WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000070007-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 28
• Document Creation Date: December 27, 2016
• Document Release Date: May 6, 2010
• Sequence Number: 7
• Publication Date: July 12, 1974
• Content Type: REPORT

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eekly Review
?Top-Secret-
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12 July 1974 2bAl
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FEV FW, issw2d every Friday mr;rning by the
oi lritcriicience, reports and analyzes significaht.
deveopment:t of the v.,'oeh through noon On Tht.m.,day, in
ire.:::!nently rtrEiterral coordMated with or prepared by.
the Oftice of Economic Research, .the Officc: of Strategic
Rev: rh ,-ind the Direciorate of Sciencc arid Technology.
?Topic: iciturrinit trier ::.:orop(ehensive treatment and theretorr:
hut: 1:1 si.erItclv is Spccial Reports are listed in tfre
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CONTENTS (July 12,1974)
EAST ASIA
PAC I FIC
EUROPE
? MIDDLE EAST
AFRICA
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WESTERN
HEMISPHERE
1 After the Summit: Europe and Moscow
3 Canada: A Comfortable Majority
4 Cuba: Castro Ready to Talk
5 China: Governing From The Clinic
6 Japan: The Upper House Election
7 Laos: The Demise of the Assembly
8 Cambodia: An Olive Branch
9 Thailand: A Forceful Approach
10 North Korea: On Land and Sea
11 Western Europe: Plane Shopping
11 France: Nuclelr Testine 25X1
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ing om: C Renegotiation
16 Portugal: Cabinet Shake-up
17 Italy: Austerity Begins
. ?
18 Lebanon: Seeking Security
19 Jordan-Fedayeen: Getting Together
20 Iraq: Procuring, Arms
21 Iraq: Kurdish War Grinds On
22 Ethiopia: Keeping Things Moving
23 Argentina: Outwardly Calm
24 Venezuela: Against the Critics
25 Mexico: President's Southern Trip
26 Bolivia: Banzer Gives In
26 International Money
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After The Summit
WESTERN EUROPE REASSURED
The West European allies seem satisfied with
the results of the Nixon-Brezhnev summit and are
delighted with the detailed briefings they received
both before and after it. The summit was
regarded as a test of the greater consultation
pledged in the recently signed Atlantic Declara-
tion.
Press commentary in Western Europe wel-
comed the agreements limiting underground nu-
clear testing anddeployment of ABMs. While there
was some regret about the 'imited nature of the
curbs on 5trategic arms, there was general agree-
ment that detPrite had reached the point where
dramatic developments could not be expected.
Much of the commentary, in fact, expressed relief
that the results were relatively meager in some
areas. Before the summit, the fear had been
widely voiced that the US might make deals with
the Soviets?especially on the European security
conference and the force reduction talks?without
taking European interests into account.
Only the passage on the European security
conference in the summit communique threat-
ened to dampen the satisfaction of the Euro-
peans. They felt that this leaned too far in the
direction of Soviet interests by seeming to en-
dorse the progress of the conference and by
coming close to agreeing that the conference's
final stage could be held at the summit level.
At the NATO ministerial in Ottawa last
June, the US and the West Europeans had agreed
to a far less forthcoming description of the con-
ference's status and prospects. Moreover, the EC
foreign ministers recently deplored the lack of
progress at the conference and concluded that no
decision could be made about the level of the
final stage until the results of the present stage are
known. The West Europeans believe that the best
way to break the deadlck at the conference is to
stand fast until Soviet concessions are made,
especially in the area of the freer movement of
people and ideas.
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Some dissatisfaction with the summit
communique was also expressed by Western dele-
gations at the security conference itself. They
were particularly sensitive to the fact that the
communique used traditional Soviet language in
rPfe.rring to a summit-level conclusion of the
conference. Their resentment deepened as Eastern
delegates began using the communique to argue
against a summer recess so that the conference
could conclude speedily at the summit.
In Brussels, Secretary Kissinger was able to
persuade most of the allies that the US had not
given in to the Soviets on security conference
issues. His explanation, according to one report,
prevented some of the West Europeans from
delivering critical statements in the North Atlan-
tic Council. In Bonn, Kissinger's conversations
may have helped put the West Germans?the most
intransigent of the allies at the conference?in a
mood to make compromises. The secretary and
Chancellor Schmidt reportedly agreed that the
security conference's problems could be solved,
and that the final stage could be held?possibly at
the summit ievel?by the end of the year.
The allies found little to object to in the
summit communique's expression of 4upport for
the Vienna force reduction negotiations. They are
not at all distressed that force reductions were
apparently riot discussed in detail at the summit
because they think NATO should hold fast to its
proposal for the time being and offer the Warsaw
Pact only limited hints of flexibility.
West German Foreign Minister Genscher
summed up the European view of the consulta-
tions surrounding the summit when he said that
they were "in accordance with the letter and
spirit of the Atlantic Declaration" and had been
"fully satisfactory and proof of the revival of the
Atlantic alliance." The allies realize, however,
that these consultations are only a step toward
more regular and detailed consultations between
the US and Western Europe. Until that elusive
goal is reached, the West Europeans will continue
to be uneasy?as they were during this
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summit?about the possibility of bilateral US-
Soviet agreements.
MOSCOW EMPHASIZES ACHIEVEMENTS
The Soviets are saying that the recently con-
cluded Moscow summit was "a ma'or new contri-
bution" to improving US- Soviet relations,
despite the absence of "sensational develop-
ments." The Soviets have also suggested, however,
that more might have been accomplished, par-
t, ..);ariy- in the arms control area, had it not been
rJr the constraints on the President resulting crom
Watergate and the continued truculence of the
Pentagon.
At the US Independence Day reception in
MO..;COW, several Soviet guests professed to believe
that more might have been achieved in the arms
control area had not domestic difficulties limited
the President's freedom to negotiate such
national security problems. With the
exception of an insinuation along these lines by
Brezhnev during the course of the summit, how-
ever, the Soviets have studiously avoided such
linkage in public.
Over the past week, the Soviets continued to
give heavy news coverage to the results of the
summit, playing up the salutary effect of regular
exchanges between the leader.; and emphasizing
the breadth of support for detente in the US.
Pravda called the summit a "milestone" in the
history of US-Soviet relaticins. Other news com-
mentaries, drawing on Brezhnev's statement to
the press on June 28, characterized President
Nixon's visit as a further demonstration of the
resolve of both sides to maintain the course laid
out in various documents and decisions over the
past few years. Soviet propagandists have taken
the line that the importance of the Moscow meet-
ing stemmed not from the number of agreements
signed, but from the evident intention of both
sides to maintain the momentum of improving
relations.
The President with Soviet leaders Podr Jrny, Brczhnev, and Kosygin
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Canada: A Comfortable Majority
The victory of Prime Minister Trudeau's
Liberals in the July 8 elections gives the party an
unexpected majority in the 264-member House of
Commons.
The strong Liberal showing cor trasted with
polls that indicated throughout the campaign that
the electorate woulrl not return a majority admin-
istration. The Libel dls gained chiefly in the swing
province of Cntario, where they picked up 19
seats. They also gained several seats in the Atlan-
tic provinces, Quebec, and British Columbia.
The win is a personal victory for Trudeau,
whose perfunctory 1972 campaign contributed
greatly to the Liberal setback that year. This
time, the Prime Minister adopted an aggressive,
highly visible style that was more convincing to
the voters. Mrs. Trudeau, who previously guarded
her private life and shunned political activity,
campaigned actively and no doubt helped her
husband regain some of his popularity.
Canada's 30th Parliament is expected to
begin its term in early September. Some minis-
terial portfolios may change hands, but the new
cabinet should closely resemble the old one.
The first order of business for the new Par-
liament will be to pass the Liberals' budget, which
was the issue that brought about Trudeau's defeat
when introduced in early May. The budget pack-
age includes proposals for higher corporate taxes
on resource industries and various measures
designed to shield hard-hit consumers from the
worst effects of inflation. The voters will also
expect Trudeau to move quickly to carry out
some of his campaign promises, such as special
government assistance for first-time home buyers,
public takeover of passenger trains, and new
federal programs to aid farmers. The Prime Minis-
ter will probably leave other programs to the
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ELECTION RETURNS
October 1972 July 1974
Liberals
109 141
Progressive Conservatives
107
95
New Democrats
31
16
Social Credit
15
11
Independents
2
1
future, however, because their high cost would
threaten any efforts to counter inflation.
A majority Liberal government without pres-
sure from the nationalist-minded New Democrats,
who held the balance of power in the last Parlia-
ment, might be less influeuced by the "Canada
first" approach that frequently surfaced during
the term of the minority Trudeau government.
The current policy of trying to lessen Canada's
dependence on the US, however, will still have
strong bipartisan support.
Inflation was the dominant campaign issue,
and the voters clearly rejected Tory leader Robert
Stanfield's proposal for a wage and price freeze.
This was Stanfield's third?and probably best?
chance to lead his party to victory. The loss is
likely to cause his resignation or ouster.
New Democratic leader David Lewis was up-
set by a Liberal challenger in the Toronto district
he had held since 1965. Lewis' loss should not
present any severe leadership problems for the
New Democrats as he had been expected to retire
soon. Although the party lost half of its parlia-
mentary seats, the New Democrats will continue25xi
to appeal to their hard core farm and labor sup-
porters. In addition, the party controls the gov-
ernments in three western provinces.
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Cuba: Castro Ready To Talk
Fidel Castro's recently professed willingness
to talk with Secretary Kissinger if the so-called
blockade is lifted is the most specific indication
to date that he wishes to break the present
impasse in relations between Havana and Washing-
ton. His offer, however, is merely a reiteration of
the general line Havana first made public in
December 1972, shortly after the presidential
elections in the US. Prior to that time, the Castro
regime had virtually eliminated any possibility of
bilateral talks while President Nixon remained in
office.
According to the official Cuban press
agency, Castro met with newsmen in Havana on
July 2 and said he would have no objection to
meeting with the secretary. The press agency
qw:Aed Castro as saying, "I believe that Kissinger
is not a negative figure in US policy. He is a
realistic man. But since the blockade is not
negotiable, we will not agree to talk with anyone
until this measure is unconditionally lifted." In an
apparent attempt to demonstrate his good faith,
Castro added that he would receive the staff chief
of the US Senate Foreign Relations Committee,
who was then on a ten-day tour of Cuba.
Castro's shift in attitude on the Cuba-US
stalemate stems from several sources. One key
factor is the significant progress made in the past
year by the US toward solving long-standing bi-
lateral problems with Mexico, Peru, and Panama.
The Cubans have apparently been convinced that
the US is willing to make concessions to smooth
its relations with Latin America, and they wart to
take advantage of the cooperative mood before it
changes. Moreover, the Cubans? iho made it
clear beforehand that they would be paying close
attention to the secretary's remarks at the confer-
ence of Tlatelolco in Mexico last February?were
probably encouraged by his pledge there that the
US would not intervene in the internal affairs of
other countries. This may have struck Havana as a
response to oft-stated Cuban demands that the
US cease its alleged role of gendarme in Latin
America.
Soviet pressure is also partly responsible for
Castro's more recepitive attitude. During Leonid
Brezhnev's trip to Cuba this past winter, Castro
finally relaxed somewhat his rigid negative
position on detente, paid it modest lip service,
and praised Brezhnev's personal efforts toward
that goal. Also, the Soviet press played up the
theme of Brezhnev as an international mediator
and replayed US press speculation that a major
purpose of the visit was to improve US-Cuban
relations. In addition to the detente issue, Mos-
cow probably equates improved US-Cuban ties
with a reduction in the enormous economic
burden that Cuba represents for the USSR.
FL:rthermore, the steadiiy increasing influ-
ence of the USSR in Cuban internal affairs may
have finally reached the point where Castro be-
lieves it is in his best interest to develop an
alternative to Soviet support. He is certainly
aware, for example, that the Soviet-sponsored in-
stitutionalization process, which has been under
way in Cuba since 1970, is designed to place
limits on his heretofore unchecked authority. He
therefore may be hopeful of achieving a relation-
ship with the US that will counter Soviet political
and economic leverage, and will permit him to
retain his domestic supremacy. Mindful of the
Cuban Communist Party congress scheduied for
next year and the potential it has for placing
formal institutional restraints on him and his
Sierra Maestra guerrilla elite, Castro may want to
reach some accommodation with the US so that
he can enter the congress with a stronger hand.
His basic hostility toward the US, however,
has shown no signs of waning. He would enter
into negotiations only as the lesser of evils. Al-
though he would probably not make such deliber-
ately unreasonable demands as to torpedo the
talks at the very outset?a tactic he has used in
the past?his position would be tough. He would
expect discussions cover such topics as Guan-
tanamo, US overflight, of Cuban territory, repara-
tions for alleged damages to the Cuban economy
caused by the US economic denial campaign. and
hostile activities of exiles in thp I Ic
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China: Governing From The Clinic
The first generation of Chinese revolution-
aries is a remarkably hardy group, having endured
the grueling Long March of the 1930s. Many of
these people, now in their 70s or 80s, still occupy
the top ranks in the political hierarchy. As a
group, in fact, they seem hardier than their
younger colleagues. Since the election almost a
year ago of a new party Central Committee, a
surprising number of Central Committee members
in their 50s and 60s have died. The latest casualty
was a 54-year-okl provincial official.
Despite the longevity of the old leadership,
however, age is beginning to take its toll. While
many people in China and abroad have long been
concerned about the survival of 80-year-old party
Chairman Mao, it has almost been taken for
granted that his younger colleague. 76-year-old
Premier Chou En-lai, would outlive him. That
prospect has been thrown open to question with
the revelation on July 5 that the Prerrer was in
the hospital. This spring, Chou revealed that he
had been forced to trim further his exhausting
activities on orders from his doctors.
The official news agency made the unusual
admission of the Premier's illness through an
:0,04i0:strit
?
Chou En-Jai
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announcement that Chou had met Senator Henry
Jackson in the hospital. Only the day before,
Chines,3 spokesmen had denied foreign press
report; that the Premier was critically ill and
dying. On July 6, People's Daly front-paged a
picture of Chou, flanked by the Senator and his
showing the Premier sta'iding, fully dressed,
and looking reasonably fit.
Chou had not appeared in public for more
than a month, touching off speculation about his
political, as well as his physical, health. Media
coverage of his hospitalization and his meeting
with Jackson seemed designed to squelch persist-
ent rumors that he was in political trouble and to
reassure the Chinese people?and foreign observ-
ers?that the Premier was still carrying on with
his job.
Senator Jackson found Chou mentally alert
znd well briefed on the Senator's earlier
discussions with Chinese officials. Nevertheless,
Chou admitted that he had been very sick last
month. Indeed, his doctors' earlier efforts to get
him to slow down had only limited success?the
Premier cut back on some of his protocol duties
but ignored the one hour limit that the doctors
had placed on his meetings with foreign dig-
nitaries.
The current episode of his illness, obviously
severe enough to require hospital care but not
otherwise spelled out by the Chinese, may have
convinced him he will have to cut back further.
Chou's meeting with Senator Jackson lasted only
a half hour. Chou will almost certainly remain a
major political force until his death. Mao himself
has remained at the center of Chinese politics
despite years of relatively poor health. But Chou's
forte has been the day-to-day management of
state and party affairs. He had already begun to
delegate the more time-consur7ing and less
important aspects of these duti ts to others?
particularly vice-premiers Teng Hsi ao-ping and Li
Hsien-nien?before his hospitalization, and he
ma never ... . e once was.
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JAPAN: THE UPPER HOUSE ELECTION
The unexpected Upper House losses by
Prime Minister Tanaka's ruling Liberal Democrats
in the July 7 elections will not have any serious
immediate impact on the functioning of the Japa-
nese Government. The results, however, do reflect
adversely on Tanaka's leadership and will lead to
more intense maneuvering by his party rivals to
unseat him at next summer's convention.
The Liberal Democrats will have only a bare
majority?some 129 seats?in the 252-member
Upper House of the Japanese Diet, even with the
expected addition of three "independent" conser-
vative candidates to the total. The ruling party's
share of the popular vote, moreover, continued
the slow but steady decline of the past decade.
The Socialists, the largest opposition party,
put on an unexpectedly good performance, com-
ing on strong in the final weeks of the campaign,
and picking up a few seats where earlier predic-
tions had them losing. The Communists did very
well, almost doubling their previous strength,
while the Buddhist-based Komeito increased its
delegation by only one seat, contributing to a
growing belief that the party has reached a politi-
cal plateau. The Democratic Socialists lost only
one seat, despite predictions of heavier losses and
the possible breakup of the party.
T;-ie Upper House will remain under Liberal
Democratic control, although opposition mem-
bers may have opportunities for committee chair-
manships. The net result is likely to be no worse
Wa0910
Tanaka
I
JAPAN: UPPER HOUSE ELECTION REGULTS
July 7, 1974
Party
Upper House Seats
Current Pre-elert!on
Percent of Popular Vote
1974 1971
Liberal Democtatic
126
134
44.3
44.5
Japan Socialist
62
59
15.2
21.3
Kotneito
24
23
12.1
14.1
Japan Communist
20
11
9.4
8.1
Democratic Socialist
10
11
6.0
6.1
Minor
1
0
0.1
0.1
Independent
9 '
6
13.0
5.9
Vacancies
8
252
252
100.0**
100.0?
"3 hulmenden.'s are likely to join the LDP; one will fah: the JSP.
?? Dec to rounding.
than a greater degree of sluggishness in the
conduct of Diet business. The Diet's Upper House
is less important than the Lower House, where
Liberal Democratic dominance is clearcut.
The election returns are probably more signi-
ficant as an adverse public judgment on the
stewardship of Prime Minister Tanaka. He has
been somewhat weakened in his bid for re-
election as party president?and hence, continuing
as prime minister?at the party convention next
summer. Anti-Tanaka forces in the Liberal Demo-
cratic Party, particularly Finance Minister Fukuda
and Deputy Prime Minister Miki, will now find
greater interest among their colleagues for in-
trigues designed to unseat Tanaka as party leader.
In charging the Prime Minister with mismanaging
the campaign, these rivals will hit hard on Ta-
naka's excesses in raising corporate campaign
funds for candidates from his own party faction.
They wil: be content, however, to let the leftist
opposition carry the ball in bringing this issue to
the public.
If press reports are accurate. Tanaka himself
believes that his heavy campaign outlays have
actually paid off. His faction, and that of his
closest ally, Foreign Minister Ohira, apparently
increased their Upper House strength, despite the
overall party setback. rukuda's faction, on the
other hand, reportedly lost a number of seats. In
sum, Tanaka has emerged from the election with
some loss of personal prestige, but vt ith no serious
impairment of his ability to compete for annthpr
term as party leader.
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LAOS
THE DEMISE OF THE ASSEMBLY
Non-Communist members in the coalition
cabinet, who have recently sidetracked several
major policy proposals by Lao Communist minis-
ters, suffered a serious political setback this week
when Prime Minister Souvanna ruled that the
present National Assembly must be dissolved
soon. The assembly, which was not reconvened
on schedule last May because of Communist op-
position, consists entirely of rightist deputies.
Several of these deputies contributed heavily
to Souvanna's determination to scuttle the assem-
bly when they organized a rally in front of the
legislature on July 9 protesting the continued
presence of North Vietnamese troops in Laos.
The following day an embarrassed and angry Sou-
vanna told the cabinet that the incident con-
Insisiengmay
vinced him that the assembly must be dissolved in
order to preserve national concord.
Lao Communist ministers were quick to
back Souvanna. The non-Communists tried unsuc-
cessfully to argue that they should decide the
matter since it was their political interests that
were being threatened. They also failed to post-
pone a decision on the issue or to persuade Sou-
vanna and the Communists that the assembly
could not be dissolved until agreement had been
reached on what would replace it.
Souvanna finally cut short the spirited de-
bate by decreeing that the assembly would be
dissolved. He said he would discuss the pro-
cedures for dissolution with the King, who, ac-
cording to Souvanna, was already in favor of such
a move.
GETTING ORGANIZE.)
The non-Communists' ability to continue to
stand up to the Pathet Lao in future confronta-
tions will depend heavily on their effectiveness in
establishing a brozd political front. They took a
major step in that direction last week when they
surfaced an organization called the "Vientiane-
side Government Front," reportedly led by ten
non-Communist cabinet ministers and nine Lao
army generals. For the time being, Deputy Pre-
mier Leuam lnsisiengmay is unofficially heading
the front.
To flourish, however, the front has to attract
the younger non-Communist officials in Vien-
tiane, and some have already expressed misgiv-
ings. They evidently believe that the move is an
ill-timed power play by members of the influen-
tial Sananikone clan?a rightist group whose polit-
ical interests are blatantly self-serving. The will-
ingness of the younger officials to align them-
selves with the front will be heavily influenced by
the reactions of Souvanna and Interior Minister
Ph e n g Phonosavan.
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CAMBODIA: AN OLIVE BRANCH
Phnom Penh seized the political initiative
this week by issuing a new bid to open peace
negotiations. The formal declaration presented by
the Lon Nol government on July 9 invited the
Khmer Communists to start talks immediately at
a mutually agreeable time and place. The new
declaration differed significantly from the govern-
ment's six-point peace proposal of July 1973 in
that it did not demand either the withdrawal of
foreign troops or a cease-fire as pre-conditions f-)r
talks. Government leaders probably hope that, ,E
a minimum, this new display of flexibility on
negotiations will gain some international sym-
pathy and support.
The initial reaction from the other side was
predictably negative. The insurgents' nominal
chief, Prince Sihanouk, publicly rejected the offer
the same day, saying:
? He and the Communists will never
negotiate or be reconciled with the Lon Nol
group.
? The war will continue as long as the US
is involved in Cambodia.
o His side will never accept a settlement
that results in the aivision of Cambodia.
Sihanouk did not insist, as he has in the past,
that any peaceful solution to the Cambodian con-
flict will have to be reached in direct talks with
Washington?after the US has withdrawn support
for Lon Nol, The demand for the cessation of all
US support to Phnom Penh has long been a
feature of the Khmer Communists' position on
ending the fighting, but there are still no signs
that the insurgents' in-country leadership hares
Sihanouk's interest in negotiating directly with
the US.
Military Progress
Meanwhile, Cambodian army units north-
west of Phnom Penh have been reinforcing the
argument the government has made in ;ts declara-
tion?that a military victory is not possible for the
Communists. After three weeks of heavy fighting
2b)V1
Watch on the Mekong
along Route 5, government advance units enterea
Oudong at mid-week without opposition. Once
the shattered town is fully secured, the army will
have regained most of its earlier holdings in this
area.
Oudong is a former royal capital with ;iis-
torical and reiigious significance. The Communists
overran the town in mid-March, repulsed a
government counterattack several weeks later,
and touted the victories as a high pont in their
dry season campaign.
The insurgents made a major effort to stem
government advances on the northwestern front.
Steady casualties as well as supply shortages have
compounded long-standing command problems,
however, and Communist units around Oudong
now appear to be in disarray. r.ommunist com-
manders oraered insurgent units closer to Phnom
Penh to go on the attack to divert government
attention from the northwest, but the army has
pre-empted these attacks with operatinnf nf itc
own.
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THAILAND: A FORCEFUL APPROACH
A by-product of the Thai effort to develop a
more responsive government has been the ap-
pearance cf considerable tension among elements
of a population stifled by more than a decade of
military rule. As a result, Bangkok is acquiring a
reputation as the most politically volatile capital
in Southeast Asia today. The Sanya Thammasak
government had barely recovered from a week of
intensive labor negotiations that threatened the
stability of the new regime when angry rioters
attempted to burn down a police station in the
city's Chinatown district. By the time the dust
had settled last weekend, 24 had been killed and
over 100 wounded, the bloodiest street fighting
since student-instigated riots toppled the Thanom
regime last October.
Unlike the disturbances of the past several
months, the Chinatown riots were not the prod-
uct of political pressure groups. They were the
culmination of a long-standing hostility between a
corrupt and inefficient police force and local
Curbing dem mstrators
residents. They may, however, have a lasting
impact on the Thai political situation.
Prime Minister Sanya's willingness to get
tough with the rioters, rather than negotiate with
them, significantly strengthened his government's
image. In uncharacteristically decisive fashion,
Sanya:
? Declared a state of emergency;
? Announced that he was prepared to use
whatever force was necessary to restore order;
? Ordered the army to be prepared to
move in if the situation grew beyond police
capabilities
Prior to the riots, there had been a growing sense
of frustration and concern within the Thai
military that Sanya's reluctance to stand up to
the students and other pressure groups was ceo-
tributing to a more general breakdown in order.
Sanya's forcefulness last week should reassure his
critics and may buttress the government's hand in
dealing with future unrest, particularly within the
labor movement.
Sam a's aggressive handling of the riots is the
latest sign of a more activist style in his
leadership. Since forming a new government last
May, Sanya has significantly reduced military
influence over cabinet decisions?much to the
dismayof army chief Krit Siwara?and has invoked
extraordinary ;egal powers, left over from the
days of military rule, to solve land-tenancy
disputes. Behind the scene, Sanya is working hard
to push through a revolutionary land-reform
program that will have a long-term impact on
Thai society. It is possible that a continued strong
performance in the months ahead could create a
public groundswell for Sanya to run in the general
elections expected to i?2ke place later this year.
Sanya has stressed his desire to return to private
liZe, but he is beginning to act like a man who
likes his job.
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NORTH KOREA: ON LAND AND SEA
Building Ships...
North Korea's naval shipbuildina pronram
continues apace.
One new class is a patrol escort about 190
feet long; two units are now under construction.
The other is smaller in size and apparentIy com-
bines Idatures of two boats already being pro-
duced to support amphibious operations. It will
evidently be armed with a 76-mm. gun and either
rocket launchers Or a guided missile. Four of
these ships are under construction.
The new surface ships appear well suited to
Pyongyang's needs. The patrol escort will enhance
the navy's coastal defense capabilities; the other
ship will add to its amphibious punch. North
Korea has already produced two destroyer escorts
as well as numerous gunboats, torpedo boats, and
amphibious crift. The North is also producing a
Komar-ciass guided-missile boat.
These submarines 3re located on east
coast and could he used to supplement Northern
infiltration efforts against the South.
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WESTERN EUROPE: PLANE SHOPPING
There is still no agreement on a replacement
for the aging US-built F-104 tactical fighters in
Belgium, the Netherlands, Norway, and Denmark.
The choice has been narrowed to three con-
tenders?France's Mirage Super Fl and two US
aircraft, Northrop's P-530 Cobra and General
Dynamics' 402.
The Europeans face a dilemma because their
decision involves more than merely choosing the
technically superior aircraft, which would prob-
ably give the edge to either US candidate. The
choice, in fact, is between buying a French air-
craft?and possibly laying the groundwork for a
truly European aircraft industry?and buying an
American one to assure continued access to ad-
vanced American technology. The Belgians, who
produced Mirage 5 fighters under a previous
agreement with France, favor the Mirage, while
the other three nations have shown some prefer-
ence for an American aircraft with accompanying
US air force logistic support.
Both France and the US are offering sales
inducements that include joint production li-
censing agreements in which a large number of
the aircraft will be assembled in the purchasing
country to offset costs. The French offer is also
said to include attractive fin3ncing arrangements
and a guaranteed price. Paris reportedly has of-
fered to absorb 100 percent of the nonrecurring
costs of the engine, and more than 50 percent of
the airframe research and development costs. As
an added inducement to sell the Mirage to Bel-
gium, the "key country" in Paris' eyes, the Bel-
gians would be allowed to produce the aircraft
engine. The US offer does not include a guaran-
teed price, but, as an added inducement, US com-
panies are said to be willing to permit about 75
percent of the aircraft to be constructed in
Europe.
The Europeans want to purchase an aircraft
that will be part of the operational inventory of
the producing nation, but none of the three
planes is yet in this status. Prototypes of the two
US aircraft are flying, but the US air force will
not make a decision on which aircraft it will
purchase until January 1975.
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France's Super Fl, which will have a better
engine than the current version, is expected to
make its initial flight in November or Decemper
of this year. Series production of the aircraft is
not likely before 1976 or 1977. Contrary to ear-
lier indications, the French air force evidently
now does plan to purchase the Super Fl, al-
though the number of aircraft involved is un-
known. If the French air force does go ahead, it
would enable manufacturer Marcel Dassault to
keep the cost of the aircraft down and ensure the
availability of spare parts to foreian buyers
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FRANCE: NUCLEAR TESTING
The French conducted the second nuclear
test of their 1974 sehes on July 7. The device,
suspended from a balloon, produced a yield of
about 170 kilotons. This test was the first full-
scale thermonuclear explosion in what appears to
be a new program to develop additional warheads
in the several hundred kiloton range.
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Both the Australian and New Zealand gov-
ernments registered mild protests over the latest
French nuclear explosion. At a news conference
in Wellington, Prime Minister Kirk claimed there
was some evidence that the first nuclear detona-
tion in June had caused slight amounts of radio-
active fallout over New Zealand territory. The
July 7 blast came only three days after Australi;:
reopened the case against French nuclear tests
before the World Court at The Hantle
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UNITED KINGDOM
THE CASE FOR RENEGOTIATION
Britain has softened its earlier demands on
renegotiating its EC membership terms, but it
remains adamant on reducing its future share in
EC budget support. Foreign Secretary Callaghan
has left open the means of achieving this reduc-
tion, noting that either a cut in Britain's gross
contributions or an increase in its receipts would
be satisfactory.
London is on reasonably firm economic
ground in requesting a cut in its scheduled budget
contributions. Because these contributions in-
creasingly will be based on the amount of duties
each member collects on imports from outside
the EC, Britain will be called on to provide fi-
nancing that is inordinately large. Its share in
budget support is scheduled to rise from 9 per-
cent last year to an estimated 27 percent in 1980.
By that time, its share in the community's eco-
nomic activity would have declined from 17 to 14
percent if recent growth trends continue.
On a net basis?gross contributions less
receipts from EC coffers?Britain will be a heavy
contributor to the budget even though its per
capita gross national product will remain con-
siderably below the average for the EC as a whole.
By contrast, France will be a net recipient despite
above-average gross national product on a per
capita basis.
Other EC members have not rejected Lon-
don's request out of hand even though they are
opposed to the basic concept of renegotiation of
entry terms. The council, under German Chancel-
lor Schmidt's leadership, recently decided to refer
the budget-share question to the commission for
study.
The fundamental issue of whether other EC
members should pay more so that the UK can pay
less will hinder negotiations regardless of the
means of altering budget shares. Any improve-
ments that London obtains will come only after
long, hard bargaining that probably will further
strain EC cohesiveness.
BRITAIN'S PROPOSALS
A larger part of proposed regional
fund disbursements could be allocated to
Britain; France is opposed to such use of
the fund, and Germany wants to limit the
size of the fund itself.
The formula by which EC revenues
are to be generated could be changed in
Britain's favor; several EC members object
to this approach on the grounds that it
alters basic community structures to bene-
fit one member.
A lump-sum rebate could be made to
Britain and other "overpaying" countries
to bring their contributions more in line
with their national incomes; such an
approach has the advantage of not tamp-
ering with community institutions but
would be costly to France and some other
members.
MINERS TAKE MODERATE LINE
The decision last week by the usually mili-
tant National Union of Mineworkers to restrain
their wage demands suggests that organized labor
may cooperate with the Labor government at
least until after the general election expected this
fall. The miners' opposition to an incomes policy
and to EC membership, however, could be a
harbinger of the difficulties the Labor govern-
ment is likely to face?particularly if it wins the
next election with a majority?as it tries to con-
trol inflation and renegotiate EC membership
terms.
At their recent annual conference, the
miners?whose strike had brought down the
Heath government?turned down a proposal by
militants calling for a weekly pay hike of approxi-
mately 40 percent. The miners also passed a "no
target" wage resolution compatible with the
"social contract"?an informal pact calling for
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restraint in wage demands in return for social
legislation. This is the first time since 1970 that
the miners have refrained from demanding a spe-
cific figure. The miners, moreover, will not insist
as they had earlier that the date for their contract
negotiations with the Coal Board be advanced
from March 1975 to November of this year.
Although cooperating with the government
on the important "social contract" issue, the
miners' convention caused some headaches for
the Labor government by rejecting an incomes
policy in any form and calling on union leaders to
have nothing further to do with the EC.
The important question now is the direction
the miners and other militant unions will take at
the Trades Union Congress conference this Sep-
tember. Both the "social contract" and the EC
will be key issues. The powerful leader of the
Trades Union Congress, Jack Jones, reportedly is
confident the "social contract" will be strongly
supported. He believes that the overwhelming
majority of the unions will go to great lengths to
spare the Labor government embarrassment be-
fore the anticipated election.
Jones acknowledges that the Trades Union
Congress conference will provide the election
platform for the Labor Party. Officials of the
organization seem confident, however, that the
conference will not straitjacket the Labor Party
on the EC issue. Jones says he prefers a referen-
dum on the EC after the election rather than
immediate moves for outright withdrawal.
PORTUGAL: CABINET SHAKE-UP
The resignation of Prime Minister Palma
Carlos and four other centrist ministers on July 9
indicates that the Portuguese leaders are far from
agreeing on who should wield political power. As
Spinola has not yet officially accepted the resig-
nations, a compromise solution may be in the
works to retain centrist representation in the
cabinet.
The immediate cause of the resignations ap-
pears to be the failure of the major administrative
body, the Council of State, to grant Palma Cat los
more authority over cabinet decisions. Palma
Carlos also disagreed with the Council's refusal to
allow an immediate presidential election to legiti-
mize the provisional government. He has been
further frustrated by the actions of the Socialist
members, who have been blocking implementa-
tion of economic and labor measures that the
Prime Minister strongly favored. Spinola re-
portedly gave Palma Carlos a vote of confidence
and said that 1,e planned to remove the controver-
sial ministers. The subsequent resignation of
Palma Carlos and the centrist ministers, therefore,
implies a setback for Spinola.
Initially, there were plans for all or most of
the vacant cabinet positions to be filled by mili-
tary officers, but these plans appear to have been
suspended, possibly because of leftist refusal to
serve in a cabinet largely controlled by the mili-
tary.
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Military
representatives will be appointed to these posts if
civilian leaders with centrist views cannot be
persuaded to accept positions in the cabinet.
Spinola may also have to refrain from taking
actions to strengthen his own authority, at least
for the present. The conflict betwcen Spinola and
left-wing elements of the Armed Forces Move-
ment centers on the dispute over control of the
government. If Spinola moves too suddenly
against the left, the coalition of political forces
that he has been trying to maintain could dis-
integrate.
A new commando regiment was stationed
outside Lisbon last weekend and other military
forces were placed on alert as a precautionary
measure against possible civil disturbances. The
alert was rescinded a few days later, but marines
and paratroopers were on hand to control a
demonstration held on July 9 by extreme
left-wing organizations protesting the arrest of
officers who had refused to obey orders to quell
the recent postal strike.
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ITALY: AUSTERITY BEGINS
Prime Minister Rumor's government ap-
proved a package of austerity measures last week,
but the coalition will have to clear some major
hurdles if the program is to deal effectively with
Italy's mounting economic problems.
The austerity program provides for an in-
crease in corporate taxes from 25 to 30 percent
and an increase in some categories of personal
income tax along with measures to improve the
tax collection apparatus. The value-added tax on
some basic consumer items and on luxury goods
will be raised substantially. Gasoline taxes will
increase by 25 cents per gallon bringing the cost
of premium to about $1.80 per gallon, and em-
ployer and employee contributions for health ser-
vices will go up.
These increases are designed to raise govern-
ment revenues by $4.7 billion. Most of the funds
will be used to lower the large budget deficit.
The program is a first step toward the goal
of improving Italy's international credit standing.
The new tax measures will dampen domestic
Rumor
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demand and, if government estimates are accu-
rate, will hold growth of the gross national prod-
uct to between 3 and 4 percent per year and
reduce imports somewhat over the next 12
months.
Whether the program actually meets these
objectives, however, will depend largely on the
degree of cooperation from organized labor and
the public generally, as well as on the govern-
ment's ability to administer the intricate program
effectively. The three labor confederations are
united in their dislike of the program, which they
fear will result in increased unemployment and
more inflation. They are divided, however, over
how far labor should go in trying to bring about
changes. Some labor factions are prepared to call
a general strike while others are counseling
moderation. The three confederations will meet
this weekend to formulate an official response to
the government's proposals.
Even if labor goes aiong, the government will
face the formidable task of implementing the
austerity measures. The Italians are notoriously
adept at circumventing taxes; most are probably
unwilling to accept a decline in their present level
of consumption for the sake of the abstract con-
cept of national welfare. This factor, combined
with the cumbersome nature of the Italian
bureaucracy, could hinder the government's ef-
forts to produce results rapidly. The support that
does exist for the program could evaporate
quickly in the face of rising prices and diminish-
ing disposable income.
Although the coalition parties are publicly
-:Drnmitted to support the program, the political
scene remains tense. The Socialists have made
their support contingent upon acceptance of this
program by orgailized labor. The dominant Chris-
tian Democrats, meanwhile, are preoccupied by a
serious internal quarrel. Party leaders are sharoly
divided over the implications of Christian Demo-
cratic defeats in the divorce referendum and the
Sardinian regional election. The left-wing?about
30 percent of the party?is in open revolt against
the leadership of Amintore Fanfani. These issues
will be hotly debated by the National Council?
the party's highest executive body?when it meets
on July 18. 25X1
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LEBANON: SEEKiNG SECURITY
Lebanese Defense Minister Maluf announced
this week that he would visit Syria and Kuwait to
ask for military and economic aid. Lebanon is
attempting in this way to prompt the Arab states
to make good on the promises of assistance made
at the meeting last week of the Arab League
Defense Council.
In Damascus and Kuwait, Maluf planned to
seek the support Lebanon needs to implement its
long-range defense plan, which is based primarily
on the acquisition of additional Western equip-
ment. In Cairo last week, Lebanese Prime Minister
Sulh stated publicly that Beirut did not now
consider it necessary to accept offers of personnel
and aircraft. Maluf almost certainly intended to
hold to this line in his talks with the Syrians and
Kuwaitis.
Maluf's travel plans probably are not specifi-
cally related to Israel's attack on July 8 against
several Lebanese ports. That incident, however,
increased Lebanon's hope that the meetings with
Syria and Kuwait, as well as those to be scheduled
with other Arab countries, would yield concrete
results.
The Lebanese are generally sat!sfied with the
results of the Defense Council meeting. The
session cast Lebanon in the flattering but
unaccustomed role of an Arab stalwart, yet did
not force it to accept unwanted military aid that
might provoke wider hostilities with Israel.
Lebanon predictaoly failed to win any ef-
fective Arab assistance in dealing with the per-
sistent problem of fedayeen activities in Lebanon.
If the military assistance promised by the other
Arabs is realized, however, it will better equip the
Lebanese army to control the fedayeen. Leb-
anon's efforts to forestall increased Arab as-
sistance directly to the fedayeen irritated feda-
yeen leaders, who met in Damascus this week to
consider the results of the Cairo meeting.
LOA I
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Perennial Lebanese concern about controll-
ing the fedayeen was heightened by the Palestin-
ians' acquisition shortly before the Defense Coun-
cil meeting of a quantit of SA-7 surfa
missile).
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MOROCCANS WITHDRAW
Morocco has withdrawn us expedi-
tionary force from Syria. The first two
contingents arrived in Tangier on July 4,
followed by the third the next day. The
Moroccan force was sent to Syria over a
year ago and originally consisted of over
2,000 men and about 60 tanks. It was
involved in heavy fighting around Mount
Hermon during the October war. The
force apparently left behind such tankc nq
survived the war.
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JORDAN-FEDAYEEN: GETTING TOGETHER
Egypt and Syria have begun to focus on the
problem created by the competing interests of
Jordan and the Palestine Liberation Organization,
which they hope to reconcile before the Geneva
peace conference reconvenes.
For some time, President Sadat has been
privately urging the two to work together. Last
month, he publicly proposed a meeting of Egypt,
Syria, Jordan, and the PLO to work out a co-
ordinated strategy for the, next phase of the peace
talks. Last week, Syrian Foreign Minister
Khaddam visited Amman in part to offer to medi-
ate between King Husayn and PLO chief Yasir
Arafat. Morocco's King Hassan, the host for the
Arab summit meeting to be held in September,
has also offered his good offices.
Both Sadat and Asad have encouraged
Husayn to believe that they are sympathetic to
Jordan's interests. Jordanian Prime Minister Rifai
recently told the US ambassador in Amman that
Khaddam agreed with Jordan's refusal to attend
the Geneva peace talks unless a Jordan-Israeli
disengagement accord is reached first. The Jor-
danians also believe that Sadat does not want to
risk becoming isolated by moving ahead in nego-
tiations with Israel without both Syria and Jor-
dan at his side.
Husayn wants to hold a series of meetings
with the Syrians and Egyptians before the Arab
summit to try to hash out a position paper giving
priority to disengagement talks between Jordan
and Israel. The Jordanians are far less certain how
to deal with the PLO. Prime Minister Rifai seems
inclined to talk with Arafat, but doubts that
anything can be worked out. Husayn is distrustful
of the Syrian and Egyptian expressions of sup-
port. He is also concei ned about the reaction of
the army if he agrees to a rapprochement with the
fedayeel, or even to meet publicly with Arafat.
Accordrigly, Husayn has reportedly laid
down two conditions for a formal meeeting: prior
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assurances that any meeting with PLO leaders will
produce positive results; PLO acceptance of Jor-
dan's right to negotiate the return of the West
Bank at Geneva, leaving the still vaguely defined
question of "Palestinian rights" for the PLO to
handle at some "later stage" of the talks.
PLO leaders are most unlikely to provide the
advance assurances that Husayn desires. In
particular, they will refuse to acknowledge that
he should be the sole negotiator for an Israeli
withdrawal from the West Bank. Because the area
would form the heart of any future Palestinian
state, even moderate Palestinians insist that they
be allowed a say in negotiating its return to Arab
control.
The f edayeens' public position toward
Jordan remains hard. At its meeting in early June,
the Palestine National Council adopted a ten-
point program that called, in effect, for the over-
thr ow of Husayn. Behind this tough public stand,
however, the PLO leaders are deeply divided
about whether to seek a reconciliation with
Husayn. A number of relative moderates are
believed to be pursuing, however indirectly, some
accommodation with the King; Arafat himself is
reported to have sought Syrian mediation.
According to pro-fedayeen newspapers in
Beirut, the PLO Executive Committee met in
Damascus early this week to debate PLO policy
toward Jordan "in light of the mediation that
Egypt, Syria, and Morocco have carried out."
Arafat, despite the recent expansion of this
committee to include more of his supporters, will
have great difficulty convincing the group of the
desirability of a rapprochement with Jordan. The
most he can realistically hope for is a committee
decision to talk to the Jordanians without any
preconditions. This, apparently, is what the
Syrians have proposed to Husayn, almost cer-
tainly with Arafat's a. 'royal
II
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IRAQ: PROCURING ARMS
Over the last three months, Iraq has spent
some $160 million on arms purchases from non-
Soviet suppliers. This flurry of orders mirrors the
need to rebuild inventories depleted during recent
fighting with the Kurds.
Except for a large contract with Yugoslavia
(Iraq's first with that country), the purchases are
from traditional suppliers of small arms, ammuni-
tion, and military support equipment. The $82
million agreement with Yugoslavia, the largest
non-Soviet arms accord ever concluded by
Baghdad, underscores Iraq's determination to
diversify its major sources of conventional
armaments while still acquiring weapons com-
patible with existing Soviet-supplied inventories.
The agreement with Yugoslavia, concluded
after three months uf negotiation, will include
mortars, small arms, ammunition, gas masks, and
other support equipment. The first shipment of
mortars was to be airlifted to Baghdad in early
July; the rest is scheduled for delivery over the
next 30 months.
v-' ,-,4:1'1,1t14077771,,,t
4.V ?
-YrrPV5'''VraZZ2a,
OSA class guided missile patrol boat
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Baghdad has also purchased some $70 mil-
lion in military equipment trom other East Euro-
pean sources so far this year. Bulgaria and Hun-
gary will provide the bulk of the equipment,
although several small accords were also signed
with Czechoslovakia, East Germany, and Roma-
nia. Vehicles, support equipment, ammunition,
and spare parts comparable to those previously
purchased from the East Europeans and Soviets
dominate these purchases.
Arms purchases from Western Europe have
been relatively insignificant so far this year. Iraq
placed orders for small arms, ammunition, and
spare parts with Belgium and France this spring.
Negotiations are under way with Spain for
106-mm. recoilless rifles and with Sweden for
aircraft refueling trailers. West Germany also has
been approached regarding the possible sale of
Leopard tanks and the Milan anti-tank missile
system. Baghdad has been unsuccessful thus far in
attempting to purchase military hardware from
Bonn.
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Baghdad still relies or Moscow for sophisti-
cated weapons systems. Deliveries made this year,
under 1972 and 1973 contracts exceeding $40
miliion, have included FROG tactical surface-to-
surface rockets and Osa-I I guided-missile patrol
boats?the first exported by the USSR. The So-
viets are also helping Iraq build an air defense
network. They have reintroduced the SA-2 missile
system
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IRAQ: KURDISFI WA ? GRINDS ON
The Kurdish rebellion, now in its fifth
month, has spread across northeastern Iraq. It has
involved the bulk of the Iraqi army in what has
thus far been a fruitless effort to force the
Kurdish rebels to accept the government's offer
of I im ited autonomy.
Fighting between army units and the rebels
has intensified in recent weeks. Army casualties
since the fighting began reportedly have reached
more than 3,900 killed. Kurdish casualties are
ciifficult to estimate but probably are much lower
than those of the army. The heaviest fighting
co.-itinues to be concentrated generally in the
Sulaymaniyah-Darbandikhan area and north of
Irhil.
Although the army has attempted several
multibrigade offensives, its long-anticipated gen-
eral offensive has never materialized and there
have been no decisive engagements. Faced by
superior numbers arid firepower, the Kurds have
resorted to guerrilla tactics, including ambushes,
night raids, sabotage, and mining operations.
The government forces have tried to counter
these hit-and-run attacks by relying heavily on
aerial bombardment, armor, and artillery. These
attacks have sometimes hit civilian targets, result-
ing in great loss of life and property damage. The
Kurds have publicly warned Baghdad that unless
the indiscriminate bombing ceases, they will
destroy the Kirkuk oil complex. They have al-
ready carried out some attacks on this installa-
tion.
The heavy fighting in the north appears to
be fueling public hostility to the Baghdad regime.
Despite the government's concerted effort to play
down the fighting and to conceal the high
casualty rate, most Iraqis are now probably aware
that Baghdad's campaign has thus far been a fail-
ure and that casualties have been heavy. Dissident
groups reportedly are becoming more active, and
party cadres have been ordered to organize armed
patrols in the major cities to quash anti-regime
activity. The government is also reportedly taking
other unusual precautions, such as stationing a
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tank battalion inside the grounds of the presi-
dential palace.
Some ranking officials are said to view the
Kurdish situation with deepening pessimism. A
senior security official believes tl.e war could last
more than a year and increase latent antagonism,
especially among the armed forces, toward Baath
Party leadership. If the high casualty rate con-
tinues, he believes the public outcry could lead to
acthe military opposition to the regime.
There are persistent rumors of stress within
the party hierarchy. Some favor a general military
offensive to settle the Kurdish problem once and
for all, while others be!ieve the problems can only
be solved through negotiations. The regime has
virtualiy closed the door to further negotiations,
however, by publicly denouncing rebel leader
Barzani as a traitor and an agent of Iran, Israel,
and the US. The Kurds, for their part, continue to
leave the way open for an eventual resumption of
negotiations.
Relations between Iraqi President Bakr and
Baath Party strong man Saddam Husayn Tikriti
reportedly remain strained, but no open break
appears likely in the immediate future. They are
aware of their mutual dependence: Bakr needs
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Tikriti to prevent a rift in the party and to assure
the loyalty of the civiliein security organizations;
Tikriti needs Bakr's support to keep the army
loyal to the regime. In terms of absolute power,
however, Bakr appears to be the stronger because
of his widespread personal support within the
army. An open power struggle could develop
between them if the army suffers a major defeat
or gets bogged down in the north for the win-
ter.
ETHIOPIA: KEEPING THINGS MOVING
Segments of the military that support polit-
ical end social change pushed Ethiopia's slow-
moving revolution a notch forward late last week
by securing Emperor Haile Selassie's acceptance
of their demands or military supervision of the
government and for the acceleration of constitu-
tional revisions that will make the Emperor a
figurehead.
The agreement, reached at meetings between
the Emperor and military representatives, for-
malizes the close collaboration that has devel-
oped, under army pressure, between the military
and Prime Minister Endalkatchew'sgovernment. It
also commits the Emperor to the speedy intro-
duction of constitotional changes that are now
being prepared by a committee appointed last
March. Haile Selassie called Parliament into
special session to consider the committee's recom-
mendations. The new constitution will make the
cabinet responsible to Parliament rather than to
the Emperor.
On July 9, the Armed Forces Coordinating
Committee that the military n?.formers established
late last month issued its first formal policy state-
ment. It emphasized the military's intention to
"present proposals" to the cabinet and to
"ensure" their implementation.
The military scored another gain with the
recent appointment of General Aman Mikael
Andom as the new chief of staff. Aman is widely
respected among junior officers and has long
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advocated the changes the military has now
forced on the Emperor. Aman was transferred to
the largely powerless Senate ten years ago for his
outspoken criticism of the regime. The military
reformers are reported to be discussing with the
government cabinet changes that would further
increase the military's influence.
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The agreemen` .4iith the Emperor helped
ease tension brought lbout by the military's
ah est, beginning early last week, of leading
members of the aristocracy. This week, Addis
Ababa returned to normal, and military guards
were withdrawn from most key installations. The
arrests continued, however. On July 8, the co-
ordinating committee issued a list of 27 wanted
officials, including a member of the Crown
Council and several senior military and police
officers. Seventeen surrendered almost immedi-
ately, bringing to about 35 the number known to
have been arrested.
The coordinating committee, originally
formed by military units in Addis Ababa, now
includes representatives from most key com-
mands in the provinces. A statement on July 4 by
the air force proclaiming its solidarity with the
other services added to the impression of growing
unity among the military. About the same time,
,he army airborne battalion and the air force unit
stationed at Debre Zeit airbase settled the bitter
dil.pute that broke out between them last March
when the paratroopers took control of the base to
prevent an alleged coup attempt by air force
radicals. The reconciliation was aided by the
cashiering of both units' comrnande.rs,who were
thought to be prolonging the hostility.
Despite these moves toward unity, the
moderates who now dominate the military are
not yet a tightly knit group. While they can
enforce their views when they intervene in the
political process, they probably will not be able
to provide firmness and continuity in their
attempt to direct the government from behind
the scenes
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ARGENTINA: ONLY OUTWARDLY CALM
Mrs. Peron moved cautiously during her first
week as President to sustain the image of an
orderly transfer of power and to assure the coun-
try that there would be no major shift in policies.
To forestall growing labor unrest, she approved an
additional half-yearly bonus for workers?a ges-
ture already endorsed by Peron before his death.
The measure will be little more than a palliative;
serious economic and political problems remain
that will test Mrs. Peron's mettle.
The aura of public uncertainty about the
future was not dispelled by Mrs. Peron's decision
to retain her late husband's close aide, Jose Lopez
Rep, as her private secretary. Mrs. Peron has long
leaned on Lopez Rega for political guidance, and
the two shared responsibility for managing
Peron's finances. Lopez Rega, who is also social
welfare minister, is generally despised by the mili-
tary, his rivals in the cabinet, the Peronist left
wing, and other political parties. He has almost no
political following of his own, but has neverthe-
less been quite successful in edging supporters
into important posts and in cultivating key trade
union figures aligned with the orthodox (right-
wing) faction of the Peronist movement. Urifet-
tered by Juan Peron, and aware of his impo: iance
to the politically inexperienced Mrs. Peron, +he
ambitious Lopez Rega may indulge his propensity
for palace intrigue with increased fervor.
Behind-the-scene maneuvers may already
have begun as ambitious members of Peron's
inner circle struggle to improve their positions.
Lopez Rega's continued prominence in the power
structure is certain to set off even sharper infight-
ing among the Peronists, and it could sour the
President's relationships with the military and
with party leaders. For the time being, Lopez
Rega's adversaries in the government may contain
their opposition out of deference to Mrs. Peron
and a desire to avoid rocking the boat. As time
goes on, however, pressures on Mrs. Peron to get
rid of him will intensify.
President Peron
At first cabinet meeting
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the power
conflict between Lopez Rega and Minister of
Ecoiomy Gelbard is becoming more intense as
both attempt to purchase support from labor
leaders. Gelbard and Lopez Rega have long been
enemies, although they have occasionally been
partners of convenience when it suited their
Purposes.
It probably will be some time before the
jockeying for power forces a split in the coalition
around Mrs. Peron, but the antagonisms within
the inner circle are deep and will lead to in-
creasing strains among Mrs. Peron's most influ-
ential advisers.
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VENEZUELA: AGAINST THE CRITICS
President Perez is rallying popular support
behind his government's efforts to fight inflation,
ease temporary food shortages, and rebut the
criticism of conservative businessmen that his ad-
ministration is moving at too fast a pace in re-
structuring the Venezuelan economy.
Using a variety of carefully staged public
appearances during the past several weeks, Perez
has warned critic; that he intends to fulfill his
campaign promises, especially a guarantee that
lower income groups will be assured access to the
"necessities of life" and that he will not tolerate
attempts by a "segment of society" to undermine
this effort. The basis of his program is a broad
economic plan that includes wage hikes, agri-
cultural and industrial development programs,
price controls on basic necessities, consumer pro-
tection, and anti-monopoly laws. In defending his
total program, Perez claims that it is essential in
order te achieve the "authentic liberation of the
Venezuelan people."
The traditionally conservative businessmen
disagree with the President, contending that by
tampering with traditional business practices he
could impede increased productivity. They fur-
ther charge that the uncertainty generated by the
great volume of economic decrees issued during
the administration's few months in office has
kept private investment bottled up. The business-
men attribute the flight of at least $1 billion in
foreign exchange during the past month to fears
inTired in small entrepreneurs by th,a President's
economic legislation. More objectionable than
Perez' energetic style of governing, however, has
been the drafting of new labor legislation that
prohibits the "unjustified" firing of workers, in
effect securing them in their jobs. Congressional
leaders have ind,zated they will accept some mod-
ification to thr draft law, but business interests
are adamantly opposed to any measure that in-
hibits their rights to dismiss employees.
LOA I
Apparing before the annual convention of
the Venezuelan Fedc.r3tion if Chambers of Com-
merce on Jui,a 29, Perez vigorously defended his
programs. He said that if mistakes were made, he
would rectify them, but that he was determined
to obtain a more equitable distribution of the
country's wealth. Perez w3rned that if social in-
justices were not corrected, the country risked
political upheaval. At the conclusion of the
speech, the delegates gave Perez a standing ova-
tior,, signifying perhaps their realization that
come what may, their future is linked with him,
and there is no acceptable alternative however
much they might disli're his populist programs. In
a news conference the same day, Perez told his
supporters that there would be no turning back
from the goals he has set. In another major
speech, Perez again assured the commercial sector
that his government's policies are not intended to
hurt them and promised to review or delay any
actions that could be harmful. At the same time,
the President invited representatives from labor
and peasant organizations to form a joint com-
mittee to advise him on the laws that should be
adopted to benefit and protect the lower and
middle classes.
Public reaction to Perez' speeches has been
favorable, and he appears to have defended his
government's policies well. His political strength
remains strong and he has won general support
from politicians and workers for his efforts to
pull the reins on inflation. The influential busi-
ness community, although unhappy with Perez'
economic and social objectives, is aware of his
sweeping election mandate, and it is not in a
position to win a confrontation with him. The
businessmen, moreover, are well aware of the
President's skill in using the nationidistie fervor of
the electorate to his administration's advantage.
The post-election honeymm could end in the
coming months, however, unless Perez can fulfill
his election promises and at the same time calm
the fears of the influential business sectnr n ri
foreign investors.
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MEXICO: PRESIDENT'S SOUTHERN TRIP
President Echeverria left this week on a
South American trip intended to boost his
prestige as a leader of the developing nations and
to strengthen Mexico's ties with its southern
neiahbors. After a brief stop in Costa Rica, he will
spend the rest of July visiting Venezuela, Peru,
Ecuador, Brazil, and Argentina.
Echeverria has told journalists that he
intends to discuss severri themes with his presi-
dential hosts. Top billing will go to furthering
Latin American integration and unity in
economic, social, and political areas. -lis vehicle
for accomplishing this goal?and possibly gaining
consideration for the Nobel Peace Prize?is his
proposal for a "Charter of Economic Rights and
Duties," which is being considered by the United
Nations Conference on Trade and Development.
He will try to elicit commitments to support the
measure when it comes before the UN General
Assembly in September. In his public statement
during the trip, Echeverria will probably aim his
critical remarks at the industrial nations as a
group, although at times he may single out the US
on such subjects as multinational corporations.
The Mexican President has said that at each
stop he also will urge the lifting of the OAS
embargo against Cuba, in effect since 1964.
Mexico is the only Latin American country that
defied the OAS position by maintaining diplo-
matic relations with Havana. Relations with the
Castro government have fluctuated, but are cur-
rently quite warm. The Cuban education minister
was in Mexico during June, and several adminis-
tration officials and members of the President's
family have been to Cuba recently. Echeverria
himself has said he will visit Cuba, but has not
specified a date.
Echeverria has particular points he wants to
discuss with the individual chiefs of state he will
meet. In Venezuela, he will almost certainly deal
with Mexico's need for oil. He also has indicated
that he wants to address the UN Conference on
the Law of the Sea, which has been meeting in
Caracas. Economic and technical cooperation will
be highlighted during his sojourn in Brazil.
LOA I
Echeverria
Although the two countries are, to a degree, rivals
for influence in Latin America, their governments
share a pragmatic viewpoint that facilitates
cooperation.
One notable?but not surprising--omission
on Echeverria's itinerary is Chile. The Pinochet
government is becoming increasingly indignant
over Mexican foot-dragging on re-e