, and nearly all of
the 50 percent growth in US output is at-
tributable to a rise in productivity. By
contrast, less than one third of Soviet out-
put growth resulted from improved
productivity.
Wages of Soviet farm workers have
grown faster than their productivity, con-
tributing to the high cost of agricultural
output in the USSR. Over the last decade,
labor productivity on state farms has in-
creased by about 35 percent while average
wages have increased by 70 percent.
Manhours per unit of output of grain
production on state farms average four
times the number of those required on US
farms. Comparative labor differences are
even greater for collective farms and for
livestock products.
Disappointing Progress
Soviet agricultural progress has not
kept up with the rising consumer demand,
stimulated in part by higher per capita in-
come. Despite a rate of growth of farm
output since 1950 that has averaged more
than two percentage points above the rate
of increase in population, food supplies
have lagged behind consumer demand, es-
US AND USSR: LABOR REQUIREMENTS
1960-63 AND 1970-73 AVERAGES
Parcae
100
GRAIN"
5.9 Man-hours per 100 kilograms
CATTLE
Percent 110.2 Man hours pert 00 kilograms
100,- ,-,
1960-63 1970-73 1960-63
Average Average Average
'Excluding corn for USSR, wheat for USA.
No- 111
pecially with regard to meat, butter, fresh
fruits, and vegetables. The livestock sec-
tor remains the least efficient aspect of
Soviet farming.
Since the leadership remains com-
mitted to upgrading the quality of the
Soviet diet, the USSR has had to turn in-
creasingly to importing foodstuffs and
other agricultural commodities. Soviet
gross imports of farm products grew from
$2.5 billion in 1970 to $5.2 billion in 1974
before jumping to $9 billion in 1975, a
consequence of that year's extremely poor
grain harvest.
Uneven Output
Given the climate, it is understandable
that instability in annual agricultural out-
put has long plagued the USSR. The
major differences in average annual
deviations between climatically analogous
areas of North America and the USSR,
however, are surprising. For example, the
fluctuations in spring wheat yields in
Kazakhstan is 2.5 times that for spring
wheat yields in the prairie provinces of
Canada. Improved farming practices that
state rerme
Uaited states
1970-73 1960-63 1970-73
Average Average Average
have dampened fluctuations in grain
yields in North America have not been
widely adopted in the USSR.
The degree of instability in production
from year to year may increase as the
socialized sector contributes an ever in-
creasing share of total farm output. The
fluctuation in annual yields is less in the
private sector because of the intensive use
of labor there. High rates of average an-
nual deviations in production, and the of-
ficial Soviet policy of maintaining fixed
retail prices of food will continue to result
in "transitory shocks" to world commodi-
ty markets.
Prospects
Nothing currently on the horizon will
significantly alter recent trends in Soviet
agriculture. Moscow's agricultural goals
in the tenth five-year plan (1976-80) are
generally consistent with long-term
trends. Targets for livestock production
have been cut back in response to the 1975
harvest disaster, but remain tied to an am-
bitious herd rebuilding program.
On the other hand, the planned growth
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in the flow of resources to agriculture has will continue to grow at an average annual
been sharply reduced from the last rate of roughly 10 percent. Little increase
five-year plan, although it is in keeping in land improvement investment is
witi the investment program for the rest planned, however, and deliveries of
of the economy. Deliveries of fertilizer equipment will grow only slightly. Reach-
ing the agricultural targets probably
will depend in part on major increases
in productivity and on better-than-
average weather conditions.
Argentina's current leaders have made considerable
progress in revitalizing the country's economy, which had been
reduced to shambles by the Peron administrations. The key fac-
tor in further economic progress in 1977 will be labor's
willingness to accept continued austerity and suspension of its
bargaining rights.
Argentina: Economic Accomplishments
The junta headed by General Jorge
Videla has an impressive record of
economic accomplishment for the 10
months since the Argentine military
ousted Maria Estela Peron from the
presidency. Its achievements have gone
far to revive business confidence and
restore the country's international credit.
Since assuming power last March, the
military government has:
? Arranged for foreign loans of $1.3
bi lion to meet debt service payments
and rescheduled foreign debts so that
future repayment problems can be
avoided.
? More than doubled foreign
reserves.
? Replaced a $1-billion trade deficit
in 1975 with an $800-million surplus
last year, as increased sales of grains
and meat raised exports while imports
declined with the drop in domestic
ec )nomic activity.
? Devalued the peso by almost 50
percent and eliminated the dual-rate
system.
? Lowered the annual rate of infla-
tion from nearly 400 percent in the
first half of 1976 to a little more than
10) percent in the second.
? Stimulated agricultural producers
to increase crop areas, leading to a
record wheat harvest that should boost
export earnings in 1977.
? Reduced the government budget
deficit as a percentage of gross
domestic product in 1976 to about one
half the level in 1975 by improving tax
collections and curtailing spending.
Although real gross domestic product
probably declined about 4 percent for
1976 as a whole-following a 1.4-percent
drop in 1975-production began to pick
up in the last quarter. A bumper wheat
crop was harvested, truck and tractor
sales increased, and petroleum production
rose after several years of steady decline.
A large part of the recent economic
readjustment has come at the expense of
the working class. Real wages slumped in
the second quarter; since then, the govern-
ment has authorized several wage hikes to
hold real wages near the June level. This
has enabled many enterprises to retain
workers on their rolls despite reduced
production and kept unemployment at
roughly 5.5 percent.
Plans and Projections
Government economists expect the
trade balance to remain strongly positive
in 1977 because large supplies of grain are
available for sale, prospects for meat
sales to Western Europe are improving,
and industrial exports are rising slowly.
The export surplus will be slightly larger
than in 1976, even though imports will rise
as industrial output revives. Inflation is
officially projected to continue at about
100 percent; private estimates are slightly
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higher.
The government's economic projections
for 1977 call for gross domestic product to
grow by 4 percent, led by reviving invest-
ment. Some $260 million in development
loans has been obtained from inter-
national agencies for government con-
struction projects.
The regime hopes to attract private
foreign investment through its recent
revisions of restrictive Peronist laws and
its settlement of most disputes with
foreign enterprises. Industrial output is
projected to grow about 5 percent as idle
capacity is drawn back into production to
meet rising demand. Assuming normal
weather, agricultural production is
scheduled to grow 5 percent.
The government plans to permit real
wages to rise only slightly in 1977; un-
employment is projected at or below the
current level. The planners intend to ease
the present rigid wage restrictions to per-
mit employers to raise wages as produc-
tivity climbs.
Labor so far has accepted the sharp
decline in the standard of living and severe
restrictions on union activities with only
moderate protest. Some demonstrations
and work stoppages have occurred, even
though major unions have been put under
government control and strikes are illegal.
Labor is now growing more restive.
Early this month, leaders of unions not
under government control put out a
manifesto protesting that labor is bearing
more than its share of hardships in the
economic recovery period.
Terrorist activities, though reduced,
continue to hamper the economy-they
particularly tend to discourage foreign in-
vestment. Domestic investment funds are
limited even though savings have picked
up since March and capital that had
moved out of the country seems to be
starting to return. Foreign involvement
in the petroleum industry is needed if
the government's goal of energy self-suf-
ficiency is to be reached.
Budget Deficit
The budget deficit will have to be re-
growth in the money supply. The 1977
budget calls for raising revenues by
further improving tax collection
procedures and by basic tax reform.
Expenditures are to be held down by a
gradual reduction in government rolls as
private employment opportunities im-
prove-a plan that often has proved in-
effectual in the past. Projected sharp cur-
tailment in transfers to provincial
governments and in subsidies to un-
profitable state enterprises also will be
difficult to achieve.
Assuming that the current leadership
remains in power, economic prospects for
Several governments in Western Europe are committed to
expanding labor's participation in the corporate decision-
making process, and those plans implemented so far have gone
smoothly.
(~; C
Western Europe: Labor in the Board Room
Worker participation in management
has opened up new channels of com-
munication between labor and employers
in northern Europe, particularly in West
Germany and Sweden. Schemes im-
plemented thus far have been relatively
moderate, however, and worker participa-
tion has not radically altered the
1977 are favorable. Private businessmen
foresee a substantial improvement in
economic activity. This confidence,
however, could be severely undermined by
a change in leadership or policy.
Labor's willingness to accept continued
austerity and the suspension of its
bargaining rights will be the key factor in
determining the success of the economic
program this year. So far, the government
has reacted mildly to isolated infractions
of the restrictions imposed on labor.
If labor starts to make concerted de-
mands, however, the regime will face a
dilemma.
If the government refuses to grant con-
cessions, it risks a confrontation with
labor that could wipe out many of the
economic gains made so far. If it makes
concessions, the workers will almost cer-
tainly increase their demands, and the
economic balance will be jeopardized.
Such a move, moreover, could trigger a
government takeover by military hard
liners, who favor a shift to stricter
policies.
Many in the military fear that the
Videla government will permit a revival of
labor power such as existed under the
Peronist governments. Greater repres-
sion, however, could backfire by making
traditional role of management in any
European country.
The controversy now developing in Bri-
tain over government plans to introduce
worker representation on company
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boards shows the issue remains a lively
one. At a time when governments and in-
dustry are reluctant to accede to demands
for major wage increases, the participa-
tion of workers in management takes on
added importance. Some argue that this
could add to labor-management strife;
others believe labor would thereby be in-
duced to take a more realistic attitude
toward industry's cost problems.
While worker participation in manage-
ment at the plant level in some European
countries dates back to the 1920s, West
Germany was the first country to adopt
employee representation at the board of
directors level. Continuing an arrange-
ment imposed by British occupation
authorities, Bonn legally established pari-
ty board room representation for workers
in the coal and steel industries in 1951. In
early 1976, the government passed a
highly controversial law granting workers
near parity representation with
shareholders on the supervisory boards of
firms employing more than 2,000
workers.
Workers are influential in corporate
decision-making in Sweden as well.
Although Swedish workers have only two
representatives on company boards, the
unions are legally authorized to use
collective bargaining to influence almost
any decision a company takes, including
those traditionally outside labor's purview
such as investment, plant location, and
product mix.
Workers in other countries have much
less influence. The number of workers on
company boards is generally held well
below parity.
Management's fears of labor obstruc-
tionism, reduced-profitability, lowered in-
vestment, and loss of company confiden-
tiality because of increased worker par-
ticipalion generally have not been borne
out. Parliamentary studies in West Ger-
many. for example, have concluded that
the system has functioned without notable
clashes. The fear of union officials that
worker participation schemes would
bypass the unions has been allayed by
allowing unions to dominate the process
of selecting worker representatives on cor-
porate boards.
A number of reasons account for the
smooth operation of worker participation
schemes to date:
? The plans have been restricted
mainly to countries benefiting from a
long tradition of orderly labor-
management relations.
? Workers are generally a minority
on supervisory boards and thus are
prevented from imposing their views.
? The role of the supervisory board
is generally confined to developing
broad company strategies, leaving
day-to-day affairs in the hands of
managers.
? During most of the 1960s and ear-
ly 1970s, rapid economic growth
allowed corporate decision-makers to
avoid some of the more explosive
issues that confront them today, such
as job cutbacks in a period of high un-
employment.
Profit sharing is another aspect of
worker participation that has attracted in-
creasing attention in recent years. Labor
reaction to existing schemes, however, has
been lukewarm. French unions complain
that profit sharing has taken a form of
compulsory saving rather than a real
transfer of income or control; in France a
share of each firm's profit is placed in a
special fund, on which the workers cannot
draw for five years.
Unions in several countries now are
pushing for profit sharing programs that
could increase labor's influence on cor-
porate decision-making through gradual
accumulation of company stock in union-
controlled funds.
Political Signposts
In the UK, the Labor government has
promised to draft legislation this year for
a participation plan, although it may not
be passed until at least 1978. Debate
within Britain on a plan published this
week by a government-appointed com-
mission is sure to be intense and
protracted. The plan calls for representa-
tion on the boards of large companies to
be split three ways-equal numbers from
labor and management plus a third, joint-
ly chosen group. The proposal is strongly
opposed by top business leaders.
In West Germany and Sweden, debate
over future directions on worker par-
ticipation is shifting from formal par-
ticipation to profit sharing. A Swedish
labor proposal for gradually shifting con-
trolling interest in firms to the unions
appears to have died with the defeat of the
Social Democratic government last
September.
Prospects for adoption of profit sharing
in Denmark were set back when the
minority Social Democratic government
agreed last summer to hold off submission
of its proposal in exchange for opposition
party support on budget and wage
policies.
In France, the government is not likely
to push fora debate on worker participa-
tion this year for fear it could worsen the
climate for investment already threatened
by the prospect of a leftist victory in the
1978 elections.
In Italy and Spain, worker participa-
tion generally takes a back seat to other
labor goals. Italian unions will continue to
press their demands through local collec-
tive bargaining rather than seek national
legislation for such participation. In
Spain, workers still are trying to win the
right to organize their own unions.
Outlook
The prospect of new or existing worker
participation programs is obscured by a
number of factors. New programs in West
Germany and Sweden have encountered
minor resistance. If these programs were
adopted in countries where the industrial
relations climate is more hostile, the
result could be more conflict rather than
less.
In such countries-the UK is one of
them-management is torn between the
need to improve relations with labor and
the fear that worker participation would
simply move confrontations from the
plant into the board room. Moreover, the
lower long-term growth rates and high un-
employment forecast for European
economies will dictate difficult choices
that could strain even traditionally good
labor-management relations.
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