WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011500150001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 21, 2016
• Document Release Date: July 2, 2008
• Sequence Number: 1
• Publication Date: April 15, 1977
• Content Type: SUMMARY

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i
Secret
Weekly Summary
State Dept. review completed.
DIA review
completed.
Secret
CG WS 77-015
April 15, 1977
Copy
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eporting Group, reports and analyzes significant
EKLY SUMMARY, issued every Friday morning by the
lopn ents of the week through noon on Thursday. It fre-
Itly includes material coordinated with or prepared by the
1 and Political Analysis, the Office of Eco-
Office of Strategic Research, the Office of
rice, the Office of Weapons Intelligence,
of Geographic and Cartographic Research.
CONTENTS
1 Middle East
Israel; Lebanon; North
Yemen; Egypt-Libya; Libya
3 Asia
Pakistan; China;
China-Japan; Laos-Thailand
5 Africa
Mozambique - South Africa;
Zaire; South Africa - Israel
8 Europe
Spain; Cyprus
9 Argentina: Support for President Videla
11 Canada: A New Look in Defense
13 The World Sugar Market
14 Somalia: Looking for New Friends
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of the Weekly,
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ISRAEL e%
The already uncertain prospects of
Israel's long-dominant Labor Party in the
national election next month were dealt a
new blow by the exposure last week of
financial irregularities on the part of
caretaker Prime Minister Rabin and his
abrupt withdrawal from the top position
on Labor's electoral list. The party's new
candidate for prime minister after the
election, Defense Minister Peres, man-
aged to win the grudging endorsement of
factions within Labor and an allied party
that have long opposed him.
Ironically, the Labor Party, which for
months had been rocked by corruption
scandals and torn by dissension, was just
beginning to rebound from its low stan-
ding in opinion polls when the Israeli
press disclosed that Rabin and his wife
had illegally maintained bank accounts in
the US. The most recent public surveys
showed the Labor Party and its small
left-wing ally, Mapam, moving ahead of
both the right-wing Liikud opposition
group and the new reform-minded
Democratic Movement for Change.
Rabin, under Israeli law, must continue
as caretaker Prime Minister until after
the election, but he clearly intends to play
a minimum role. Control of Labor's cam-
paign quickly passed to Peres, a more
polished and self-assured politician and
one who will likely run a more dynamic
campaign.
The new party leader, who almost
defeated Rabin in party voting in 1974
and again at Labor's convention last
February, is an established hawk on
Arab-Israeli questions but at the same
time a pragmatist who is well aware he
must broaden his support beyond the par-
ty's conservative faction. Immediately
after Rabin dropped out, Peres moved to
conciliate leading party doves, notably
Foreign Minister Allon, who settled for
the second spot on Labor's list and a
promise of the defense portfolio. Abba
Eban, already an ally of Peres, was
promised a new tour as foreign minister in
a Peres government.
This week Peres succeeded in per-
suading Mapam to maintain its alliance
with Labor. His public statement last
weekend that he remains committed to
the party platform, which calls for
withdrawal from some occupied territory
as part of a peace settlement, and the
prospect of Eban's return to the Foreign
Ministry probably helped. Mapam
leaders were probably also influenced by
the lack of a realistic alternative to Labor
as a political ally and concern that aban-
donment of Labor now would jeopardize
their prospects for participating in the
coalition that will be formed after the
election.
Peres may take other steps to broaden
his appeal before the vote on May 17. He
is unlikely, however, to do anything that
would seriously alienate his conservative
backers. He has said that the conservative
National Religious Party must be includ-
ed in any new Labor-led coalition. He has
even indicated he could take the Likud
into his government, although privately he
has said that the Democratic Movement
would be a more likely coalition partner.
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LEBANON 2-./
The Christians, who started the round
by launching an intensive drive to
eliminate the Palestinians from a buffer
zone all along the border with Israel, have
at this point little to show for their effort.
All important territory taken by them
during the first two weeks is now back in
fedayeen hands. In addition, the intensity
and initial success of the Christians' drive
brought the mainstream Palestinian
group Fatah, which had not been
significantly involved in the southern
fighting, into the field against them and
contributed to a growing rapprochement
between Fatah and the Syrians.
The new commander of the Lebanese
army, General Khoury, indicated this
week that he hopes to send a supervisory
force into southern Lebanon in about two
weeks. He reportedly i itends to use
troops from a small mixed
Christian-Muslim group originally put
together by the Syrians to form the
nucleus of a new Lebanese army. Khoury
recognizes that this force will not be able
to maintain peace in the area unless the
Palestinians and Christians acquiesce; he
does not intend to send the force into the
area until a cease-fire is actually in effect.
A
The intensive fighting in southern
Lebanon between Christian extremists
and Palestinians that began last month
appeared to be subsiding this week. With
the status quo ante about restored after
three weeks of seesaw battle, the foreign
patrons of both sides-Israel for the
Christians and Syria for the
Palestinians-have apparently become
anxious for the fighting to die down lest it
lead to a wider conflict.
Although the warring groups continued
to exchange heavy artillery fire, there was
little movement on the ground this week
and the overall situation seemed to be
stabilizing. The Christians, in retreat last
week before a Syrian-supported Palestin-
ian counteroffensive, succeeded in fend-
ing off attempts to drive them out of
their important base at Marj Uyun near
the Israeli border. By midweek, there
were indications that the Palestinians had
agreed not to try further to take the town
and Prat leaders on both sides might be
ready for a cease-fire.
The assassination last weekend in Lon-
don of a prominent North Yemeni
political figure may prompt President
Hamdi to move against tribal opponents.
The identity of the assassin of Abdallah
al-Hajri, a former prime minister of
North Yemen, is not yet known. The
North Yemenis believe the killing was the
work either of ousted leftist politicians in
league with dissident tribesmen, or of
radical South Yemenis opposed to their
country's growing ties with North Yemen
and Saudi Arabia.
Al-Hajri was an arch-conservative and
a close adviser to Hamdi; he was viewed
by many as the unofficial number-two
man in the government. He had been
leading an effort to broaden the regime's
base of support by establishing a
progovernment political party encom-
passing the country's disparate political
groups.
The US embassy believes Hamdi is
likely to place the blame for al-Hajri's
death on the leftist tribal grouping, at least
until contrary evidence is available.
Tribesmen led by Hamdi's rival, Abdallah
al-Ahmar, recently have again asserted
their control over parts of northern North
Yemen at the expense of the central
government's authority.
Hamdi will attempt to turn popular
resentment over the death of al-Hajri,
who was widely respected, into support
for the regime. As he has in the past,
Hamdi is likely to move against the tribal
dissidents by indirect political means
rather than with military force.
EGYPT-LIBYA 1( 7
The continuing flow f invective be-
tween Egypt and Libya was accented
during the past week by officially inspired
violence in both countries. There have
been no major new military developments
along the border.
The Egyptian consulate in Benghazi
was sacked last weekend, and its workers
confined in a nearby hotel; on April 13,
Libyans demonstrated at the Egyptian
embassy in Tripoli following a
government-sponsored rally to denounce
Egyptian President Sadat. Libya has also
imposed further restrictions on travel by
Egyptians, this time on those trying to
leave Libya.
Egypt has retaliated in kind to almost
every incident. Egyptians burned the
Libyan consulate in Alexandria. There
has been no indication so far that
Libyan diplomats will be ordered out
of Egypt or recalled by Tripoli.
The media in both countries continue to
trade charges. In a slight shift in tactics,
Cairo dailies this week argued that Egypt
should exercise restraint with regard to
Libya because Libyans themselves were
fed up with Qadhafi and would soon oust
him. Egypt, it was said, must guard
against providing Qadhafi with a foreign
scapegoat.
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LIBYA :if /
Some 20 Libyan military officers con-
victed of participating in a coup attempt
against President Qadhafi in 1975
reportedly were executed on April 2. The
government has not confirmed the ex-
ecutions, but rumors about them have
generated a great deal of anger and ap-
prehension-particularly among
Qadhafi's detractors in the military and in
the middle class.
Agitation over reports of the executions
is running especially high in Benghazi, the
capital of the Cyrenaica region, where op-
position to the regime is strongest. Army
troops reportedly have been stationed at
key points in the city, presumably to
forestall demonstrations. Qadhafi
periodically has placed Cyrenaica under
military rule and apparently is con-
sidering doing so again.
The emotional reactions to the ex-
ecutions could help solidify opposition to
the regime. Earlier reportiing suggests that
a group of dissidents mainly from the air
force has been considering a move to top-
ple Qadhafi.
Qadhafi has had a reputation for
leniency toward his opponents; until now,
there have been no executions and very lit-
tie officially sanctioned violence under his
rule. There has been growing concern
among Libyans, however, that Qadhafi's
reorganization of the government last
month in a move to legitimize his one-
man rule and reduce the power of other
former members of the recently abolished
Revolutionary Command Council would
lead to greater repression.
It is too early to judge whether
Qadhafi's reported resort to violence will
better serve him or his opponents. Having
narrowly escaped several assassination
attempts over the past year, the Libyan
leader probably believes the need to in-
timidate his opponents outweighs the
adverse popular reaction to unaccustomed
violence. Most Libyan military officers
are likely to be more concerned at least in-
itially about their own survival than about
taking action against the regime.
Qadhafi's image as a benign leader
dedicated to Libya's interests before his
own is rapidly dissipating. His turn
toward the USSR, his disregard for local
religious leaders, and his resort to tribal
politics have offended even some of his
staunchest supporters and may have
begun to undermine his popularity among
Libya's largely rural population.
Apr 15, 77
PAKISTAN 2 ZZ_
The month-old campaign by the op-
position to force Prime Minister Bhutto
from office by mobilizing public pressure
against him may be close to achieving its
goal. A week of violent demonstrations,
centered in populous Punjab Province,
has seriously weakened Bhutto. Student
and labor organizations have joined the
fray for the first time, and most observers
in Pakistan believe Bhutto will have to
step down shortly.
Although the opposition's campaign
against the rigging of the National
Assembly election on March 7 quickly
succeeded in some areas, it had failed un-
til recently to foster significant disorders
in the Punjab, the key area. On April 9,
however, the opposition staged
demonstrations against the convening of
the provincial assembly in every Punjabi
city of any importance. Events in Lahore,
the provincial capital, were even bloodier
than the violence that forced President
Ayub Khan out of office in 1969.
l't,AN STAN (5LLAMABAD* ''.:
?` " '' Lahore
Punjab'
PAKISTAN
Baluchistan
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Demonstrations have continued both in
the Punjab and in the cities of the Sind,
and the US embassy in Islamabad
reported on April 13 that the political
situation was deteriorating in both
provinces. The opposition was planning
what could be its major effort for April
15.
Although Bhutto is still making every
effort to stay in office, he has little left to
bargain with. He can no longer count on
the support of the military. Some
members of his own party have resigned,
sparking speculation that mass desertions
will occur. Two ambassadors-who as
military officers played a key role in
Bhutto's rise to power in late 1971-have
also resigned.
Army leaders hope to avoid having to
seize power themselves and apparently are
trying to force both pro- and anti-govern-
ment politicians into an agreement. The
opposition still shows no inclination to
compromise. It does, however, appear to
be considering a proposal for ending the
confr)ntation, presumably one that at a
minimum would strip Bhutto of effective
membership under the auspices of the
four disgraced leftists.
If no announcement is made before the
congress on the status of former vice
premier Teng Hsiao-ping, a resolution of
that issue will probably be formally an-
nounced duriU_ the congress. Teng's
power and lead to new parliamentary and
provi icial elections.
CHINA 2,
The Chinese Communist Party is mak-
ing plans for a national congress, the first
in foLr years. The timing of the congress
is uncertain, but it may be heldearly this
summer.
The congress will name a new Central
Committee and Politburo. As the first
congress since Mao's death, it will also
have the special responsibility of ratifying
the selection of Hua Kuo-feng as party
chairman and of formalizing the purge of
the four leftist leaders last fall. The
decision to move ahead with a congress
was apparently made at last month's
major leadership meeting in Peking.
It will take at least until June to select
delegates from across the country. The
party is now examining the credentials of
many party members suspected of gaining
failure to return by now to public political
life, despite the reports and predictions of
Chinese officials that he would, suggests
he is the subject of continuing controver-
sy. At the heart of the issue may be the
division of power among the leaders and
the personal political fortunes of some of
them who are thought to be opposing
Teng's return.
4
CHINA-JAPAN
A high-level Japanese business mission
left Peking last week with an unexpected
Chinese agreement in principle to a
long-term private trade accord. The
Chinese treated the delegation especially
well, providing a sharp contrast with
the USSR's toughness in current nego-
tiations with the Japanese on fishing
rights.
The Soviets will be annoyed not
just at Peking, but also at Tokyo-a
similar Japanese mission to Moscow
last year turned aside a Soviet offer
for a long-term economic agreement.
Under the proposed trade agreement,
China would provide oil and coal in return
for Japanese steel, construction materials,
and plants-including power-generating
facilities-that the Chinese would use to
expand oil and coal production. The offer
to export coal and oil is another indication
of a general consensus within the new
Chinese leadership to use natural
resources to earn foreign exchange. The
four leftist leaders purged from the Polit-
buro last fall had sharply attacked this
policy. In an effort to expedite exports of
natural resources, Peking has reportedly
established a new committee comprised of
China's top economic officials, including
Minister of Trade Li Chiang.
A number of important details, such as
the duration of the agreement, annual
target levels of Chinese exports, and pay-
ment terms, are still to be negotiated
between the Chinese Foreign Trade
Ministry and interested Japanese
businesses.
In the Peking discussions, Li Chiang
agreed to "study" Japanese proposals of
5- to 10-year repayment terms-a possi-
ble indication that the Chinese will stretch
repayment beyond 5 years. Deferred
payments and other forms of foreign
credit have long been politically sensitive
subjects in China. With the leftists remov-
ed, the leadership may now enjoy a freer
hand to utilize credit facilities and
accelerate purchases of needed Western
equipment and technology.
25X1
25X1
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A P
LAOS-THAILAND 2 ~ '5 a
Lao forces this week dislodged rightist
Lao rebels from two islands near Vien-
tiane in the Mekong River, which forms
the border between Laos and Thailand.
The rebels had seized one island late last
month and another last week. Both the
Lao and Thai governments seemed intent
on keeping the fighting from escalating
into a serious confrontation.
Sporadic shooting incidents have
erupted between Thai and Lao forces
along the Mekong since the Communists
took over in Laos in 1975. Late that year,
Bangkok closed the border for several
months, an act that cut sharply into the
supply of daily necessities in Vientiane.
The border is now open, and relations
between the two countries have been
generally less troubled in the past year.
In the latest incident., Lao officials
notified Thailand of plans to recover the
islands, and Bangkok agreed that the
islands were Lao territory and promised
not to assist the rebels. Although the Lao
government called a state of alert, the
likelihood of a serious confrontation was
never high.
MOZAMBIQUE -
SOUTH AFRICA
Commercial sales of electricity
generated by the Cabora-Bassa power
project in Mozambique began late last
month. Almost all of the power is being
sold to South Africa.
Initially, three generating units with a
capacity of about 1,200 megawatts will
feed a new high-voltage power line linking
the dam with the South African power
grid. The scheduled addition of two more
units and another transmission line early
next year will bring total capacity to 2,000
megawatts, roughly equivalent to that of
Egypt's Aswan Dam.
The project was designed years ago by
Portugal to provide inexpensive electricity
to its Mozambique territory and to South
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Africa. The planners hoped that it would
eventually become the cornerstone of the
agricultural, mineral, and industrial
deve opment of Mozambique's Zambezi
Basin.
Despite Mozambique's harsh rhetoric
against South Africa's white minority
gove ?nment, practical considerations con-
tinut: to prevail in such important
economic relations as the sale of electrici-
ty. Mozambique would like to reduce its
dependence on South Africa, but no other
neigFboring country can use the large
amoi.nt of power generated by the
proje--t.
South Africa will probably continue to
purchase electricity from Mozambique as
long is the price is favorable. It also hopes
to recover its investment of more than $30
million in the project. Cabora-Bassa
could provide up to 10 percent of South
Africa's electricity by 1980. South Africa,
however, is likely to maintain a domestic
reserve generating capacity equal to the
amount it imports to guard against power
interruptions.
Mozambique must export electricity in
order to pay for the foreign financing used
in co-istructing the project; until the loans
are r.,-paid Mozambique will receive only
a small amount of the foreign exchange
from such sales.
The potential agricultural and in-
dustrial benefits of Cabora-Bassa
probably will not be realized in the near
future. Mozambique lacks the
managerial, technical, and financial
resources to develop the surrounding
region.
ZAIRE '
President Mobutu's prospects for
checking the progress of the former
Katangan soldiers who invaded Shaba
Region from Angola last month have im-
proved with the recent arrival of troop
support from Morocco. It will probably
be some time, however, before the foreign
troops and the Zairian army are ready to
move aggressively. The Katangans, for
their part, can be expected to continue to
strengthen their position in the one third
of Shaba that they hold.
The Mobutu regime, which seemed ear-
ly last week to be on the ropes because of
the ineffectiveness of its forces in Shaba,
received an important boost from the
arrival, starting late last week, of some
1,500 Moroccan troops; they were airlifted
to Zaire by France, which made 11
transports available for the operation.
Another Moroccan contingent of equal
size may be sent if deemed necessary. In
addition, a number of French military ad-
visers are now in Shaba, where some are
attached to the Zairian commander's staff
and others to the Moroccan contingent.
Other new foreign assistance may have
arrived or be coming. A shipment of
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equipment-probably including military
supplies-reportedly arrived by air from
China recently, and more Chinese
assistance is coming by sea. An Egyptian
military delegation has been in Zaire this
week surveying the government's needs.
Moroccan King Hassan's decision to
send troops to Zaire was motivated in
part by a desire to demonstrate solidarity
with a fellow moderate African state that
has supported Rabat in its continuing dis-
pute with Algeria over Western Sahara.
Hassan is also concerned--as are France,
Egypt, and Belgium, which retains major
economic interests in its former
colony-about the spread of Soviet and
Cuban influence in southern Africa and
the possibility that radicals may gain
power in Zaire if Mobutu falls. The
Zairian leader has insisted that the
Soviets and Cubans are behind the
P P&
Katangan rebels.
Most of the Moroccan troops now in
Zaire have taken up positions in or near
Kolwezi, the key mining center that has
been a major objective of the Katangans.
The invaders have advanced a little closer
to Kolwezi; this week they were reported
to be about 50 kilometers away.
The infusion of the relatively well-
trained and disciplined Moroccan troops
presumably will secure Kolwezi and other
important towns and may help stiffen the
Zairian forces. Plans are apparently un-
der consideration to use the Moroccans to
spearhead an eventual counteroffensive.
The Katangans will not be readily
eliminated from Shaba, however, as they
will probably rely on guerrilla tactics,
against which the Moroccans are not like-
ly to be very effective.
14 P
South African Prime Minister Vorster (c)
confers with Israeli Defense Minister Peres (l) and
? _ qq Prime Minister Rabin in Jerusalem
SOUTH AFRICA - ISRAEL
South Africa, which is attempting to
modernize and improve its badly outdated
navy, reportedly will take delivery next
month of the first of six Israeli-built
Reshef-class patrol boats it ordered some
time ago. The 250-ton boats are designed
to carry antiaircraft artillery and up
to eight Gabriel surface-to-surface mis-
siles.
According to a source of the US naval
attache in Pretoria, the Israelis are also
training 100 South Africans-the comple-
ment of two crews-to operate the boats.
The crew for the first Reshef has been
conducting at-sea training on the boat. A
South African naval replenishment ship
will escort the new Reshef from Gibraltar
to South Africa.
A second Israeli-built Reshef is due to
be launched this summer. South Africa
will build at least three others under
license in Durban, but they probably will
not be ready for launching until next year.
The naval modernization program also
includes the purchase of two destroyer es-
corts and two submarines still on order
from France. As these new ships become
operational, many of South Africa's
older, British-built ships will be phased
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The government's legalization of the
Communist Party on April 9 reflects the
deep commitment of King Juan Carlos
and ;'rime Minister Suarez to ensuring a
free and democratic parliamentary elec-
tion this summer. Die-hard rightists had
strongly opposed removal of the ban im-
posed by Franco 38 years ago; moderate
oppcsition groups had pressed for
removal, alleging that the election would
not to truly free unless the Communists
were-allowed to participate.
The government's hand was forced
when the Supreme Court refused early
this month to rule on the party's legality.
The King and Suarez had hoped that a
court decision in the Communists' favor
would help to dilute a strong reaction
from the political right and the military.
The timing of the government's an-
nouncement-Easter weekend-seemed
designed to reduce chances of an im-
mediate violent reaction.
So far, protest action has been of a
minor nature, but dissatisfaction with the
government's move is clearly widespread
on the right and among the military. At a
meeting of the army's Supreme Council
on April 12, officers expressed angry dis-
approval both of the decision and the fact
that it was made without a formal
meeting of the cabinet. The navy minister,
an admiral who had long been a staunch
Franco supporter, resigned from the
government the same day, and some other
senior military leaders may also quit their
posts. More serious dissent in the armed
forces may have been headed off,
however, by an army announcement on
April 13 that it accepts the government's
action and by the decision of the remain-
ing three military ministers not to resign.
Thy; military's thinking has been evolv-
ing on the Communist question in recent
months. Most of the officer corps had
c- /0 k I'A J_
moved from outright opposition to legali-
zation last fall to acceptance in February
of the decision to let the Supreme Court
make a ruling. Since then, increasing
numbers of Spaniards had apparently
come to expect the party to be legalized
before the election and this, along with
Suarez' frequent consultations with the
military ministers and the implicit back-
ing of the King, may have impressed sen-
ior military officers.
The government weathered a potential
crisis in the north last weekend when
Basque political parties defied a ban on
public celebration of Basque national day.
Strong security measures and bad weather
helped to restrict the violence.
I t
Another round of UN-sponsored talks
between Greek and Turkish Cypriots end-
ed last week without any significant
movement toward a Cyprus settlement.
The two sides made more concrete
proposals than they had previously,
however, perhaps setting the stage for a
future narrowing of their differences.
Much will depend on the outcome of the
parliamentary election in Turkey in early
June.
The talks, which were held in Vienna,
concentrated on Greek Cypriot territorial
proposals and Turkish Cypriot con-
stitutional proposals. The proposals un-
derscored the protagonists' deep mutual
distrust and their aversion to compromise.
The Greek Cypriots presented a
proposal based on conceding 20 percent of
the island's territory to the Turkish
Cypriots, who currently control 36 per-
cent as a result of the invasion of the
island by troops from Turkey in 1974.
The Turkish Cypriot proposal called
for a weak central government concerned
mainly with foreign affairs and defense,
and with no power to tax. It did, however,
leave open the possibility of greater
powers for the central government in the
future.
The Turkish Cypriots, indicating that
the Greek Cypriot proposal failed to
satisfy the Turkish community's security
or economic requirements, did not com-
mit themselves to give up any specific
areas. The Greek Cypriots nevertheless
seem willing to continue negotiating in the
hope that a government capable of strong
foreign policy initiatives will emerge from
the Turkish parliamentary election.
The Turks and the Turkish Cypriots
seem more pleased by the talks than the
other side. They got a specific territorial
proposal from the Greek Cypriots and
retained their own options on both
territorial and constitutional questions.
At the same time, the negotiating process,
important to Ankara's hope of securing a
restoration of full US military assistance,
is continuing.
The negotiations will probably resume
in Nicosia in early May. They could result
in a further elucidation of positions, but
the Turkish Cypriots are not likely to
make any significant concessions before
the Turkish election. The talks may even
be postponed if Turkish Prime Minister
Demirel concludes that they would have
negative repercussions on his party at the
polls.
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President Videla has strengthened his position with the
Argentine military and may now be in a better position to move
forward on moderate proposals for restructuring the unions and
permitting civilians a limited political role.
N 4 ` Argentina: Support for President Videla
President Videla begins his second year
as Argentina's leader in a reasonably
strong position. Only a few weeks ago
there was widespread talk about Videla
giving up one of his jobs, the presidency or
his membership on the junta. Such talk
has now ceased, and the President seems
to. be enjoying-at least for the pres-
ent-the support not only of the army,
but also the navy and air force, which
from time to time expressed dissatisfac-
tion with him. This military consensus
around Videla means that for the time be-
ing officers with moderate views are in
control in Argentina.
Videla and the junta last month marked
the first anniversary of their takeover with
low key, characteristically austere
statements. The President's address to the
nation pointed to the progress made dur-
ing the past year in controlling leftist sub-
versives and in improving the economy.
As is his custom, he promised nothing, ex-
cept that the armed forces would not be
deterred from pursuing their own concept
of economic and political progress.
Videla did suggest that a new, more
constructive phase of political activity
could begin. He made it clear there will be
no early return to free-wheeling politics,
but some civilians will be allowed to ex-
press opinions on a variety of subjects
through informal channels.
On March 15, Videla assembled all
army generals to review the government's
performance during the past year and to
outline its plans for the future. The Presi-
dent anticipated criticism of his perfor-
mance and skillfully neutralized it. The
session, which lasted an entire workday,
was a success for the President. He
assuaged the feelings of the air force and
navy by strongly reiterating the
supremacy of the junta and playing down
his own role.
The President announced at the
meeting that he would remain as chief ex-
ecutive and army commander in chief
through March 1979, refuting the notion,
widely discussed among Argentines in re-
cent months, that he would relinquish
either the presidency or his post in the
three-man interservice junta.
Videla himself may have had a hand in
encouraging public discussion of his au-
thority. He probably judged that such
a "debate" would do him no harm and
might help, and he was right. The dis-
cussions never turned up a serious con-
tender to replace him. Moreover,
although some individuals indulged in
personal criticisms, no really damaging
criticism of Videla emerged.
The army meeting seems to have
demonstrated that the present govern-
ment, with Videla at the top, is still the
most desirable choice and perhaps the
only practical one. The public "debate"
may also have served as an escape valve
for Argentina's highly politicized
citizenry, deprived for the past year of
normal outlets for political expression.
The Government and Labor
The ascendancy of Videla and his
moderate line will have an important im-
pact in the crucial area of
government-labor relations. Union ac-
tivities have been suspended since the
coup, and the military has been unable to
agree on how to treat organized labor.
Some military men believe labor, the
long-time stronghold of Peronism, must
be permanently shorn of its potential
political power. Others, including Videla,
favor an accommodation.
Developments on the labor scene over
the past year have worked to the advan-
tage of Videla and weakened the
arguments of those calling for punitive
measures. There have been numerous
violations of the junta's ban on strikes,
but the government has not used force,
nor has labor defied the junta on the
massive scale some officers anticipated in
response to government-imposed
economic austerity measures.
The way now seems clear for the
emergence of a labor policy that is not as
vindictive as the so-called "hard liners"
had demanded. The new labor code,
although it will still be restrictive, will
probably allow unions to join together in
federations. Unions will continue to be
prohibited from blatant political activity.
Apr 15, 77
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It is doubtful that larger groupings like
the Peronist General Workers'
Confederation, through which labor flex-
ed its political muscle during the Peron
regimes, will have government backing,
but such a confederation may not be
specifically banned, as some officers have
recommended. Videla presumably hopes
the workers will recognize and accept the
new law as a compromise, permitting the
uniors some, but by no means all, the im-
portance they have had in the past.
The Government and Civilians
Conditions also seem favorable for im-
plementing Videla's policy of encouraging
communication with representative
civilians. At the meeting with army
generals, the President indicated that he
intencs to continue this process, but made
it clear that he envisions no program for-
mally reincorporating civilians into the
governing process. This is in keeping with
Videl is public statements; he has
repeatedly declared that he has no
timetable for the reemergence of an
elected legislature or free political parties.
Civilian opinion leaders will be disap-
pointed-but not surprised-that the
political "opening" many of them had
begun to predict some weeks ago is not
arounc the corner. Most of them will take
heart, however, at least privately, from
the fact that Videla and not one of the
hard-li ie generals is in the driver's seat.
Cou
t
i
n
er
nsurgency to remain in the background indefinitely.
The stre
th
i
f
'
ng
en
ng o
Videla
s hand Political conditions in the country
does not mean any slackening of pressure could change, perhaps rapidly, with dis-
against lefti
t
ill
s
guerr
as. Here, Videla is
not, and cannot afford to be, any less
tough than the "hard liners."
The President may attempt to make
sure that the security forces pay more
attention to legal guarantees, and he could
justify this approach to the "hard liners"
by arguing that the subversive threat had
been so obviously hurt by the
government's campaign that the harsh
measures were no longer necessary. Any
resurgence of the terrorism, however,
would force Videla to get tougher.
Hemisphere Affairs
In his first year in office Videla has
visited the capitals of Chile, Peru, and
Bolivia. He plans trips to Venezuela and
Paraguay.
He is clearly making the point that
after a period of enforced withdrawal
from hemispheric affairs because of
domestic political turmoil, Argentina is
now ready to claim its rightful place as an
important regional power. The message
Videla carries to the heads of other
authoritarian governments in the area is
one of solidarity in the face of inter-
national pressure for greater respect for
human rights.
The General is well suited to the task of
rebuilding his country's influence in the
region without antagonizing Brazil, the
historic rival that has pulled far ahead of
Argentina by almost any measure. With
his reserved style, Videla seeks to assure
the Brazilians that his country is not out
to make gains at their expense. For the
moment, at least, the Brazilians probably
take him at his word, seeing virtually no
prospect for Argentina to contest serious-
ly the regional dominance Brazil has es-
tablished.
Outlook
The military consensus that Videla has
established is fragile. The officers who
have in the past been the most
tro.pblesome to Videla, navy chief Ad-
miral Massera, for example, are quiet, at
least for now. Still, Massera has a long
history as a "spoiler," and he is not likely
ruptive effects on military unity. Organiz-
ed labor could react violently if a new
labor code is not forthcoming soon or if it
is enacted and, in their view, is too restric-
tive. Terrorists may launch a spectacular
last-ditch offensive. Such events would
reinforce the hard-line officers and
weaken Videla.
Videla recognizes the frailty of the con-
sensus. He will continue to move with
great caution on all fronts in order to
preserve it. Policy making and implemen-
tation will continue to be slow and
cumbersome and could falter if the regime
were to be confronted with fast-break' g
problems.
Page 10
WEEKLY SUMMARY
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Canada's decision to buy new fighter aircraft is an overdue
first step toward modernizing its armed forces, but decisions on
other equipment purchases and financing have yet to be made.
A recent decision by the Canadian
government to go ahead with the acquisi-
tion of a new fighter aircraft is a major
commitment toward long-overdue mod-
ernization of the armed forces.
The cabinet has approved the letting of
bids to buy 130 to 150 high-performance
multipurpose fighters to replace the aging
CF-10ls used for continental defense and
the CF-5s and outmoded CF-104s that are
part of Canada's contribution to NATO.
The procurement program, expected
to get under way late next year, is
likely to cost $2 billion over a
10-year period.
The decision underscores a dramatic
turnaround in Canadian defense policy
over the past three years. In 1974, the
Canadian armed forces, were approaching
the point where they could no longer
effectively carry out military assignments
at home or abroad. There had been no
major equipment purchases for almost 10
years, and an increase in the defense
budget in 1973 had been swallowed up by
inflation.
By December 1974 the government had
become sufficiently alarmed by the
deterioration of its military posture to in-
itiate a comprehensive review of the
defense structure. With defense costs in-
creasing at 12 to 15 percent annually, it
was soon clear that a substantial increase
in the defense budget was needed to make
the armed forces capable of meeting their
responsibilities for internal security,
North American defense, NATO, and
Canada: A New Look in Defense
peacekeeping abroad.
It could be achieved only at the expense
of other government programs. The alter-
native was to reduce the armed forces sub-
stantially and cut back military tasks
across the board-a course unpalatable to
Prime Minister Trudeau and other leaders
in part because of new concern about the
build-up of Soviet military strength.
The European Connection
A key factor in Canada's decision in
1975 substantially to increase defense
spending was its eagerness to cement
economic links with the EC. Trudeau,
who had deliberately played down defense
concerns after taking office in 1968, en-
visioned close economic and political ties
cks
Page 11
with Western Europe as the cornerstone
of his effort to reduce Canada's
dependence on the US. A "contractual
link" with the EC was finally negotiated
last year, but the Europeans made it
clear that there are military dues to
be paid if Canada hopes to get much in
the way of real economic benefits from
its ties with the EC. Canadian defense
spending comprises 2.3 percent of gross
national product, exceeding only that of
Luxembourg among NATO countries and
well behind the NATO average of 5.1
percent of GNP.
Problems at Home
Another factor in the decision to in-
crease defense spending was a general
a- s
Apr 15, 77
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US fihter planes under consideration Include (1 to r)
McDonnell Douglas and.'Vorthrop F-1 l., Grumman F-14
Tomcat, and McDonnell Douglas F-15 / ogle
the "industrial benefits" Canada can ex-
pect to enjoy from the multibillion-dollar
program.
A ship replacement effort, expected to
cost $1.3 billion, will not get under way
until the early 1980s. It will be close to
1990 before the first four to eight
ships-if heavy destroyers are
selected-are in the water and some 20
years before the proposed new fleet of 20
ships is ready for combat.
Canada's agreement to participate in
NATO's Airborne Warning and Control
P e&-
System-AWACS-also has com-
plicated defense planning and sparked
debate within the government over the
wisdom of the commitment. Canada's
share of the cost would be :6200 million,
with $60 million returning in the form of
offset.
Some Canadians doubt the cost effec-
tiveness of AWACS in North American
air defense. Others argue that, if Canada
supports AWACS at all, it should do so
only in the context of North American
defense and only if the US is firmly com-
mitted to the system. If the US appears to
waver on AWACS for North American
defense and West Germany continues to
drag its feet on cost sharing in the NATO
context, the Canadian defense minister,
who is the strongest advocate of AWACS,
will have trouble selling a project that the
Canadian parliament rejected more than
seven years ago.
Financing Woes
Overshadowing problems oFequipment
selection is the question of financing the
recognition of the need to strengthen the
government's ability to handle a national
1 emergency
In addition, Canada must enforce its
claimed sovereignty over the 200-mile
fishing zones declared in January. Ot-
tawa's purchase of 18 new long-range
patrol aircraft last year was designed in
part to provide coverage of the new
fishing zones. Most of Canada's warships
are not geared to patrolling the zones.
Defense Priorities
fhe broad question of'defense priorities
remains a major headache for military
planners. The many lean years of
aretaker budgeting has left almost every
>>omponert of the armed forces under-
:;quipped, poorly trained, and generally
tlacking the manpower to perform ef-
ficiently. Defense Minister Danson, who
look over the portfolio last fall, has had
riot only to grapple with choosing between
:zir- and sea-oriented procurement
programs, but also with selecting the
equipment for each.
The decision to opt for new fighter air-
craft was taken to maximize the visible
and political impact of the increased
defense spending. The Canadians want an
interceptor that could go into service
within a relatively short time. In the
meantime, the government can point to
Page 12
modernization program. The defense
budget for the fiscal year that began April
I calls for outlays totaling $3.8 billion.
Capital expenditures for new equipment
will increase almost 25 percent (about one
half of which is lost to inflation) over the
previous year.
The budget includes $2.5 million for
aircraft and ship procurement programs,
just enough to get them started. No
money is set aside for increasing man-
power above the present 78,000, although
defense and cabinet officials agree
another 5,000 persons are needed to bring
the armed forces up to minimum manning
levels. Even an 83,000-person level would
be 18 percent below the 120,000-person
force level many military analysts see as
ideal.
The modernization bill over the next 10
to 20 years is estimated to cost $5 to $6
billion. Some $3.3 billion is slated for
capital expenditures during the next five
fiscal years, of which long-range patrol
aircraft, new Leopard tanks from West
1) F6-
Germany, and Canadian-built,
Swiss-designed armored cars will cost
$1.4 billion. Subtracting building con-
struction, ammunition, research and
development-normal charges on a
capital budget--there is not much left
over for new fighter planes, let alone a
new fleet of warships. The defense
minister is confident that the fighter
program can be fitted in, but admits that
new shipbuilding would "stretch us very
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In the negotiations for a new international sugar agree-
ment that begin next week, producers will probably not be able
to raise prices much above the present low level. Production is
continuing to increase, stocks are already high, and sugar sub-
stitutes are making inroads in the market.
International negotiations to set
minimum prices for sugar will begin in
Geneva on April 18. The world sugar
market has been characterized by low
prices, record production, and a growing
surplus since the end of the crop year last
August. There is little prospect of higher
prices this year; with nearly three quarters
of the world harvest completed, record
sugar production of about 87 million tons
has been forecast.
For the third consecutive year, sugar
production will outstrip world consump-
tion-estimated to be 83 million tons this
year. Although up 4 percent from last
year, consumption is still below the
long-term trend established before the
record sugar price increase of 1974.
The largest production gains were made
this year in Brazil where output was up
almost 20 percent. Production also in-
creased in Africa and Asia. Small declines
have occurred in North America and
Eastern Europe.
Most of the consumption increase is oc-
curring in the developing countries. In the
developed countries, growth in sugar con-
sumption is being slowed by market
saturation and competition from other
sweeteners, particularly high fructose
corn syrup. This product is both cheaper
and less caloric than sugar.
Reserve Stocks and Prices
World sugar stocks should reach a
record 24 million tons by August 31. Most
stocks are held by exporters, although
some major importing countries-China,
Japan, and the US-have recently in-
The World Sugar Market
creased their reserves.
The prospect of a large carryover-29
percent of annual consumption-con-
tinues to depress prices despite recent
large purchases by China and the USSR.
Since December, China reportedly has
purchased between 600,000 and 1 million
tons of sugar for 1977 delivery. The
USSR purchased 600,000 tons from the
Philippines in January for early 1977
delivery.
For the past six months, prices for
world raw sugar have hovered between 7
and 10 cents per pound, the lowest level
since 1972. The current price-about 10
cents per pound-is 40 percent below that
of a year ago. Prices now are considerably
below sugar production costs in the US,
as well as in some of the less efficient cane
producing countries of Central and South
America.
Current plans for planting do not in-
dicate a large reduction in world sugar
acreage for the 1977-78 harvest. Although
low prices have encouraged acreage
reductions by farmers in the EC, the
Philippines, and the US, growers in
Eastern Europe, Cuba, and Australia will
probably increase acreage. Unless
weather conditions prove unfavorable,
world production next year is likely to
equal or exceed this year's record level,
keeping prices down.
Negotiations for New Agreement
In Geneva next week, exporting coun-
tries will be pressing for a guaranteed
minimum price that reflects their claimed
cost of production. An organization of
Latin American sugar producers ac-
counting for about 50 percent of free
market exports has indicated that mem-
bers will push for a minimum price of
15 cents per pound.
Other major exporters-the Philip-
pines, Thailand, India, Australia, and
South Africa-will probably support this
floor price.
Any agreement would probably require
7PV
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US adherence to be successful. As the
world's largest importer, the US is the
dominant force in the sugar market, ac-
counting for 25 to 30 percent of free
market imports.
EC participation in a new agreement
probably is also essential. The EC ac-
counts for 12 percent of world production
and is a net exporter; at the same time, it
has an agreement with the
African-Caribbean-Pacific countries to
import 1.3 million tons a year. The EC is
willing to participate in the negotiations,
but has been unwilling to soften its op-
position to export quotas, favoring in-
stead a buffer-stock arrangement. Most
coun.ries involved in the negotiations
favor some form of quota system,
although they are in conflict over the
assiglment of quotas. The producers
probably cannot get the 15-cent minimum
they would like. A minimum price of 10 to
12 cents per pound is more likely.
Changes in US sugar policy also could
further dampen world prices. If the US
should adopt import quotas along the
restrictive lines recommended by the US
International Trade Commission, an ad-
ditional 575,000 to 725,000 tons of sugar
could be forced onto the world market.
Such import restrictions would meet
strong opposition from exporters in Cen-
tral and South America and the Philip-
pines.
Sugar Substitutes
The continuing growth in the use of
high fructose corn syrup will limit growth
in sugar consumption in the developed
countries. This product can be substituted
directly for sugar in most industrial uses,
and sales would jump if sugar prices were
to rise significantly. The syrup is pro-
duced almost exclusively in the industrial-
ized nations and has become a serious
threat to sugar industries in the EC and
Japan as well as in the US.
The EC has become so concerned over
the threat to the sugar industry that it has
proposed that member countries
eliminate subsidies on cornstarch produc-
tion, disallow tax benefits to high fructose
plant construction, and regulate imports
and exports of the substitute product.
According to trade studies, a sugar
price increase to a level of 13 to 15 cents
per pound would provide an umbrella for
the high fructose industry and speed ex-
pansion if corn prices remain close to
current levels.
A ban on saccharin by the US and
Canada, if implemented, would have only
a minimal effect on boosting sugar con-
sumption. The soft drink industry would
probably switch from saccharin to high
fructose corn syrup and other low calorie
substitutes. Medically handicapped in-
dividuals still must consume low calorie
The pervasive Soviet role in Somalia puts important
restraints on President Siad's hopes to improve relations with
the Arabs and the US, but some change is likely over time.
Somali President Siad has apparently
begun to question the close ties his coun-
try has developed with the Soviets. For
years, the USSR has been Somalia's
primary source of arms and military
training, aid for economic development,
advanced education for young Somalis,
technical expertise for the civil
bureaucracy, and the ideological under-
pinning for the Siad regime's "scientific
Somalia: Looking for New Friends
socialism." But now the Somali leader is
bitter over what he considers Soviet
duplicity in expanding ties with Ethiopia,
Somalia's traditional rival for influence in
the Horn of Africa. Siad appears to
believe that the Soviets take him too
much for granted.
Somalia turned to the Soviets in the
first place to receive the arms and training
needed to take on Ethiopia; from Siad's
standpoint, any effort by the USSR to
Page 14 WEEKLY SUMMARY
restrain Somalia from trying to regain its
"lost territory" runs counter to the very
purpose of having close ties to the USSR.
Saudi Arabia is actively seeking to exploit
Somalia's grievances against the USSR.
It is leading moderate Arab efforts to
wean Somalia away from the Soviets and
has offered money and petroleum as in-
ducements.
In his recent speeches, Siad has taken
to emphasizing Somalia's Arab character
and expressing a willingness to cooperate
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Stk;Ht I
with Arab states irrespective of their
domestic social and economic systems.
He has maintained balance by calling the
Soviets "true friends," but his statements
that Somalia differentiates between
ideology and national interests in deter-
mining foreign policy are a clear warning
to the Soviets that he will not be their
puppet on issues vital to Somalia.
Siad's Internal Position
Siad's internal position is secure
enough to allow him to make adjustments
in Somalia's relations with the USSR.
The regime is stable and, although
pockets of opposition remain, Siad has
consolidated his personal power over the
past year. He must consult with other key
leaders before making important
decisions, but most of his colleagues are
likely to support loosening ties with the
USSR, drawing closer to the moderate
Arabs, and improving relations with the
West. The military as a whole is also like-
ly to support such policies.
The more pro-Soviet members of the
ruling hierarchy are not strong enough to
block such a shift or to move against Siad.
General Samantar, the defense minister
and first vice president, is the main Soviet
sympathizer, and his personal power was
reduced in a government reshuffle in
February.
Most Somalis would welcome
strengthening ties with the Arabs at the
expense of the Soviet relationship.
Socialism may be making headway
among younger, educated Somalis, but
the population remains overwhelmingly
conservative and Muslim. The Soviet ad-
visers in Somalia are often seen as con-
descending and arrogant.
Restraints of Siacl's Actions
Nevertheless, Siad's freedom to reduce
Somalia's heavy reliance: on the Soviets is
limited. Soviet advisers play an important
role in both the armed forces and the civil
bureaucracy. They provide more than
broad advice; they are involved in day-to-
day administrative affairs. It would be
costly for the government and the armed
forces were these advisers withdrawn or
substantially reduced.
Close Soviet ties, moreover, fill a need
Sheikh
1^
? Military facility
^ Ecpno)ictprppject(co9 plet~ad I F . N
Economic project under construction
? Nomad resettlement
Hergeisa
0 ? Somali airfield used by Soviets (IL-38s)
1j Dafet Airfield}
Somali airfield used by Sou,
rvnnie (IL-38s and TU-95s)- j_ ..
beyond technical and administrative
talents. The ideology and political struc-
tures adopted by the regime-including
the new Somali Revolutionary Socialist
Party-closely follow the Soviet model.
Soviet advisers attached to the office of
the president provide guidance on
ideology, mass mobilization, and political
organization.
The questioning of ties to the Soviet
Union risks raising doubts in Somalia
about the whole concept of President
Siad's much-touted "scientific socialism."
Siad genuinely believes that socialism is
Somalia: Major Soviet Economic Projects andMilitaryFacilities
Page 15
Apr 15, 77
Military agreements $ 306 million
Military deliveries $277 million
Military technicians 1,000 persons
Economic agreements $ 165 million
Economic deliveries $ 89 million
Economic technicians 1,000 persons
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Somali Defense Minister Samantar with Politburo members Arkhipov (1) and Ponomarev (c),following aid
discussions in Moscow last August
the way to social and economic develop-
ment. He is capable of making tactical
adjustments in implementing his program
for building a socialist society, but he
would be uncomfortable trying to become
too closely aligned with moderate Arab
states like Saudi Arabia.
The armed forces' reliance on Soviet
military equipment is one of the most im-
portant restraints on making a dramatic
change. The Somalis are searching for
alternative sources of supply and may
eventually obtain small arms and other
limited amounts of aid from other
sources, but they cannot hope for enough
large and sophisticated equipment to end
their dependence on the Soviets. The
Egyptians might be able to provide some
Soviet equipment, but they are not in a
positicn to send large amounts or to sus-
tain a now of parts and ammunition.
Replacing Soviet equipment with arms
purchased from Western countries-paid
for with Saudi money-would probably
take several years and require a reorienta-
tion of military doctrine. There would
also be a degradation of military capabili-
ty while the changeover is taking place.
The Somalis would be reluctant to risk
this while they are facing the possibility of
a conflict with Ethiopia over the French
Territory of the Afars and Issas and the
Ogaden region of Ethiopia.
Siad would have to weigh carefully the
military reaction to changes in Somalia's
sources of military supply. The military
hierarchy would probably approve a
broadening of Somalia's military and
political relations, but would probably not
support an abrupt break with the Soviets
and perhaps not even a gradual transition
to more reliance on other sources.
The Soviets' View
The Soviets apparently miscalculated
Somalia's reaction to their expanding ties
with Ethiopia. They view Ethiopia, with
its greater population and economic
resources, as potentially the more impor-
tant country in the Horn of Africa and
one that in the future will probably play
an important role in African affairs. They
may not have realized that they would of-
fend Siad to the extent that they have,
calculating that Somali suspicions could
be overcome with assurances that Soviet
weapons given Ethiopia would not be used
against Somalis.
In spite of recent problems,
Soviet-Somali relations remain mutually
beneficial. Soviet President Podgorny's
Page 16
recent visit to Somalia demonstrates con-
tinued high-level Soviet interest in
Somalia. It is doubtful that either country
will take hasty action in the near term to
end their close ties. The Soviets will reluc-
tantly tolerate a Somali opening to the
Arabs and the West so long as Somalia
takes no action to jeopardize Soviet
access to the Soviet naval and com-
munications facilities at Berbera.
In the absence of a clear alternative to
Siad in the Somali leadership, the Soviets
will probably try to mend their relations
with him. It would be counterproductive
to try to mobilize sentiment against Siad
in the Somali military solely on the basis
of loosening ties with Moscow.
The Somalis probably have the most to
lose from an abrupt termination of the
relationship. Soviet naval air operations
in the Indian Ocean area would be severe-
ly hampered by the loss of access to
Somali airfields, but overall Soviet naval
operations in the Indian Ocean could con-
tinue without the use of Somali facilities,
although at some expense. A sudden
withdrawal of Soviet military support for
Somalia, however, would cause a swift
decline in Somali military capabilities.
Approved For Release 2008/07/02 : CIA-RDP79-00927A011500150001-0
 Approved For Release 2008/07/02 : CIA-RDP79-00927A011500150001-0
Approved For Release 2008/07/02 : CIA-RDP79-00927A011500150001-0
 Approved For Release 2008/07/02 : CIA-RDP79-00927A011500150001-0
Secret
Secret
Approved For Release 2008/07/02 : CIA-RDP79-00927A011500150001-0