WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000070015-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 27
• Document Creation Date: December 27, 2016
• Document Release Date: May 10, 2010
• Sequence Number: 15
• Publication Date: August 23, 1974
• Content Type: REPORT

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Weekly Review
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23 August 1974
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The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
divelopments of the week through noon on Thursday. It
frequently includes material coordinated with or prepared by
the Office of Economic Research, the Office of Strategic
Research, and the Directorate of Science and Technology. MIDDLE EAST
Topics requiring more comprehensive treatment and therefore AFRICA
published sepantely as Special Reports .:ire listed in the
contents.
CONTENTS (August 23, 1974)
EAST ASIA
PACIFIC
WESTERN
HEMISPHERE
EUROPE
INTERNATIONAL
1 Cyprus
6 Arab States - Israel: Groping Their Way
8 Egypt-Libya: Meeting Produces Little
8 Arabian Peninsula: Radicals Shift
10 Iran-Iraq: Tensions Rise 25X1
11 Portuguese Africa: Ups and Downs
12 Cambodia: New UN Tactics
13 Vietnam: Communist Pressure Continues
14 Japan: Tanaka's Political Outlook
15 Korea-Japan: Assassination Aftermath
16 Malaysia: No Election Surprises
17 Mexico: Major Oil Find
18 Panama-Cuba: Dipiomatic Relations
19 Nicaragua: Once and Future President
20 Alternatives to Non-Proliferation
21 France: Defense Policy Review
21 UK: More Nationalization 25X6
22 European Communist Conference
24 Effect of Oil Money
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Cyprus President Clerides and -
Vice President Denktash
CYPRUS
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The fighting on Cyprus wound down this
week following a cease-fire?declared on August
16?after Turkish forces had succeeded in gaining
control of the northern third of the island. Ef-
forts to reopen the Geneva peace talks have
proved fruitless so far, but Greek and Turkish
Cypriot leaders have agreed to talks on human-
itarian issues that could be expanded to cover
political topics. The Karamanlis government in
Athens has refused to negotiate unless Turkish
forces return to the positions they held on August
9?before the second round of fifthting. Mean-
while, Turkish military successes have set off a
wave of anti-Americanism in Greece and Cyprus,
where it is believed that the US could have
blocked the Turkish action. US Ambassador
Davies was killed during a demonstration at the
US embassy in Nicosia on August 19.
status of Negotiations
The scheduled meeting between President
Clerides and Turkish Cypriot leader Rauf
Denktash is the first sign of diplomatic progress
after a week of stalemate. The two leaders have
agreed to discuss urgent humanitarian issues?such
as the massive refugee problem?arising from the
Cyprus conflict. Clerides has said that he will not
negotiate on the broader political issues until the
matter of returning refugees to their homes is
resolved, but any indicaton of flexibility on the
part of the Turks could give the Greek Cypriot
leader the room he needs to broaden the talks.
It is generally considered by diplomatic
observers that any breakthough will have to come
as a result of negotiations between the two
Cypriot communities. Athens has rejected all sug-
gestions that peace talks resume between Greece
and Turkey, saying it cannot talk in the face of a
"fait accompli." The Greeks could probably
accept any reasonable settlement made by
Clerides, but to make major concessions in direct
talks with the Turks would be. politically unac-
ceptable for the Karamanlis government.
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For their part, the Turks seem prepared to
wait out the Greeks for as long as necessary.
Turkish military moves south of the so-called
"Attila Line"?which delimits the northern third
of the island claimed for a Turkish Cypriot
autonomous area?were probably designed, at
least in part, to for-re the Greeks to the con-
ference table. The failure of this gambit has led
the Turks to take initial steps toward establishing
an autonomous Turkish administration in north-
ern Cyprus. The Turks have indicz.; id a willing-
ness to negotiate on the area of Turkish control
west of Morphou and to make minor adjustments
in the "Attila Line" elsewhere, but the longer
talks are delayed, the more difficult it will be for
the Turks to consider moving out of areas
presently under their control.
Greek Reaction
The Karamanlis government has remained
firm in its intention to withdraw from military
participation in NATO, although it has not yet
taken any steps to make the withdrawal official.
According to NATO Acting Secretary General
Pansa, the Greek Defense Ministry has instructed
its representative on the NATO military com-
mittee that a 15-day withdrawal notice for Greek
military personnel will become operative on the
date Athens actually issues the recall order.
NATO authorities are somewhat encouraged by
the fact that Greek officers so far have only
received readiness orders, indicating that Athens
may be having second thoughts.
The future status of US military forces in
Greece is even more unclear. There have been
hints that the Karamanlis government will order
US forces to leave the country, but government
spokesmen continue to deny that such a decision
has been made. Restrictions have, however, been
placed on US access to certain facilities, and
limitations have been placed on US military
flights into and out of Athens.
The announcement of military withdrawal
from NATO, which was extremely popular in
Greece, has strengthened Prime Minister Kara-
manlis' hand for the time being. He has further
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consolidated his control by reshuffling the top
echelons of the army and installing military
leaders he trusts in the top positions. On August
19, Karamanlis ousted the armed forces chief,
General Bonanos, and the army chief, General
Galatsanos, as well as several other senior military
officers identified with the previous regime.
General Arbouzis, who commanded the Greek
army contingent in Korea, was called out of
retirement to replace Bonanos, and General
Davos, former commander of the army corps on
the Greek-Turkish border and a critic of the last
junta, was named army chief. Former Greek
strong mdn General loannidis was not included in
the purge, but there is speculation that he will be
forced to retire by being passed over in the next
round of military promotions.
Anti-US Sentiment
Turkish military successes on Cyprus have
sparked an upsurge in anti-American sentiment in
both Greece and Cyprus. Demonstrations have
now been banned in both countries, but not
before US Ambassador Davies' life was taken in
an attack on the US embassy in Nicosia and
serious threats were made against the security of
the US base on the Greek island of Crete.
The attack in Nicosia was apparently
planned?possibly by the right-wing EOKA-B ter-
rorist group?and there are indications that one
purpose of the violent demonstration was to kill
Ambassador Davies. While marine guards and
local security forces confronted demonstrators
who set a fire within the compound, a machine
gun located in a building 'across from the embassy
raked the ambassador's office. The ambassdor and
a secretary were killed in a corridor outside the
ambassador's office where they had sought
refuge.
Soviet Political Reaction
The Soviets are trying to square their in-
terest in a unified and independent Cyprus free of
NATO links with their desire to avoid alienating
Turkey. As a result, they have not committed
themselves to meaningful support for any of the
contending parties.
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Demonstrators hurl objects at embassy building
Moscow has not openly criticized Ankara
because it does not want to risk damaging its
longer term interests in Turkey: unhindered
passage through the straits, weakening of Tur-
key's ties with NATO, and a decline of US in-
fluence there. The Soviets have told the Turks
that they have three basic interests in the final
settlement for Cyprus:
? no US military bases to be allowed on
the island;
? no partition of Cyprus;
? continued Cypriot independence, what-
ever the form of government.
The imprecision of the third stipulation
appears designed to appeal to Ankara. Some form
of federation and a continued Turkish military
presence are not ruled out. In addition, Moscow's
public support for Makarios, whose return is
unacceptable to the Turks, has diminished con-
siderably during the last few weeks.
The Soviets have been chary about courting
the new regime in Athens. Rumors of Soviet-
Greek military cooperation notwithstanding, Mos-
cow has failed to give the Greeks any significant
support. The Soviets are, nevertheless, still
intrigued by the turn of events in Greece. They
have applauded Athens' decision to pull its troops
out of NATO, and over the longer term will
encourage its drift away from the US.
Moscow has been frustrated by its exclusion
from all significant diplomatic efforts to solve the
crisis. The Soviets hive attempted?without
notable success--to get more involved through the
UN. Soviet press articles continue to demand a
greater role for the UN and to say that NATO hod
failed to settle the Cyprus problem because of
"ulterior motives." Soviet criticism of NATO wifl
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probably increase as the attempts to reconvene
the Geneva peace talks proceed.
Still, the Soviets can take heart from some
favorable developments, such as the fall of
Greek military junta and the withdrawal of
Greece from NATO, which have been achieved at
no cost to them.
Military Situation
After a four-day Turkish advance across
Cyprus, both Greek and Turkish forces on the
island agreed to a cease-fire on August 16. The
Turks, however, continued their advance until
August 18 and took an area of high ground near
the Nicosia-Larnaca road, which they had
declared as an "ancillary objective." Since then,
the cease-fire has held with a few minor excep-
tions.
The major Turkish objective of seizing the
northern third of Cyprus?along a line running
generally from Lefka through Nicosia to
Famagusta?was achieved shortly before the
cease-fire was implemented. The Turks' advance
had been expected to stop when it reached the
southernmost of the two major roads between
Nicosia and Famagusta on August 16, but their
forces continued toward the besieged Turkish
Cypriot enclave at Melousha. By August 18, the
Turks had captured the village of Pyroi, thus
gaining control of the important Nicosia-Larnaca
road. The southward advance finally stopped at
the village of Troulli just west of the British base
.at Dhekelia.
Prior to the cease-fire, the heaviest fighting
on Cyprus was north of the Nicosia airport, where
Turkish troops attempted to overrun the camp of
a 950-man regular Greek army contingent. The
Greeks repulsed the numerous attacks despite
heavy Turkish air and artillery strikes. Since the
cease-fire, there have been no reports of attacks
on the Greek camp.
On the mainland, the US defense attache in
Ankara reported that a convoy of at least 500
military vehicles moved southwest from Adapa-
zari toward Bursa on August 19. Some of the
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trucks carried troops in battle dress, and others
weie towing artillery pieces and transporting sup-
plies. The destination and purpose of the convoy
has not been determined. 25X1
Turkish Chief of Staff Sancar
We are in full control
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ARAB STATES - ISRAEL: GROPING THEIR WAY
Syrian Foreign Minister Khaddam's visit to
Washington this week underscores Syria's interest
in continuing to pursue its objectives, for the
present at least, through negotiations rather than
war. President Asad put the Syrian army on a
precautionary alert, but otherwise Damascus'
rention over the past month to Israeli military
maneuvers and talk of war has been unusually
restrained.
While in Yugoslavia last week, Asad accused
the Israelis of raising tensions in the Middle East
in an attempt to stall negotiations and warned
that Syria was ready to rebuff any Israeli military
attacks. Asad said that Syria might again have to
resort to force if Israel continued to throw
"obstacles in the path to peace," but in the joint
communique issued at the end of Asad's visit the
Syrians implicitly stressed the need to continue
efforts to find a peaceful solution.
There is always the dancrr, of course, that
the Syrians might become disenchanted with the
peace talks. But they do not appear anywhere
near that point now. Without Egyptian support or
the element of surprise, moreover, the Syrians
know they would risk a military disaster by carry-
ing out a large-scale attack against lErael.
Right now, President Asad seems mainly pre-
occupied with sorting out his relatio is with
Egypt, Jordan, and the Palestine Liberation
Organization in preparation for the next stage c.f
the Geneva talks. He met with PLO chief Yasir
Arafat earlier this month. The two men re-
portedly agreed to work more closely together to
bolster the moderate faction of the PLO against
the "rejection front," which has demanded that
the organization refuse to attend the Geneva
conference.
Although still distrustful of Sadat, iVad is
said to have told Arafat that Syria as well ;Is the
PLO must continue to cooperate with Egypt.
Asad also said he was unwilling to risk a complete
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breach with Jordan as long as the threat of war
with Israel remained, but he promised to try to
bring about negotiations between Jordan and the
PLO on an equal basis. Asad would like to see
some sort of compromise between the PLO and
Jordan to enable the Arabs to get on with formu-
lating a coordinated strategy for the peace talks.
Egypt, meanwhile, is continuing prepara-
tions for a tripartite meeting with Syria and the
PLO possibly to be held at the conclusion of
Syrian Foreign Minister Khaddam's visit to Wash-
ington. The primary purpose of the meeting will
be to urge compromise on the Palestinians. Egypt
will try to persuade both Syria and the PLO that,
while Cairo is not abandoning the Palestinian
cause, any hope at this point for the eventual
establishment of a Palestinian state requires that
the PLO first acknowledge Jordan's right to nego-
tiate for the return of the Israeli-occupied West
Bank.
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Egyptian Foreign Minister Fahmi's recent
statements in Washington seem to lean heavily in
Jordan's direction. He told a television inter-
viewer last week that Jordan might represent West
Bank Palestinians "temporarily," if this were
necessary to induce an Israeli withdrawal from
the territory. In the US-Egyptian communique at
the conclusion of his visit this week, Fahmi
agreed that the attendance of "other parties" at
the Geneva conference would be decided only
when the conference reconvenes. He thus im-
plicitly acknowledged the Palestinians' exclusion
from the next round of negotiations.
ISRAELIS IN NO HURRY
In Israel this week there were signs of
concern that Washington may be pressing Tel
Aviv to step up the pace of peace negotiations
and that the US may be supporting Jordan's
efforts to secure a troop disengagement agree-
ment on the Israeli-occupied West Bank. Press
commentaries reflected alarm over the US-Jordan
statement issued at the conclusion of King
Husayn's visit to Washington on August 18, which
referred to such a military separation, and over
Secretary Kissinger's announcement the following
day that Prime Minister Rabin had been invited to
visit the US in early September.
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Israel's largest daily criticized the invitation
as an attempt to dictate a timetable to Israel in an
effort to maintain the diplomatic momentum of
the negotiations. Another influential journal,
however, claimed that Rabin may actually prefer
an early trip to Washington in order to press for
negotiations with Egypt rather than Jordan as the
next step. One English-language daily argued that
references to a disengagement agreement, with its
buffer zones and UN controls, only serves to
separate the West Bank from Jordan. Israel is
anxious to prevent the creation of a separate
Palestinian state and will try to ensure that any
West Bank territory it might agree to give up
reverts only to Jordan. 25X1
Statements by government officials reflected
some of the same unhappiness evidenced by the
press as well as a desire to slow the pace of
negotiations. Prime Minister Rabin told a para-
military youth group on August 19 that there
would be no more disengagement pacts such as
those with Egypt and Syria, but only talks
pointed toward achieving substantive peace agree-
ments. The same day, a high Israeli official told
Ambassador Keatina that he assumed there was
no pressing reason for Rabin to go to Washington
before October. The official also scoffed at an
initial disengagement accord with Jordan that
would involve Israeli troop withdrawals.
The government's go-slow attitude toward
the negotiations with Jordan stems in large part
from its self-imposed commitment to call for new
national elections before agreeing to any West
Bank settlement involving )sraeli territorial
concessions. An inti?r'm agreement with Jordan
presumably would trigger such elections at a rel-
atively early date. Rabin reportedly prefers to go
before the electorate only on the basis of an
overall, final peace settlement with Jordan in
order to increase the government's chances of
success and to avoid opposition charges that he
succumbed to US pressures for a partial settle-
ment without knowing the content of the final
package.
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EGYPT-LIBYA: MEETING PRODUCES LITTLE
The meeting between presidents Sadat and
Qadhafi last weekend in Alexandria resulted in
little more than a papering over of their much
publicized feud. Both leaders agreed to quiet
down acrimonious press exchanges and to send
representatives to another round of talks in early
September. The dismantling of their once coop-
erative alliance, however, will continue.
Although Qadhafi had long been eager fo:-
such a meeting, Sadat apparently went along with
the mediation effort largely because it was ar-
ranged by United Arab Emirates President Sheikh
Zayid, one of Cairo's wealthy benefactors. The
meeting received scant coverage in the ET .n
press, and Sadat only half-heartedly offer. to
Qadhafi and Sadat
Friends in public
2bA"I
send an emissary to Tripoli to carry on the
dialogue.
Neither Sadat nor Qadhafi seems convinced
that a true reconciliation is possible, and their
agreement to muffle differences may not survive
the current withdrawal of the Egyptian military
mission fron. Libya. Each side has agreed publicly
to return military men and equipment on loan to
the other, but diffi=rences could arise over
whether equipment was "given" or "loaned."
Moreover, Tripoli reportedly intends to hold
some Egyptian aircraft and support personnel
until Cairo returns a squadron of Libyan Mirages.
If either side begins to suspect the other of reneg-
ing on the agreement, recriminations could
quickly flare up again.
Sadat would like to avoid such arr incident,
if only to keep himself free to deai with the
broader issue of peace negotiations. The Egyptian
leAer, however, has little tolerance for Qadhafi's
antics, and if provoked he might renew his subtle
appeal to other members of the Libyan leadership
to challenge Qadhafi's authority.
Although Qadhafi and his colleagues remain
publicly united, the Libyan leader cannot afford
to ignore the possibility of Egyptian trouble-
making. The rift with Cairo has probably aggra-
vated private differences between Qadhafi and his
subordinates, who have for some time questioned
the wisdom of their leader's policies toward
Egypt. There is no evidence that other members
of the regime are sympathetic to Egypt's position,
but several are thoroughly disgusted with Qa-
dhafi's arbitrary behavior, and urgings from Cairo
may encourage them to stronger expression% nf
dissent with Qadhafi.
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ARABIAN PENINSULA: RADICAL SHIFT
The recently announced reorganization and
change in name of the Aden-based Popular Front
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for the Liberation of Oman and the Arab Gulf?
an organization of area radicals dedicated to the
overthrow of local conservative governments?
suggests an early effort by the Marxist regime in
South Yemen to establish diplomatic ties with the
conservative gulf states. There are no signs,
however, that the Front, which has long been
conducting the guerrilla war in Oman's Dhofar
Province as well as organizing cells in the gulf
states, intends to modify its effort to bring down
the government of Sultan Qabus by force.
In early August, Aden radio announced that
the "second general conference" oF the radical
organization had adopted, sometime in July, a
plan whereby the Front's various national units in
Oman and in the gulf states would become
independent and free to draw up their own action
programs designed to fit local political situations.
On August 7, Aden radio indicated that "Arab
Gulf" had been dropped from the organization's
name and that the resulting Popular Front for the
Liberation of Oman embraced only the Dhofari
rebels.
The statements coming out of Aden attri-
bute the break-up of the old Front to the need to
"mobilize," to "put secondary ccntradictions
aside," and to crea+e an organizational form that
will enable the Dhofari rebels to concentrate on
finally putting down the British and Iranian
"invasion" of Oman. At no point !n the statement
on reorganization was there any indication that
the rebels intend to withdraw their guerrilla units
from Dhofar. In fact, a later statement reiterated
their commitment to continue the "armed
struggle."
The name change and modification of the
Front's structure and focus were probably under-
taken at the behest of Aden. The South Yemenis
tedly are interested in improving relations
with the gulf states. For Aden to continue to be
41entified as the primary backer of an organi-
zation overtly committed to the "liberation" of
those very governments would certainly not make
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the establishment of diplomatic relations an easy
task. At the same time, South Yemen can be
expected to continue its ties, on a covert level,
with the gulf radicals.
Meanwhile, Omani officia's are reacting
warily to recent proposals being 'ioated by offi-
cials of some moderate Arab stat..s that an Arab
military force be sent to Dhofar. As yet, the
Omanis are not certain what the proponents of
the plan have in mind, but Sultan Qabos is not
likely to be receptive to any proposal that wou'd
replace the 1,400-man Iranian force already there
with an untried Arab contingent. Omani Foreign
Minister Zawawi has speculated, however, that an
Arab peacekeeping force along the Oman - South
Yemen border might be appropriate after the
Dhofar conflict ends.
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IRAN-IRAQ: TENSIONS RISE
Tehran this week placed its border guard
units and army divisions near the border with Iraq
on full alert in response to minor border incidents
and increased Iraqi military action against the
Kurds. The new Iraqi campaign against the
Kurds?which seeks to cut rebel supply lines to
Iran and to isolate Kurdish forces?increases the
likelihood of violations of Iranian territory. Iraqi
aircraft that strayed across the border reportedly
bombed one Iranian village, and another village
was shelled.
Although Iran in the past has dealt with
Iraqi border violations in a low-keyed manner, the
Shah evidently has now decided to meet with
force any Iraqi operations against the Kurds that
spill over into Iran. He has ordered at least three
army brigades and supporting units to move
closer to the border to ? k
.0 I" 1-1110. ??? -
The Iranian moves were probably respon-
sible for an Iraqi decision to conduct a military
exercise near the Iranian border as a show of
force. On August 20, armored units not involved
in the Kurdish fighting held maneuvers within a
few kilometers of the border.
Despite the increasing tension along the
border, Baghdad and Tehran apparently intend to
proceed with talks that began last week in Istan-
bul. These talks are aimed at preparing an agenda
for possible discussions by the Iraqi and Iranian
foreign ministers. Iranian Foreign Minister Khalat-
bari left for Istanbul on August 20 to ascertain
whether or not the preliminary talks have made
enough progress to justify a meeting with his Iraqi
coucterpart.
Baghdad and Tehran have been exploring the
possibility of talks .:ince last May, when the UN
Security Council adopted a resolution calling for
an end to the occasionally violent border dispute
and for another effort at a negotiateu settlement.
Discussion at the foreign ministers' level
depends, however, on whather both sides can
keep border incidents triggered by Iraqi-Kurdish
fighting from getting out of hand. A senior of-
ficial in the Iranian Foreign Ministry has told the
US embassy that Iran expects to make little head-
way in the Istanbul talks in view of what Tehran
calls continuing Iraqi border provocations. Kha-
latbari announced on August 14 that he had
instructed the Iranian delegate in Istanbul to
make representations to his Iraqi counterpart
about the "border aggression." 25X1 25X1
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PORTUGUESE AFRICA: UPS AND DOWNS
Lisbon's decolonization process in Africa,
well advanced in the case of Guinea-Bissau, may
soon move forward in Mozambique. Angola, how-
ever, continues to pose major problems for the
Spinola government.
Foreign Minister Soares returned to Lisbon
last weekend following talks in Dar es Salaam
with leaders of the rebel Front for the Liberation
of Mozambique. The talks resulted, according to
Soares, in tentative agreement on a plan that calls
for the formation of a provisional government
with "substantial" rebel participation. The pro-
visional government, to be headed by a "high
Portuguese official," would run the territory for a
transitional period of one year, after which power
would be transferred to the Front.
Soares indicated that the plan is now being
studied by President Spinola. If it is finally ac-
cepted by both sides, further talks to work out
details, such as the extent of rebel participation in
the provisional government, could take place in
the near future.
Lisbon clearly remains in a quandary over
Angola. It wants desperately to talk with the
rebels there, but has been frustrated by rivalry
among the three rebel groups as well as by
factionalism within one of them?the once-
dominant Popular Movement for the Liberation
of Angola. Moreover, racial antagonisms are more
deeply rooted in Angola than in the other terri-
tories, and Lisbon cannot show itself too ready
for accommodation with the insurgents without
risking a backlash from the territory's sizable
white minority. Racial violence has flared up on
numerous occasions since the coup in Lisbon last
April, and it could quickly break out again.
In the absence of talks with the rebels, Presi-
dent Spinola is scheduled to meet with Zairian
President Mobutu, possibly this weekend, to dis-
cuss the Angolan problem. Lisbon is well aware
that Mobutu is an influential figure in the African
liberation movement, and that he has his own
stake in securing a peaceful transition and stable
government in Angola. Mobutu, for his part, will
test Lisbon's attihR-le toward the Zairian-based
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Angolan rebel
Still a problem
National Front for the Liberation of Angola,
which he is trying to boost into the dominant
negotiating position with Lisbon.
Both the National Front and the Popular
Movement?the two leading rebel groups?have
publicly rejected the offer Lisbon made last
month to estahlish a provisional coalition govern-
ment that would include representatives of the
rebel organizations and of the white and mestizo
communities in Angola. At the present time,
neither rebel group is eager to share power with
the other. The Popular Movenlent is currently
preoccupied with a congress taking place in
Zambia to try to resolve a two-year-old leadership
dispute. The National Front, long the junior of
the two groups, does not have as wide a following
within Angola. Until the Popular Movement's
leadership crisis is resolved and some sort of
united front established between the two rival
organizations, there seems little chance that
Lisbon's program for decolonization will make
any headway in Anaola.
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CAMBODIA: NEW UN TACTICS
Following a brief swing through several
Asian capitals, Prime Minister Long Boret is back
home with a new strategy for defending Phnom
Penh's seat at the UN. Boret enlisted the help of
Indonesian Foreign Minister Malik in developing a
new approach that hopefully will appeal to pc:),
tential abstainers and possibly even to some dele-
gations that voted against Phnom Penh last year.
A pro-Sihanouk resolution will almost cer-
tainly be inscribed on the General Assembly
agenda this fall. Boret's plan is to offer an amend-
ment to the resolution calling for the establish-
ment of a UN fact-finding team to investigate the
situation in Cambodia and requesting that no
further action be taken on the Khmer issue until
the team submits its report to the 1975 General
Assembly.
Although the maneuver is essentially a new
twist on the old delaying action of last year, it has
a reasonable chance of success. Jakarta has ap-
parently promised to lobby hard for the amend-
ment. The support of the Philippiro-, Australia,
and Japan also seems assured. Malaysia, Singa-
pore, and Thailand have so far shown little en-
thusiasm for Phnom Penh's UN cause, but will
probably fall in line. Strong Asian support or the
amendment could attract the votes of delegations
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hitherto reluctant to involve themselves in what
they have considered essentially a regional issue.
In any case Boret's amendment would improve
Phnom Penh's bargaining position at the General
Assembly and place Sihanouk' s backers on the
defensive.
Arab Dividends
Phnom Penh may also be on the verge of an
important breakthrough in its efforts to gain
increased international recognition on the eve nf
the UN battle.
King Faysal has agreed to
receive Prime Minister Long Boret in Jidda during
the last week in August, and a formal announce-
ment of Saudi recognition is expected at that
time. 25X1 25X1
The Lon Nol government had been courting
the Saudis with little apparent success for most of
the summer. Jidda was slow to approve the visit
of an unofficial Cambodian delegation, and few in
Phnom Penh expected that Saudi recognition
could be obtained. Increased Arab support?even
Jidda's alone?could create favorable conditions
at the UN f
tive.
? ? : ? ?
8
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Long Boret at an earlier UN session
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Vietnam:
COMMUNIST PRESSURE CONTINUES
The Communists' summer campaign is now
in its fifth week, and although the Communists
have not made any further significant gains into
the populated sectors of southern MR 1, they are
continuing the pressure against several outlying
district towns. In Quang Ngai Province, North
Vietnamese forces captured the second district
capital in as many weeks and overran a South
Vietnamese outpost in Kontum Province.
Another outpost in Pleiku Province is under
attack, and the government has lost three isolated
government positions in southeastern Tay Ninh
Province.
Both government and Communist losses
have been substantial, but the government's
defense effort has not been crippled in any of the
regions. South Vietnamese commanders are still
expressing confidence that they can contain the
attacks arid eventually recapture most lost posi-
tions. In September, bad weather will begin to set
in over much of the country. The government is
hopeful thut the pressure in the northern prov-
inces will then ease sufficiently for them to begin
retaking some of the lost ground. Military
officials are cautious in their appraisals, however,
and apparently are reconciled to some fairly in-
tense fighting and further losses through the end
of the year. Prime Minister Khiem, for example,
already has directed General Truong in Military
Region 1 to begin drawing up a plan to consoli-
date his forces on the periphery of the region's
major population centers. Khiem acknowledges
that such a plan could mean additional loss of
land and people, but he is unwilling to accept the
heavy casualties and equipment losses that would
be involved in trying to defend remote and stra-
tegically unimportant positions.
Although government military commanders
are generally satisfied with the performance of
their units, they also are complaining of shortages
of ammunition, helicopters, and combat equip-
ment. Government commanders are also pointing
to the large amounts of ammunition and equip-
ment the Communists are using in their current
campaign as an indication that the Communists
have sufficient materiel resources to back their
campaign for the next several weeks.
Despite this apparent Communist logistic
advantage, senior government commanders in
Military Region 3 are finding some shortcomings
in the enemy's performance. They claim that the
Communists have used poor infantry tactics, have
unnecessarily exposed artillery and heavy
equipment to zir strikes, and have displayed a
general lack of aggressiveness on the ground.
Communist main forces in the region, they feel, 25X1
are not as strong, well-trained or well-led as o *-
nally estimated.
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JAPAN: TANAKA'S POLITICAL OUTLOOK
Three months ago, Prime Minister Tanaka
was looking ahead to this summer as recompense
for a year of political setbacks. A slight easing of
the inflationary spiral, together with the disarray
of the opposition parties, augured well for the
chances of his Liberal Democratic Party in the
Upper House elections scheduled forJuly. Tanaka
saw in the anticipated victory an opportunity to
weaken both the left in parliament and his rivals
within the ruling party, thus setting the stage for
his own re-election in 1975 to a second term as
party president and prime minister.
The election, far from fulfilling Tanaka's
hopes, reduced Liberal Democratic strength to a
three-seat majority in the Upper House, sufficient
to pass legislation but not to fully contriil the
flow of committee business. The setback pro-
duced a flood of intraparty recrimination, almost
all of it directed against Tanaka personally. Two
cabinet members (Deputy Prime Minister Miki
and Finance Minister Fukuda) resigned imme-
diately in protest over the Prime Minister's high-
handed campaign tactics.
Just last week, Keidanren, the influential
umbrella organization of the nation's business
leadership, announced that it will no longer serve
as a collection agency for the ruling party.
Keidanren's action followed growing public criti-
cism of the intimate government-industry rela-
tionship?in particular Tanaka's excesses in
squeezing campaign funds from the business com-
munity. Corporate donations will not end, but
the Liberal Democrats will now have to rely upon
voluntary contributions in place of the assured
monthly income that Keidanren provided in the
past.
The six weeks since the election have been a
time of political retrenthment. The defection of
Miki and Fukuda is certainly not a crippling blow
to Tanaka?he remains very much in charge?but
it compels him to woo more actively the key
politicians of the intraparty opposition. In this
20A-I
Tanaka
effort, he has all the tactical advantages of an
incumbent?most importantly, the power of
appointment, and control of the party's vast cash
reserves.
Tanaka's cause, moreover, is aided by the
basic political unattractiveness of his challengers.
Fukuda, the only serious contender at this point,
will probably find little profit in his self-imposed
cabinet exile. He is nearly 70, with an image of
excessive conservatism; his succession hopes are,
perforce, tied to the possibility cf filling in for a
politically crippled Tanaka.
Public support for Tanaka may dip again this
fall as the goveinment is forced to choose be-
tween either continued fiscal and monetary re-
straints to counter inflation, or stimulation of the
economy to ease the recession. Barring an acute
slump in the economy, however, or the emer-
gence of some major political scandal tied to the
Prime Minister, Tanaka will likely complete his
first term and go to his party's convention in
mid-1975 favor d +IP A? ? ? ? years ?
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Korea-Japan:
ASSASSINATION AFTERMATH
The August 15 attempt to assassinate South
Korean President Pak Chong-hui?which resulted
instead in the death of his wife and a teenage
bystander?will have a major political impact
because of the gunman's background and the way
authorities in Seoul have chosen to represent his
actions.
South Korean authorities claim that assailant
Mun Se-kwang confessed under interrogation that
'his effort to kill President Pak was ordered by
North Korean President Kim II-song.
The official South Korean version of the
assassination plot is that Mun, an anti-Pak activist
among Koreans resident in Japan, was recruited
for his mission in September 1972 by Kim Ho-
ryong, leader of a chapter of Chosen Soren, the
pro-Pyongyang umbrella organization of Koreans
in Japan, and by an unidentified North Korean.
Mun was told by his mentors that Kim II-song had
ordered the assassination. According to the South
President Pak and his wife
Moments before
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Koreans, Mun had ber)n instructed to kill Pak
earlier, but the date had then been postponed to
August 15. 25X1
Much of this story has been confirmed by
independent investigation,
Mun was d friend of Kim Ho-ryong, who
was committed to the North Korean cause; and
Mun was a longstanding admirer of Kim ll-song
and Mao Tse-tung. There is as yet no confirma-
tion, however, of Kim Ho-ryong's?or Chosen
Soren's?involvement in the assassination plot,
much less of Kim II-song's personal role.
Seoul's accusations?true or not?will have
important effects. The political dialogue between
North and South Korea?moribund in any case?
seems headed for the deep freeze. The signs are
already evident: Seoul called off a meeting sched-
uled for August 21 and has intensified prov-
ganda attacks on the North; Pyongyang, for
part, is charging Seoul with "foul intrigues"
designed to bolster Pak's repression at home and
to justify a crackdown by Tokyo on anti-Pak
elements among the 600,000 Koreans in Japan,
The attempted assassination will reinforce
President Pak's determination to stamp out
domestic dissent, whatever the source. There are,
on the other hand, prominent South Koreans who
would like to retreat from a policy of repression,
fearing that it might eventually push the country
to the brink of internal chaos. They see this as an
appropriate moment for Pak to rally the popula-
tion in support of policies that clearly distinguish
the Communist enemy from legitimate political
opposition. If he follows past form, however, Pak
will probably disappoint such hopes.
Further deterioration of the already strained
relationship with Japan is also likely. Seoul has
reviewed the dimensions of the "Japanese con-
nection" in the Mun case and has concluded that
"the North Koreans are using Japan as a base"
against South Korea. Affronted by official
Japanese denials of any legal or moral responsi-
bility, and by persistent Japanese press attacks on
the Pak government, Seoul is demanding a
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demonstration of Japanese "sincerity" as well as
tough action against Kim Ho-ryong and the
Chosen Soren apparatus. Prime Minister Tanaka's
presence at Mrs. Pak's funeral apparently has not
appeased the South Koreans, whose resentment
could easily take on ultranationalist coloration.
There have already been demonstrations at the
Japanese embassy in Seoul.
The key to Seoul's course of action in all
these problem areas is Pak himself. The loss of his
wife, a major softening influence on his otherwise
stern and unyielding personality, could well lead
the President to strike out more forcefully against
his various opponents.
25X1
MALAYSIA: NO ELECTION SURPRISES
The Razak government is expected to sweep
the national elections on August 24. Razak's
National Front, a new nine-party confederation
that mirrors Malaysia's racial diversity, will
probably take the lion's share of the 154 seats in
the lower house of the federal parliament. The
Front's member parties held 118 of the 144 seats
in the outgoing parliament, and they are likely to
do better in the enlarged body.
The projected election outcome will further
Prime Minister Razak's aim of achieving a
"national consensus," a solid coalition govern-
ment that embraces all of Malaysia's major races
and has a minimum of political opposition. At the
time, the United Malays National Organiza-
tion, the main government party, predominates in
the multiracial National Front, and Malay
political pre-eminence has been enhanced by a
redrawing of electoral boundaries.
Under the constitution, the government was
not required to go to the polls until 1976, but
Razak decided to act now, believing government
popularity is at a peak. Economic prosperity cur-
rently is at an all-time high, but there may be a
downturn later in this year or the next because of
Malaysia's dependence on exports. The govern-
ment also believes that its position has been
2bAl
strengthened by recent successes against Com-
munist insurgents in the east Malaysian state of
Sarawak, and that these achievements will out-
weigh any public concern over the expansion of
Communist activities in peninsular Malaysia.
Moreover, the opposition parties are weak, and
efforts to establish a united opposition front have
foundered.
The campaign has been a quiet one, and the
government hopes that limiting the campaign to
three weeks, plus strictures on the discussion of
racially sensitive subjects, will prevent a recur-
rence of the communal rioting that followed the
last elections in 1969. Communist terrorists have
staged several incidents in remote areas, but they
are not capable of interfering sianifican'-:y with
the voting. 25X1
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MEXICO: MAJOR OIL FIND
Mexico reportedly has discovered giant oil
fields in its Chiapas and Tabasco states that could
change the petroleum market in the Western
Hemisphere. If the more optimistic estimates of
the new fields' potential are borne ou'c, within a
few years Mexico could rank alongside Venezuela
as the Western Hemisphcre's leading oil exporter.
Venezuela's proved reserves, now estimated at 14
billion barrels, have been declining steadily as a
result of reduced exploration.
The state oil company discovered the new
fields in 1972, and all subsequent wells have
proved successful. Another dozen or so geological
structures likely to be productive have been
mapped in the area. Mexico has already ear-
marked $1.4 billion to explore and develop the
new deposits during 1974-76.
55444/f 8-74
These fields are being widely compared with
the "Golden Lane" fields that made Mexico the
world's largest oil exporter early in the century.
The oil is of high quality, and reservoir pressures,
gas/oil ratios, and other indicators are all highly
promising.
25X1
Mexican officials have already announced an
abrupt turnaround in the nation's crude oil
supply. In June, sharply increased production
from these new oil deposits allowed Mexico to
break the record of 521,000 barrels per day set in
1921, to end crude oil imports of 65,000 barrels
per day, and to declare an exportable surplus.
Mexican oil production will probably exceed
750,000 barrels per day by the end of 1974, and
the country will have an exportable surplus in
excess of 150,000 barrels per day. Transporting
this oil should pose no problem as the fields are
close to port facilities on the Gulf of Mexico. The
discovery is also likely to bring a 20-percent
increase in as roductio
MEXICO
Golden Lane
Oil Field
Tampico
Veracruz New Oil
Veracruz Fields. Cludi6 del Carmen
Tabasco
Chiapas
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PANAMA-CUBA: DIPLOMATIC RELATIONS
The Panamanian government announced on
August 20 its intention to re-establish diplomatic
relations with Cuba after a break of 13 years. The
next day, a delegation headed by Nicolas Barletta,
minister of planning and economic policy,
traveled to Havana to make the formal arrange-
ment-. Barletta's role as a key economic tech-
in the Torrijos administration suggests that
i likely to discuss trade as well as political
matters with his hosts. Among Panama's reasons
for normalizing relations with Cuba is the fact
thz,t Torrijos believes his friendship with Castro
buttresses his "revolutionary" image in the
developing world. The two leaders?who already
have had extensive dealings with each other, but
always through intermediaries?are likely to meet
soon.
Barletta told a press conference in Panama
that the re-establishment of diplomatic ties with
Barletta
25X1
PANAMA JOINS SIX OTHER OAS
MEMBERS?ARGENTINA, MEXICO, PERU,
JAMAICA, BARBADOS, AND TRINIDAD
AND TOBAGO.
Cuba was a step toward Latin American unity. He
said that Panama did not anticipate any economic
reprisals by the US for taking the step, noting
that the US maintains very good relations with
Mexico, which has continued to maintain
diplomatic ties with Havana despite the sanctions
imposed in 1964 by the Orwinization of Ameri-
can States. Furthermore, Tort ijos apparently feels
that the canal treaty negotiations with the US are
far enough advanced so that they will not be
impaired by the move toward Cuba.
Panama joins six other OAS members?
Argentina, Mexico, Peru, Jamaica, Barbados, and
Trinidad and Tobago?that have full relations
with Cuba. Guyana, which is not a full member
state of the OAS, also has diplomatic and trade
ties with Havana. Several other governments, in-
cluding Colombia, Venezuela, and Costa Rica, are
strong supporters of lifting the OAS sanctions
against Cuba, but thus far have held off making
unilateral moves, preferring to work through OAS
channels. Given the Panamanian initiative,
however, and the widespread speculation in Latin
America about a possible new US policy toward
Cuba under the administration of President Ford,
additional unilateral moves may be forthcoming.
Nothing would please Castro more. He
recognizes that the OAS is likely to lift the
sanctions against Cuba eventually, opening the
way for the renewal of diplomatic relations by
the member nations. He prefers, however, that
they take this step outside the OAS framework
because it contributes toward his goal of scuttling
the organization.
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Nicaragua
ONCE AND FUTURE PRESIDENT
General Anastasio Somoza is expected to be
returned to the presidency on r;eptember 1 in
general elections that will also result in a substan-
tial majority for the well-organized ruling Liberal
Party. The legal opposition?a small faction of the
Conservative Party?constitutionally must receive
40 percent of the congressional seats and repre-
sentation throughout the government regardless
of how small its percentage of the vote. The
non-legal opposition proposes to boycott the
polls, and its leaders may try to provoke their
own arrest in a bid for sympathy that might
attract wider support.
The presidential contest?if it can be ca:led
that?is between former President Somoza
(1967-72) and his colorless opponent, Edmundo
Paguaga, who currently occupies the one Con-
servative seat on the executive troika. Somoza is
the third member of his immediate family to hold
the top office during the 1-0 years his family has
controlled Nicaragua. Unable constitutionally to
succeed himself and unwilling to step down for a
full five-year term, Somoza negotiated a pact with
Somoza
2bAl
the Conservatives in 1971 whereby he would be
succeeded by a 30-month interim government
(May 1972 to December 1974). The Conserva-
tives were promised increased participation in the
government and a revamping of the electoral
system. For Somoza, whose re-election then was
recognized as a certainty, the pact offered a faster
return to office.
The increase in minority representation was
embodied in a revised constitution issued earlier
this summer. Electoral reforms and the 7e-registra-
tion of voters, howevar, were all but ignored. The
failure to accomplish this important provision of
the pact has been one factor in causing many
Conservatives?and some disgruntled Liberals?to
desert their parties and make common cause with
the non-legal opposition. This amorphous group
includes small unregistered parties of all political
stripes and a wide range of independents.
Their numbers are relatively small, but they
have been a very articulate opposition. Twenty-
seven of their leaders were tried for publicly
branding the election a sham and recommending
that voters shun the polls on September 1.
Encouraging non-participation in an election is
illegal, and the 27 had their citizenship rights
suspended for six months. Under the suspension,
they are not allowed to hold public office, hold
or attend meetings, or to petition?strictly
interpreted this could prevent them from being
notaries, a considerable source of revenue for
many lawyers?or even to apply for a driver's
license.
This sentence was probahly intended to
silence the leaders of the non-legal opposition
during the remainder of the campaign withnut
making them martyrs by going to jail. It might,
however, cause some to speak out more forcefully
or to incite some minor unrest in an effort to get
arrested. General Somoza and the National Guard
can very likely handle any such unrest, but
heavy-handed tactics would run the risk of
causing reaction from other. formerly rriescent
sectors._
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ALTERNATIVES TO NON-PROLIFERATION
A second session of the committee preparing
for next year's Non-Proliferation Treaty Review
Cnnference will begin in Geneva next week. The
UE views the conference as a means of attracting
more adherents to the treaty and otherwise
strengthening it. The non-proliferation system
established by the 1968 treaty is being increas-
ingly challencted, however.
The Indian nuclear explosion on May 18
provided the catalyst for a number of countries to
re-examine their nuclear policies. More im-
portantly, the failure of the US and the USSR to
condemn the Indian action has raised doubts
among many countries about the commitment of
the major powers to nuclear non-proliferation.
Many now perceive no disadvantage to keeping
the nuclear option open, a view that has been
reinforced by the US decision to provide nuclear
equipment to Israel and Egypt.
Within recent months, the concept of the
regional nuclear free zone?similar to the 1967
Latin American Nuclear Free Zone?has become
the most frequently proposed alternative. In-
creased interest in the concept of nuclear free
zones has led the Iranians to revive their proposal
to establish a nuclear free zone in the Middle
East, although they have deliberately left the geo-
graphical limits of the zone undefined. The
Pakistanis have already made known their in-
tention to submit to the UN a proposal for a
Southeast Asian nuclear free zone if the Indian
subcontinent is excluded from the Iranian pro-
posal.
Earlier this year, a Nigerian spokesman sug-
gested reconsideration of the 1964 Declaration of
the Organization of African Unity regarding a
nuclear free :one for Africa. Most recently,
Romania promoted the concept of nuclear free
zones, declaring that regional regimes should
encourage peaceful uses of nuclear energy.
The countries affecteJ by these regional
arrangements are also claiming new rights for
parties to such nuclear-free zones. In a recent
memorandum submitted to the International
Atomic Energy Agency, the organization re-
sponsible for administering the Latin American
Nuclear Free Zone suggested that parties to
regional arrangements should enjoy the same
benefits as parties to the non-proliferation treaty.
While that treaty has long been condemned by its
critics as perpetuating discriminatory arrange-
ments in favor of the nuclear powers, incentives
for accession to the treaty itself would be severely
diminished if this proposal is widely accepted.
The US has ccisistently maintained that
four conditions must be met if a nuclear free zone
is to be recognized:
? the initiative should be taken by the
states in the region concerned;
? the zone should include all states in the
area whose participation is deemed important;
? the creation of a zone should not disturb
necessary security arrangements;
? provision should be made for adequate
verification.
25X1
The actual establishment of a nuclear free
zone and the interpretation of what this entails
are up to the countries in the region, however,
and it is thus possible that there would be
provision for conducting peaceful nuclear
explosions. Under the terms of the treaty, states
not possessing nuclear weapons are prohibited
from conducting peaceful nuclear explosions,
although the US, UK, and USSR are obligated to
make available any technology derived from
nuclear research. I
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FRANCE: DEFENSE POLICY REVIEW
France's current defense policy review, in
which budgetary cuts are a key concern, could
lead to discussion of new approaches to West
European security cooperation.
Paris has thus far given no hint that policy
shifts are under consideration. The review may
have been partially inspired by pressure to reduce
the budget and to establish new priorities among
France's ambitious and expensive advanced tech-
nological programs.
Press accounts this week, prompted by
articles in the newsweekly L 'Express and military
journals, speculate, however, that Paris is con-
sidering a new approach to defense cooperation
with its West European neighbors. The L 'Express
article, allegedly based on information from a
presidential adviser, says that President Giscard is
attempting to deal with the contradiction be-
iween France's defense policy, which treats Ger-
many as a potential enemy, and its Soviet and
European policies, which call for close coop-
eration among EC members.
Giscard's perspective is different from that
of the late President Pompidou, who apparently
preferred partnership with London rather than
Bonn. Giscard has a much closer relationship with
Chancellor Schmidt, dating back to their earlier
days as finance ministers, than with any British
leader.
L 'Express says Giscard has concluded that
France's defense plans, based on French survival
alone in d!sr,-:-..-tioered Europe, are unsound. He
believes that West Germany cannot be expected
to commit itself fully to European unity in part-
nership with France if Paris is unwilling to
reciprocate.
This argument reportedly has led the French
President to consider developing, with Bonn, a
program for strengthening French conventional
forces stationed in West Germany and arming
them with the Pluton tactical missile. He may also
be thinking about creating a new body within the
Atlantic Alliance to discuss European defense
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cooperation, especially nuclear matters. Those in
France who strongly oppose joining NATO's
Eurogroup, which is concerned with these issues,
might find such a body an acceptable substitute.
Giscard reportedly has discussed this idea
with German and British leaders. The French
leader has devoted a week to the study of defense
issues and has met with senior Defense Ministry
and military officers According to the press, he
will make public an outline of his plans at the EC
summit he hopes To call before the end of the
year.
Pompidou, during his last year in office, had
ordered a similar defense review. There were hints
of policy shifts at that time; some of them are
similar to those surfacing now. The major dif-
ference may be Giscard's recognition that a
European defense stra'Legy that fails to take
account of German DO'NPr is rionmed to failure
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UK: MORE NATIONALIZATION
In a white paper published last week, the
Labor government outlined a three-part program
that would increase ?tate control of industry.
Although the proposals are less sweeping than
tho7e the Labor Party put forth in its pre-election
manifesto last winter, Prime Minister Wilson prob-
ably hopes they will placate the party's left wing
while meeting industry's need to have government
policy spelled out for investment-planning pur-
poses. Nevertheless, the threat of further nation-
alization, which has existed since Labor came to
power, has dampened investment and contributed
to Britain's poor economic growth prospects.
Besides further nationalization, the white
paper proposes two new measures to enlarge the
government's control of industry. The first of
these would initiate plannin agreements that
would rt.:, lire companies receiving financial assist-
ance from the government to submit future in-
vestment and prod:Action plans covering a three-
year period; these agreements would apply only
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to "major and strategic" manufacturing firms and
would be drawn up after close consultation with
the companies and the unions involved. The
second prcposal would establish a National Enter-
prise Board that would provide investment capital
and assume part ownership of the company re-
ceiving public funds; it 'you'd also aid financially
sound companies faced with short-term money
problems.
After publication of the white paper, the
Labor government announced plans to nationalize
the ports and two chief aircraft builders. Much of
the shipbuilding industry is to be nationalized
under previously announced plans, and land
developers also are to come under state control.
Public reaction to Labor's proposed program
has tended to be negative, with the exception of
the trade union leadership. Both the Tories and
Liberals have criticized the white paper for failing
to meet industry's reds. In view of Britain's
mounting economic problems, the Tories are
likely to choose nationalization as one of the
principal election issues. Prime Minister Wilson,
on the other hand, probably is hopeful that the
white paper's more moderate proposals will help
to strengthen his party's position as it prepares
for the election that is expected this autumn?
perhaps in October.
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EUROPEAN COMMUNIST CONFERENCE
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Preparations for a conference of European
communist parties are quickening. An organiza-
tional meeting is to take place in Warsaw in late
September, and a European conference, possibly
in East Berlin, will follow in early 1975. If this
and other regional meetings go smoothly, a world
communist conference could be held in Moscow
in 1976.
Moscow is the prime mover behind the Euro-
pean conference, but the Polish and Italian parties
are taking the lead in making the arrangements.
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The Soviets have probably decided that the organ-
izational work will go more smoothly if they are
not directly involved at this stage. But the prob-
lems Moscow faces as it tries to get its ideological
brethren in line have already begun to surface.
The Romanians, who have agreed to go to
Warsaw, expect the French and Italian parties to
revive such controversial subjects as the invasion
of Czechoslovakia in 1968 and the Solzhenitsyn
affair. The French party may also raise the issue
of Soviet support for Giscard d'Estaing in the
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The Soviets, eager to have as broad a repre-
sentation of European communist parties as
possible, have so far tolerated lobbying on issues
they normai!y consider beyond debate. When ine
meeting opens in Warsaw, however, they probably
will act more sternly to avoid public embarrass-
ment and to sustain the momentum for the 1976
world meeting. Moscow may agree to issue pro
forma invitations to certain non-communist
groups, but it will so design the proceedings that
these groups will have no chance of exerting any
meaningful influence.
The Romanians clearly share the F rench and
Italian apprehensions that the Soviets will domi-
nate the Warsaw meeting and subsequent gather-
ings. To avoid too early identification with posi-
tions that could become untenable, Bucharest
plans to send a low-level delegation to the prepar-
atory meeting and will not disclose its stand on
issues until the Eu
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INTERNATIONAL: EFFECT OF OIL MONEY
Reports that oil producers have begun in-
vestirrj more funds directly in the US were a
major factor in the dollar's sharp rise on foreign
currency exchanges last week. Since August 9, the
pound declined nearly 2 percent against the dol-
lar; other European currencies declined up to 2
percent in relatively active trading.
The reports apparently stem from Kuwait's
taking a larger part of its mounting oil revenues in
dollars. Kuwait is not selling off its sterling
holdings, as some press recoils indicate. The last
oil payment, made to Kuwait at the end of July,
consisted of a much higher share of dollars and a
relatively lower proportion of sterling than
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payments made under an agreement with the oil
companies that was cenegotiated last May.
Although this agreement does not specify
the percentages of currencies in which payment
must be made, Kuwait's willingness to accept a
lower proportion of sterling indicates that it does
not intend to increase its sterling holdings as
rapidly as in the past.
As a result, the British are receiving a smaller
share of the return flow of oil revenues and will
find it necessary to finance a larger proportion of
their oil bill through dollar borrowinn.
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