WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080013-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 30
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 13
• Publication Date: March 14, 1975
• Content Type: REPORT

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Weekly Review
Top Secret
Top Secret
25X1
March 14, 1975 25X1
Copy
N2 650
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CONTENTS (March 14, 1975)
I r1 _? ___l"...Y RFVIf_t!'.r, ISSnod %r'a~ i-rida' inorrijilc] hi tht:;
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It'.1'I;r;C.l.,'(1 Y.
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in ; _ norll(rl
1 Portugal: Leftists Tighten Grip
2 Iran-Iraq: Startling Accord
4 Cyprus-Greece-Turkey
6 South Vietnam: Fighting Flares
9 Cambodia: The Noose
Tiahten
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12 Thailand: An Exercise in Confusion
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13 USSR: Carriers "Russian S le"
15 The Soviet Union: Merchants of Moscow
19 Spain: Limned Cabinet Reshuffle
20 Hungary's Party Congress
20 Ideologists Gather in Prague
21 Iceland: Extended Fishing Limits
22 Middle East: Asad and the PLO
23 Kenya: Tensions Sharply Increase
23 Trinidad-Tobago: OPEC Application
24 Colombia: Sitting on the Fence
25 Argentina: Opting for Shortages
25 Diplomacy in the Andes
26 Brazil: Disgruntled Conservatives
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Comments and queries en the contents of this
publication are welcome. They may be directed to
!ne editor of the Weeki- 25X1
EAST ASIA
PACIFIC
EUROPE
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MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
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, -. ' 23 iUJl ' "'V. :-s_ !U
17 rh
Portugal
The leftist-dominated Portuguese Armed
Forces Movement has moved rapidly to con-
solidate its control of the country following an
abortive coup by rightist forces. The coup at-
tempt, which played directly into the hands of
Movement radicals and their Communist sup-
porters, occurred at a time when the moderates
appeared to be gaining strength. Nov., on the
defensive, the moderates are expected to be the
target of retaliation by the radicals. This will
further cripple the moderates in the comir,g
constituent assembly elections, which have now
lost much of their meaning.
On March 11, rightist officers with alleged
connections to former president General
Antonio do Spinola launched an ill-conceived
and poorly executed coup attempt. The up-
rising, directed against the headquarters of an
artillery unit near Lisbon airport, involved only
a handful of aircraft supported by a paratroop
unit and some elements of the national guard.
Wiihin hours, Portuguese authorities announced
the coup had failed, and President Costa Comes
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 presented a gist of 6 officers charged with in-
volvement in the revolt.
The list was headed by General Spinola,
who fled to Spain by helicopter with some of
his supporters and is being "interned" pending a
decision by the Spanish government. Madrid,
embarrassed by Spinola's presence, has denied
any involvement in the coup and has declared
that it will continue to pursue a policy of non-
involvement in Portuguese affairs. The Spanish,
who expect an extradition request for Spinola
and his retinue, may anticipate such a request
by offering to return the Portuguese helicopters
and arms used h-; the escaping offices. Spain
reportedly would welcome offers of diplomatic
asylum for Spinola from third countries.
Duri ig an all-night meeting following the
coup attempt, officers of the Movement ac.3d
quickly to tighten their grip on Portugal. As a
first step, spokesmen announced on March 12
that the Movement would be institutionalized
immediately. Although the military's future role
in politics has been the subject of tough debates
in recent weeks between the Movement and
Portugal's political parties, this question is ap-
parently now rendered wholly academic. Prime
Minister Goncalves was also authorized to
reshuffle his cabinet to bring its membership
more into line with the Movement's program. In
an internal reorganization move, the Movement
announced the creation of a new executive
body, the Council of the Revolution.
A purge of Spinola's supporters is already
under way within the leadership of the Move-
ment, and increased pressure on the moderates
is anticipated. All service councils that con-
tained members involved in the coup attempt
a e to be abolished. Just prior to the attempt,
the defeat of leftists in elections to these coun-
cils had greatly encouraged hopes of a moderate
resurgence.
The political parties of the center and right
are also being threatened. Mobs of leftist dem-
onstrators have sacked the L'shon and Oporto
offices of both moderate and conservative
parties. It is already rumored in Lisbon that the
center-right Social Democratic Center and Chris-
tian Democratic parties will be dissolved prior to
the constituent assembly elections set for April
12. A commission has been formed to investi-
cate the coup attempt and moderate parties will
be reluctant to pursue their criticism of Move-
ment policies for fear of being labeled reaction-
aries and tarred with the same brush as the
coupists.
Although the Movement has announced
that the elections will be held as schedulec;, the
increasingly dominant government role being
played by the leftists and continued excesses
against the democratic parties threaten to make
any future Portuguese elections meaning-
Iran-Iraq: Startling Accord
The Shah of Iran and Iraqi strong ma
Saddam Husayn Tikriti, long bitter antagonists,
signed a comprehensive agreement last week in-
tended to resolve bilateral difference; that have
produced nu! .erous border clashes between
their two countries during the past year. Each of
the parties gains important advantages from the
accord, while Iraq's rebellious Kurds, who have
depended on Iranian military support, were the
big losers. This week, Kurdish leaders sued for a
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cease-fire that appears to leave the Arab regime
in Baghdad the decisive victor in its latest round
wi.!^ the proud Kurds.
The accord, "which was arranged through
the mediation of Egypt, Algeria, and Jordan,"
was announced on March 6 in Algiers where the
two leaders were attending a summit conference
of the Organization of Petroleum Exporting
Countries. A subsequent communique makes no
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mention of the civil war that has been in pro
ress in Iraqi Kurdistan for the past year,
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Baghdad publicly accepte
Tehran's formula for defining their long-dis-
puted southern river boundary. Iran had unsuc-
cessfully sought such an Iraqi concession in pre- he Iranian and Iraqi foreign ministers
vious negotiations and regarded it as the key to are scheduled to meet in Tehran on March 15 to
any accord with Iraq. start working out, with the help of their Alge-
rian counterpart, details of the border demarca-
tion. 25X1
Acceptance of the Shah's terms for settling
the boundary dispute costs Baghdad something
in national pride, but, on balance, the Iraqis
gained more than they conceded. For Saddam
Husayn, curtailment of Iran's support of the
Kurds-and, thus, of the rebels' military
capabiiities-clearly became an overriding pri-
ority some time ago. The prolonged rebellion
was drawing increasingly heavy domestic
criticism and causing serious disruptions in the
economy.
The Shah, in addition to gaining the
boundary settlement he has long been pushing,
extricates himself from involvement in a re-
bellion that he knew could be sustained only by
an increased military commitment on his part.
He was not prepared to make that invr;5:ir.9nt,
especially at a time when he wishes to have
closer ties with Arab regimes-notably Sadat's
Egypt-anxious for their own reasons to see
Saddam Husayn relieved of his l,urdish
problem. In addition, the Iranian ruler may
hope the accord will lead to a diminution of
Moscow's presence and influence in Iraq. Egypt
and other moderate Arab states had held out the
prospect of such a development in pressing the
Shah to seek -
dad
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Cyprus-Greece-Turkey
Cyprus: Extremists Again Active
The tenuous truce between pro- and anti-
Makarios factions within the Greek Cypriot
community appears to have been broken as a
result of the attempted assassination of a high
government official on March 9 and an explo-
sion last week at the Limassol offices of the
Church of Cyprus. President Makarios will now
be under growing pressure from his supporters
to purge the remaining rightist extremists in the
government and to move against the remnants
of the EOKA-B terrorist organization, which
may have been responsible for the latest acts of
violence.
Relations between pro- and anti-Makarios
supporters began to deteriorate late last month
following the Greek government's discovery of a
plot against it by supporters of the former junta.
Pro-Makarios groups on Cyprus charged that the
conspiracy was also aimed at the overthrow of
the Archbishop's government. They called for a
purge oS junta collaborators from the bureauc-
racy and the national guard, as well as the
apprehension of terrorists s'.ill at large.
Makarios had previously adopted a con-
ciliatory line toward the far right in an effort to
secure a common front in the face of the Turk-
ish threat. This now appears to have been oniy a
tactical move, however, as he was apparently
just biding his time before moving against those
who have sought his overthrew. The latest acts
of violence, coupled with pressure from his
supporters, will probably persuade him to take
some punitive measures against the far right,
despite the continuation of the Turkish threat.
This could spark renewed clashes between
government or pro-government forces and the
well-armed, hard-core remnants of EOKA-B,
which are particularly strong in the Limassol
area. The terrorists, however, do not appear to
have either the means or the popular support to
mount a successful challenge to the government
UN RESOLUTION
Greek and Turkish Cypriots have
agreed to resume intercommunai negotia-
tions after the UN Security Council an
March 12 adopted a resolution acceptable to
both sides. The resolution provides a face-
saving means for the Greek Cypriots to re-
sume the talks they broke off last month
following the proclamation of a separate
Turkish Cypriot state.
The Greek side had hoped to secure a
greater role for the Security Council in fu-
ture negotiations, but the Turks succeeded
in preventing this. A key provision of the
resolution calls for future talks under the
"auspices" of the UN Secretary General, but
the scope of Waldheim's role must be deter-
mined by the mutual consent of the two
Cypriot communities. Preparations to re-
sume the talks will get under way at a time
when their outcome could be affected by
domestic unrest it Greece and Turkey-as
well as within the ty
itself.
at this time. Moreover, the Turkish threat is
likely to keep the violence on both sides at a
Greece: Shaking Up The Army
The Karamanlis government completed its
review of the loyalty and competence of high-
ranking officers this week and will now begin
examining cases in the lower ranks. The review
and subsequent retirements have caused major
morale problems in the army as well some
friction within the government itself.
Fifty-eight army and air force generals and
four naval flag officers have been retired, caus-
ing widespread anxiety within the armed forces.
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After seven years of military rula, nearly all
officers are vulnerable to charges th, it they sup-
ported the junta. In addition, the constant
shuffling of the top leadership has created con-
fusion in the command structure, while the
recall to high positions of officers who had been
cashiered by the junta has increased factionalism
within the army.
The government, which is aware of the
unrest within the :jrmed forces, this week de-
cided to suspend indefinitely penal proceedings
against former military leaders connected with
the coup on Cyprus last July. The postpone-
ment, v 'ch was approved by political opposi-
tion leader:, is clearly a conciliatory gesture
toward the military. It may also mean that
government leaders are trying to resoive dif-
ferences of their own on that score. Sources of
the US defense attache in Athens report that
friction exists between Defense Minister Averoff
and Prime Minister Karamanlis, with Karamanlis
advocating a harder line against holdovers from
the junta than Averoff. According to these
sources, Averoff, who has been under heavy
attack for his handling of the military con-
spiracy, may resign as defense minister. Alter-
nati',ely, some say, he may remain in the gov-
ernment as foreign minister, while Karamanlis
would add the defense portfolio to his other
Turkey: Still No Government
Caretaker Prime Minister Sadi Irmak this
week abandoned attempts to form a new gov-
ernment, thus prolonging Turkey's political
stalemate into its sixth month. Irmak, who will
continue in a caretaker capacity, went through a
ritual round of consultations with party leaders
this week, but he encountered the same obstacle
that prevented him from forming a government
last week: the parties would not agree to join
together in any one of several coalition
formulas.
President Koruturk has been reluctant to
designate Justice Party leader Demirel to form a
right-wing Nationalist Front, but he may now be
forced to do so. Although Demirel appears to
have the best chance of forming a coalition that
might be able to command a majority in parlia-
ment, both Koruturk and the military fear that
if he comes to power, the polarization between
right and I'ft would increase, provoking re-
newed public disorders. They are also opposed
to the inclusion of the Islamic-based National
Salvation Party and the extreme rightist Na-
tional Action Party- both members of Demirel's
four-party Nationaiist Front-in any future
government.
Military pressures will undoubtedly grow
now that Irmak has admitted failure. So far, the
m0itary has beers content to exert psychological
pressure. A "precautionary" alert is still in ef-
fect, designed to demonstrate the concern of the
high command over the political impasse. The
alert may also be related to:
? the threat of renewed violence between
rival political -ligio is factions;
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? the General Staff's concern over grow-
ing unrest among junior and noncommis-
s'oned officers;
? the possibility of President Koruturk's
resignation and the crisis that would ensue
as the deeply divided parliament tried to
find a successor.
Ultimately, the only way out of the im-
passe is new elections, which the military may
decide to compel by intervening in the political
process. Even this solution is far from sure, for
it is not certain that any party could win enough
votes to ensure a stable majority. A revision of
the electoral law is in order, but the parties
disagree on the details.
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SOUTH VIETNAM: FIGHTING FLARES
The second phase of the Communist winter Communist Si,ategy
campaign, which got 'under way last week, has
now spread to all four government military re-
gions. The signs are clear that the fighting will The Communists, recalling their success in
in ensiy, especially in the central part of the she Phuoc Long fighting earlier this ea r must
t f yea
country, and the government almost certain)
an
y realize most that certainy I Saigon is i believes in
will lose more ground before the new Commu- aggressive defense of all its holdings. Hanoi JI-
the no
opportunity tonity now make
ex-
nist drive can be blunted. Most of the losses will be in fringe areas, however, and South Vietnam- is s to
t t g y hitting
make sizable territorial gains b amese where they are unlikely
ese counterattacks may recapture some of the the South Vietnamese
population still under its control. The com-
mitment of several reserve divisions from the
North, however, would tilt the balance of forces
toward the Communists.
territory later. The government should be able
to emerge from this round of fighting with most
of t economically important land and most of
The heaviest fighting of the week took
place in he central provinces. The battle contin-
ues for Ban Me Thuot, the capital of Darlac
Province, although the Communists are in con-
trol of most of the city. Government reinforce-
ments have been sent to this battlefront, and
President Thieu has ordered that the city be
held "at all costs." The main routes linking the
highlands with the coast remain cut, and heavy
fighting continues as the South Vietnamese
move to open these vital roads. Late in the
week, the Communists cut north-south Route 1
in the central coastal provinces.
To the south, the Communist 9th Division
made a long-awaited move in midweek by sally-
ing out of its base area and overrunning a dis-
trict capital just 40 miles north of Saigon. The
Communists have also cut Route 22, the road
linking Tay Ninh with the capital, and have
increased their shellings throughout many of the
provinces north and west o.' Saigon. A flurry of
shellings and harassing attacks also took place at
week's end in the northern and central delta
provinces. Although the South Vietnamese have
retaken some lost positions in the northern
provinces, the fighting in the area has resulted in
large numbers of refugees who are fleeing to the
safety of Hue and Da Nang.
to put up a vigorous defense. The Communists
probably see their best chances for substantial
gains in the western tier of provinces-Kontum,
Pleiku, Earlac, Quang Duc, Binh Long, and Tay
Ninh. The recent surge in action along vital
highways serving the highlands confirms Com-
munist interest in the area. The fighting in Dar-
lac, Phu Bon, and Quang Duc suggests a main
Communist thrust will be in that area. The Com-
munists have sufficient forces in the highlands
to carry out large-scaly attacks in the Pleiku-
Kontum areas. The Communists also have
opened new fronts along the northern coast, and
attacks are likely in Quang Nam and Quang Ngai
provinces.
Enemy Preparations
The Communists have had ample time to
consolidate their gains of December-January and
to rebuild the units that took part in the ea lier
fighting. Moreover, Hanoi has committed addi-
tional combat units, and infiltration is running
substantially higher than a year ago-troop depar-
tures from North Vietnam have increased
sharply from a rate of about one group a day to
two or more daily. Most of this manpower is
going to southern and central South Vietnam.
The North Vietnamese started a major, ia-
tionwide induction campaign in January, which
appears to be continuing, and they have appar-
ently shortened the training time for some new
recruits. The increased recruitment and short-
ened training indicate that Hanoi expects heavy
losses over the next few months and is getting
more troops ready to send to the South.
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Tay M1 nh
?
C'\
100
557471 3-75 MILES
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The Communists also are shifting combat
forces. The North Vietnamese 966th Division
recently completed a move into the Kontum-
Pleiku area from southern Laos, and there are
signs that part of the 341st Division has moved
across the Demilitarized Zone into northern
South Vietnam. Several other reserve divisions
in the North have shown signs of moving, but so
far the evidence is not convincing that any of
North Vietnam's remaining six reserve divisions
have actually begun to move to South Vietnam.
Communist units already in South Vietnam
are also on the move. Parts of the 320th Divi-
sion reportedly have moved south from Pleiku
to the border of Darlac and Quang Duc prov-
inces. In the southern half of the country, sev-
eral units of a division that fought in Phuoc
Long have been moving westward into Tay
Ninh. In addition, part of the 5th Division re-
portedly has returned to Tay Ninh from the
northern delta. The Communists have also built
up their air defenses, armor, and artillery just
north of the provincial capital of Tay Ninh.
Government Initiatives
Since taking command of government
forces in the region around Saigon, Lieutenant
General Nguyen Van Toan has conducted ag-
gressive military operations against Communist
forces threatening Tay Ninh. Toan is optimistic
about the government's prospects in the region
and believes his forces are more than a match
for the Communists.
The government is preparing to move rein-
forcements into the highlands, where South
Vietnamese troops are making little progr(.,ss in
clearing the Communists from intern ?ted
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Khmer Communist gunners this week in-
tensified their artillery and rocket attacks
against Phnom Penh's Pochentong airport. On
March 13, an insurgent rocket set off 90 tons of
ammunition on the civilian side of the airport,
forcing a temporary suspension of airlift oper-
ations. The airlift was scheduled to resume at
week's end, however.
iv t anwhile, government commanders have
brought in reinforcements in an effort to
breathe life into the operation to retake the
town of Tuol Leap and eliminate insurgent artil-
lery and rocket positions in the area. Late in the
week, local commanders were reporting some
progress in the operation, but they had not yr?t
forced any significant communist w;+hrrawal
from around the town. Many embassies in
Phnom Penh have cut back to skeleton staffs,
but only two-the Australian and Israeli-have
closed down completely.
Command Shake-up
In a desperate bid to shake the army out of
its lethargy and boost sagging morale, President
Lori Nol this week replaced armed forces com-
mander in chief Sosthene Fernandez with
wk ly respected roving ambassador, Sak Sut-
sakhan. Lon Nol was c!earl"" responding to pres-
sure from Prime Minister Long Boret, who for
some time has been pushing for increased civil-
ian control over the military establishment.
Boret has the backing of th,? National Assembly
and the Senate, both of which last week passed
resolutions demanding increased powers for the
civilian government. Lon Nol has also em-
powered Boret to reshuffle his cabinet, a move
that will almost certainly include naming Sak
Sutsakhan to serve concurrently as defense min-
ister.
INTENSE I NFIGF.TING, 111ILiTARILY
AND POLITIC.iLLY, INFLUENCING
VIEWS A130UT NEGOT IATIONS.
bringing the 'ighting to an end.
on a negotiated settlement. They may seize on
any confrontation or confusion resulting from
the command shake-up or the cabinet resht.'ffln
to force more dramatic changes in hope of
The shake-up is a calculated risk. Fernan-
dez had come to symbolize the government's
military shortcomings so that a groundswell had
developed for his departure, and his removal has
sparked little controversy. A period of intense
infighting could still be in the offing, however,
as other ambitious military leadets vie for
dominance in the new command structure.
Moreover, increasing numbers of influential
Cambodians are exp.essing the belies that some
way must be found to break the current imoasse
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LOA I
Khukrit, respected journalist and former
assembly speaker, is more acceptable than Seni
to Thailand's vested interests, a factor that
helped to bring about Seni's downfall. Khukrit
is supported by several key army generals,
including the commander of the important
Bangkok garrison and army commander Krit
Siwara.
THAILAND: AN EXERCISE IN CONFUSION
Thailand is still without a government six
weeks after the general election. On March 6,
after lengthy political mar;euvering to gain the
necessary support, Seni Pramot's proposed coali-
tion was defeated. The initiative has now shifted
to the conservatives, who are backing Seni's
younger brother, Khukrit Pramot, to lead a
center-right coalition.
Khukrit believes he can put together a
coalition and get a vote of confidence in the
assembly within a week. His optimism is based
in part on his agreement with several key rightist
leaders on the allocation of the most important
cabinet positions. Although this is an important
first step, Khukrit must still come to terms with
a handful of smaller parties that hold the key to
his geinir,g a parliamentary majority.
Khukrit's sense of political timing may
work to his advantage. He had been tempted to
join with the conservatives in blocking Seni's
erforts to form a government, but backed out at
the last minute. He apparently reasoned that
Seni would fail and that embracing the conserva-
tives prematurely would needlessly hurt his own
standing as a moderate. He may have calculated
that after six weeks without a government, the
public would be growing weary of parliamentary
maneuvering. This conjecture seems to have
been borne out, inasmuch as there has not been
any significant outcry from the media, the
student community or the public over Seni's
defeat, even though Bangkok is the stronghold
of Seni's Democrat Party.
Another factor that is probably contrib-
uting to the muting of protest at this time is the
belief that Khukrit represents the last real
chance for a political moderate of national
prominence to head the government. If Khukrit
fails, the most likely alternative is a i fight-wing,
military-backed government-something the stu-
dents and their liberal mentors believed they
had overthrown in October 1973. Such an even-
tuality would lead to a new and perhaps more
violent round of political unrest in the rani-
tal.
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USSR: CARRIERS "RUSSIAN STYLE"
will shortly begin sea trials. In addition, the new
aircraft that is intended to operate from this
ship-the Yak V/STOL (Vertical or Short Take-
Off and Landing)-now is in series production.
The Kiev, equipped with the new aircraft as well
as with antisubmarine warfare helicopters,
should be operational by early next year. It will
probably conduct extensive training in the Black
Sea before undertaking open-ocean operations.
Kiev-class ships will help alleviate the So-
viet navy's lack of sea-based airpower. The
Kiev's capabilities ano mode of employment will
not, however, be similar to that of US attack
aircraft carriers. Although the Kiev has been
labeled an aircraft carrier in the West, use of this
term tends to obscure major differences in naval
philosophy between the USSR and the US.
US navy carriers form the nucleus of US
naval surface combat forces. A typical US attack
carrier has 70 or more aircraft, including high-
performance long-range fighters and attack air-
craft whose capabilities exceed those of the
V/STOL. US carrier aircraft provide the main
striking power of the fleet, both for operations
against other surface forces and for the pro-
jection of tactical power ashore. Some US at-
tack carriers also have ASW capabilities, but this
is not their primary mission.
The Soviet navy, on the other hand, derives
its main striking power at sea from cruise mis-
siles carried by submarines, land-based aircraft,
and some surface ships. The Kiev will be able to
support these forces by providing better air
defenses and reconnaissance information for
cruise-missile targeting, but probably will be
used mainly for ASW operations. The Kiev has
only a limited ability to project power ashore,
but this type of mission does not have a high
priority in the Soviet navy.
In its weapons and capabilities, the Kiev-
class ship has evolved from the earlier and
smaller Moskva-class ASW cruisers. Indeed, the
Soviets themselves have called the Kiev an
"ASW cruiser." There is general agreement
among Western analysts that the Kiev's primary
mission is open-ocean antisubmarine warfare.
Once the Soviets have gained experience in
V/STOL aircraft operations at sea, the Kiev
might als,) be used for occasional "show the
flag" operations in the Third World.
The first ship of the Kiev class has been
under construction at the Nikolayev shipyard on
the Black Sea since July 1970. The keel for the
second ship-the Minsk-was laid in December
1972. The initial Kiev-class operations probably
will be confined to the Black Sea and the Medi-
terranean. When the second ship enters service
about 1978, one of them probably will be used
in the Norwegian Sea and the North Atlantic.
Aircraft and Helicopter Carriers
rM
1100 1000 To ac too 6m 603 aD it
Ne to)
US Kitty Hawk Class
Attack Aircraft Carrier
US Hancock Class
ASW Aircraft Carrier
Itiitr.el
0 0 0
Soviet Kier Class
Aircraft Carrier
Soviet Moskva Class
ASW Helicopter Carrier
~9
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The Kiev has an overall length of about
Hormone helicopters. This type of helicopter is
900 feet, a 600-foot flight deck, and a displace- found on the Moskva-class ASW cruisers and is
ment of 35,000 to 40,000 tons. The flight deck
lacks steam catapults and arresting gear, which
effectively rules out the use of aircraft other
than V/STOL or helicopters. There are two ele-
vator openings in the flight deck-one large
enough to accommodate the KA-25 Hormone
helicopter, the other large enough for the new
Yak V/STOL aircraft. The Kiev will carry a
variety of ASW sensors and weapons and will be
armed with air defense missiles and guns.
The Soviets have been working on a
V/STOL aircraft since the early 1960s. The
early aircraft-the Yak Freehand-never became
operational. The new Yakovlev aircraft-desig-
nated the Ram-G by US intellicence
he Yak V/STOL is a fixed-
wing aircraft about 50 feet long with a wingspan
of about 23 feet. It has two lift engines for
vertical or short take-off and one main engine
to carry a mixed payload o machine guns,
bombs, and unguided air-to-surface rockets.
There are indications that it will also be armed
;. ith air-to-ai' missiles.
estimated
The ability to take off and land in confined
areas makes the Yak V/STOL we!I suited for use
in shipboard operations. Although V/STOL air-
craft can perform essentially the same missions
as conventional fighters or attack aircraft, they
have a more limited range and payload because
of the high fuel consumption cluing take-off
and landing.
The most likely missions for the Yak flying
from the Kiev are reconnaissance and air de-
fense. The Yak V/STOL aircraft could provide
such capabilities for Soviet forces at sea. The
lack of sea-based air power has placed the So-
viets at a disadvantage when operating in areas
beyond the range of its land-based aircraft.
In addition to Yak fighters, the Kiev is
expected to have a complement of KA-25
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THE SOVIET UNION
THE MERCHANTS OF MOSCOW
Soviet officials continue to show interest in
working out a new trade agreement with the US
to replace the one Moscow renounced in Jan-
uary. The Soviets probably believe, however,.
that their bargaining position is stronger than it
was last fall, and they may be less willing now
than before to pay a political price for expanded
trade ties.
In an Izvestia interview last week, Deputy
Trade Minister Alkhimov spoke of a "serious
reappraisal" taking place in the US, and implied
that important US politicians and businessmen
are dhmanding that recent trade legislation be
revised "this year." The Soviets clearly think
that the US business community-at a time of
economic slump, and with "proper manipula-
tion"-could become a "useful ally" of Soviet
policy. Moscow has given heavy play in its press
to criticism of congressional trade policy by US
businessmen, and the Soviets have urged US
businessmen to lobby strenuously for changes.
In attempting to enlist the support of the
US business community, Soviet officials have
warned that Washington's short-sighted policy is
forcing the USSR to take its business elsewhere.
To buttress this argument, the Soviets can point
to substantial credit lines at relatively low
interest rates received over the last few months
from the UK, France, and Italy.
Moreover, by further cutting Jewish
emigration in the first two months of this year,
the Soviets have demonstrated that the US can-
not expect to use trade and credits as leverage
on the emigration issue. On the contrary, Mos-
cow is showing that it has the will, as well as the
capability, to regulate the flow of emigrants in
pursuit of its objectives on the trade front.
All things being equal, the Soviets in many
cases would prefer to trade with the US. They
like American technology more than that of
other Western suppliers and regard the US
economy as the source most nearly commensu-
rate with their appetite for capital and know-
how. The Soviets have also not lost sight of their
political stake in expanded economic ties with
the US. Moscow publicly acknowledges a link
between the state of economic relations and the
overall health of US-USSR detente, to which the
Soviets remain committed. Alkhimov, for
example, concluded his interview last week with
an upbeat comment on Brezhnev's coming visit
to Washington.
Despite their continued interest in im-
proved trade relations, the Soviets are likely to
be tougher bargainers in the future. The trade
setback was a political loss to the Soviet leaders
even though they had carefully hedged their
position against such a contingency. They are
unlikely to repeat the scenario of last fall, when
the connectiori between emigration and a trade
agreement was made explicit and was widely
published. Bolstered by what they regard as a
more "sensible" view in tl,e US, and reinforced
by the strong interest of other industrialized
countries in increasing trade with the USSR, the
Soviets will feel less constrained to make conces-
sions to the US in return for better trading
arrangements.
ECONOMY IN GOOD SHAPE
Moscow has good reason to feel secure
about its position in the international economy.
Internally, the economy has been growing at a
moderate rate, while output has been declining
in many Western countries. Because of its self-
sufficient centrally controlled economy, the
USSR has been shielded from the recession and
doubly-digit inflation plaguing the West. Thanks
to an export surplus in oil and raw materials, the
Soviet balance of payments has benefited from
high world market prices. But basic problems of
low efficiency and an inability to quickly apply
new technology remain, and Moscow cannot
readily translate its temporary advantages in
dealing with the West into remedies for its long-
term economic ills.
The Soviet gross national product grew by
3.2 percent in 1974, less than half the pace of
the previous year but still far ahead of most
other industrialized countries. The gap between
the GNP of the US and the USSR declined by a
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record $50 billion. A slump in farm output
caused by poor weather was the major cause of
the s!owdown 'ast year, but agriculture still
enjoyed its second best year. At 195.6 million
tons, grain output was the second highest in
Soviet history, and cotton production reached a
new peak. Moscow bought only 6.5 million tons
of Western arain for delivery in fiscal 1975 and
carried over large grain stocks from the 1973
record harvest.
Industrial output-the economic bellwether
for the leadership-grew at its highest rate since
1970. Adequate supplies of raw materials and
energy were major factors in this growth, as
were larger than planned increases in new
workers and the highest rise in labor produc-
tivity in the current five-year plan period. The
leading growth sectors-energy, producer dura-
bles, chemicals, and processed foods-reflect the
leadership's priority for technological advance
and expansion of farm output.
Consumer welfare continued its steady rise,
featured by increased availability of meat and
dairy products, soft goods, and automobiles.
Full employment continued, and prices were
stable, although, as usual, not all goods and
services were available at official prices. Housing
continues to be the area of greatest consumer
dissatisfaction.
Moscow's hard-currency surplus reached $1
billion last year, compared with a nearly $1
billion average deficit from 1970 to 1973; price
increases for Soviet exports of oil and other raw
materials far outweighed price increases for im-
ports. Trade with the West boomed, growing by
almost 48 percent and accounting for 31 per-
cent of total Soviet foreign trade. Soviet ma-
chinery orders from the West totaled a record
$4.1 billion-a 78-percent rise over 1973.
The Soviet plan for 1975 optimistically
anticipates that GNP will grow at more than
double the 1974 rat,;. This high rate depends on
a large boost in farm output and a matching of
last year's industrial growth. So far this year, the
weather has been favorable for winter grains,
making a record crop possible, but the industrial
plan may be more difficult to fulfill. According
to Soviet statistics, industrial output in January
grew at only 6.7 percent compared with 9.6
percent in January of last year. Although many
original consumer targets for 1975 will not be
met, the leadership remains firm in its commit-
ment to raise living standards. Support for the
agricultural sector, an important prerequisite for
satisfying consumer demands, continues high
this year.
The Soviet hard-currency surplus in 1975
will probably match the $1 billion earned in
1974 as the Soviets continue to benefit from
raw materials exports. This financial cushion
will allow them to pay cash for some purchases,
resist high interest rates, and postpone exports
of some commodities that will bring higher
prices in the future. Soviet renunciation of the
US-Soviet trade agreement will have little im-
pact on trade in 1975.
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The question of ? how to deal with in-
creasing crime and political violence is causing
dissension in Prime Minister Moro's three-
month-old government. The leaders of the four
center-left parties are trying this week to agree
on a compromise package of measures to deal
with the situation.
The recent dramatic increase in crime and
violence has heightened concern in Italy over
the maintenance of public order and-with only
a f3w months to go before nationwide local
elections-enhanced the political importance of
law-ind-order issues. A series of armed robberies
in which policemen have been either killed or
injured has led the police to demand broader
powers and to call for tougher treatment of
offenders by the courts. The seriousness of the
situation has been underlined by such incidents
as the raid in mid-February that succeeded in
freeing the leader of a left-wing extremist orga-
nization from a Turin prison. Rome has been
disturbed, meanwhile, by sporadic street fight-
ing between neo-fascists and extreme leftists
since the opening of a trial of leftists there in
late February.
As part of their preparations for the elec-
tions, which are expected to take place in June,
all of Italy's political parties are choosing sides
on the law-and-order question. Christian Demo-
crat leader Fanfani took the lead last month
when he insisted that law enforcement take
precedence over all other problems. The Chris-
tian Democrats are pushing Iegislat:,,., that gives
the police a freer hand, restricts the use of bail,
and increases penalties for possession of weap-
ons.
Fanfani's approach has drawn fire from the
entire Italian left, including left-of-center ele-
ments in his own party. Left-wing Christian
Democrats and the party youth organization
claim that Fanfani is concentrating on the crime
problem to the exclusion of bread-and-butter
issues that are also troubling voters. Sharp dis-
agreement on this point was one of the factors
that led Fanfani to dismiss the leadership of the
party youth section late last month.
The Socialists, also concerned over rising
crime, maintain that Fanfani's proposals are
aimed at the symptoms of the problem rather
than its causes. In their electoral campaign, the
Socialists will assert that the rise in crime is due
primarily to the failure to enact Socialist-
sponsored social and economic legislation. The
Socialists also are likely to hold to their view
that the neo-fascists are responsible for nearly
all serious political violence.
The dispute over the law-ano-order issue is
not likely to cause Moro's government to fall,
because there is no other alternative in sight,
and no political leader wants to take responsibil-
ity for a lengthy crisis. Government leaders,
therefore. will probably settle on a compromise
package. The Christian Democrats will report-
edly not insist on the proposals most adamantly
opposed by the Socialists, such as granting the
police the right to detain temporarily suspects
who are not charged with a specific crime. For
their part, the Socialists are trying to avoid
actions that could lead to a postponement of
the local elections in which they are expecting
gains. They fear that the elections would be
rescheduled if Moro's government falls before
June.
The Communist Party will almost certainly
take up the law-and-order question at its na-
tional congress next week. The Communists will
probably join the Socialists in insisting that
more extensive social and economic reforms
provide the only effective means of dealing with
the crime problem. The Communists are likely
to claim also that only a government that re-
flects a broader consensus-i.e., one in which the
Communists have a direct voice-will be able to
muster sufficient support to pass such legisla-
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Prime Minister Arias' appointment of five
new ministers on March 6 strengthens his au-
thority in the cabinet and may give a boost to
his lagging efforts to estab~ish political parties.
Franco appears to have vetoed the major reshuf-
fle that Arias reportedly wanted following the
resignation of his labor minister almost two
weeks earlier. The limited nature of the cabinet
changes, however, suggests that the government
will continue its hard line in dealing with polit-
ical, labor and student unrest.
The ouster of National Movement Minister
Jose Utrera Molina, secretary general of the of-
ficial state party, is a victory for Arias. Utrera
had bypassed Arias and had appealed directly to
Franco to water down the Prime Minister's plan
to break the Movement's monopoly on poi itical
activity by permitting the formation of political
associations. The newly appointed minister
favors evolution of the system, a change ;!hat
may encourage moderate political groups to ap-
ply for association status.
The new labor minister-a protege of
Arias-is a labor law expert who also supports
liberalization of the system. Although he is a
moderate, he may be no more successful than
his predecessor in preventing the introduction of
anti-labor measures in the pending labor regula-
tion law. The appointment of a younger and
possibly more liberal replacement for the right-
ist minister of justice will bring needed leader-
ship to Spain's judicial system. The new minis-
ters of industry and commerce are competent
specialists previously associated with the minis-
ter of finance.
Meanwhile, rumors of military unrest con-
tinue to circulate. Since the arrest of two army
officers in Barcelona on February 19-allegedly
for protesting the use of the military in a police
role-various reports have circulated about the
existence of a military "manifesto" on the issue.
Along with reports of this document, there has
been speculation that the regime may have un-
covered a military plot or at least have gotten
evidence that various officers had engaged in
political discussions despite warnings from their
superiors that the military must remain above
politics.
Despite doubts about the authenticity of
the manifestoes and the lack of evidence of any
plotting, the opposition groups are likely to cite
the alleged documents as evidence of unrest
among junior military officers. The regime's
reaction thus far suggests that it is aware of
concern among the military over possible misuse
of the army in suppressing civil disorder. At the
same time, the regime is confident that it can
continue to rely on the military leadership for
support in the event of civil disorders.
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HUNGARY'S PARTY CONGRESS
The 11th party congress that opens on
March 17 will reaffirm the leadership and the
moderate policies of party boss Janos Kadar.
Several people closely associated with these poli-
cies, however, may well be removed from the
leadership.
united party in the face of detente. Changes in
party rules will limit the right of dissent and will
facilitate tighter discipline. A new party pro-
gram will define in ideological terms where Hun-
gary stands, where it is going, and how it will gat
there.
The 62-year-old Kadar appears to have a
firm political hand on the situation. There is no
credible contender for the top party job, and
Kadar has cut the ground from under some
critics by nudging Hungarian policies a bit closer
to orthodoxy. Soviet party leader Brezhnev will
probably head the list of foreign guests at this
congress, and his presence would constitute con-
tinued endorsement of Kadar's leadership. The
Hungarian leader's triumphal reception in the
USSR last September quashed speculation that
he had lost Moscow's backing. The Soviets are
well aware that Kadar's political skills and popu-
larity provide a strong guarantee of domestic
stability.
Personnel shifts at the congress are likely
to include the removal of some Politburo mem-
bers who lost ground in a shake-up last March.
Two of these men, Lajos Feher and Rezso
Nyers, are closely associated with economic re-
form, while Gyorgy Aczel has been an adviser to
Kadar on cultural moderation.
The session will also endorse economic and
cultural programs that have already been
trimmed back. Kadar has heeded the calls of
critics for more orthodoxy and has taken the
lead in making adjustments. The economic re-
form has lost momentum, and a tolerant atti-
tude in cultural matters has yielded to greater
watchfulness and increased attention to ide-
ology in education and the media.
A special effort will be made at the con-
gress to paper over differences deepened by
lengthy policy debates, to upgrade the party's
guiding role, and to meet the demand for a
The congress will probably discuss the im-
plications for Hungary of the rapid increases in
world raw material prices. Budapest ran a large
deficit with the West last year and is adversely
affected by Soviet price increases this year.
The session will also reiterate Hungary's
close political alliance with the USSR and its
active participation in the Warsaw Pact and
CEMA. The restatement of its loyalist foreign
policy will include strong support for Soviet-led
efforts to improve relations with
West.
IDEOLOGISTS GATHER IN PRAGUE
Communist party officials from the War-
saw Pact states, Cuba, and Mongolia met in
Prague last week as part of the Soviet effort to
keep ruling parties alert to the dangers of de-
tente.
The meeting generated little publicity, but
the communique issued on March 6 makes clear
that it was a continuation of a similar meeting
held in Moscow in December 1973. At both
meetings, the delegates discussed the corrosive
effects of detente on communist discipline and
the measures that might be taken to keep the
parties strong. The Prague conference also took
up such topical matters as plans to commemo-
rate in May the 30th anniversary of the end of
World War II and the 20th anniversary of the
Warsaw Pact.
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From the outset, however, the conference
had its own problems. The Romanian Party
daily billed the meeting in advance as a "debate
on current problems." Then Bucharest, which
probably anticipated another Soviet attempt to
put pressure on its representatives, delivered a
calculated insult by sending two deputy section
chiefs of the Central Comr.iittee instead of more
senior party secretaries, such as attended from
the other nations, and did nut associate itself
with the final communique. The comrr.unique
described the meeting's atmosphere as "busi-
nesslike" and "coo adely," sug^ sting less than
total success.
Despite these problems, the Soviets regard
meetings of party officials involved in ideology,
culture, and inter-party relations as essential,
especially as contacts with the West increase.
More sessions of this sort, together with increas-
ing exhortations to unity and orthodoxy, .an
therefore be expected.
Iceland announced on March 4 that it plans
to extend its fishing limits to 200 miles this
year. Within the expanded limits, the Icelanders
intend to claim exclusive rights to the entire
catch and the authority to regulate all fishing
within the new zone. Prime Minister Hallgrims-
son told parliament that the move will take
place regardless ol the outcome of the UN Law
of the Sea conference. The unilatera: announce-
ment will be made sometime between the end of
the conference on May 10 and the expiration of
the current fisheries agreement with the UK on
November 13.
Disputes over Iceland's fishing limits,
which led to the 1972-1973 Cod War with the
UK and to sporadic incidents with West Ger-
many, may heat up again. In addition, difficult
bilateral talks are in prospect between Iceland
and the UK, West Germany, Norway, and Den-
mark to draw up median lines in cases where
Iceland's claims conflict with those of other
nations with traditional fishing interests off Ice-
Waiting on the tide
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land's coast. Foreign Minister Agustsson's recent
contention that lc,3l;.nd's proposed move is
backed by members of the EC, NATO, and the
Nordic Council is exaggerated. The UK and West
Germany are flatly opposed to the 200-mile
extension. Even the Nordic countries-Iceland's
strongest supporters-limited themselves to ex-
pressions of "understanding" for Reykjavik's
special position at a meeting of the Nordic
Council last month.
Iceland's small coast guard will have prob-
lems patrolling the vast zone. The cabinet minis-
ter responsible for enforcing the new jurisdic-
tion said that even with the expected addition
of a new cutter in May, the coast guard will not
be able to cope with the problem.
Protection of its vital fishing industry is an
emotional issue in Iceland that overshadows all
others in political importance. The present cen-
ter government is anxious to prove that it can be
just as tough as the previous leftist coalition on
the fishing issue.
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MIDDLE EAST: ASAD AND THE PLO
In a speech at a Baath Party rally in Da-
mascus or. March 8, Syrian President Asad
floated a proposal for a closer taLt!cal associ-
ation between Syria and the Palestinians in the
form of joint political and military commands.
The offer appears intended to serve several pur-
poses, not least of which was Asad's desire to
put maximum pressure on Egypt as it began
intensive-if indirect-negotiations with Israel
for a new Sinai accord.
Asad told his audience he was not pro-
posing a specific formula, but was simply
indicating the lengths to which Syria would go
in defending the rights of the Palestinians. The
statement seemed designed not only to under-
score Syria's commitment to the Palestinian
cause, but, by implication, to cast doubt on
Egypt's. Damascus has become increasingly
concerned in recent weeks that Egyptian Presi-
dent Sadat might conclude a second-stage with-
drawal agreement that does not hold out the
prospect of further progress soon on the Golan
front.
With key party elections coming up later
this month, Asad may also hope his offer will
enhance his supporters' chances for re-election
and thus strengthen his own hand in negotia-
tions. In addition, he probably views such joint
commands, if they are actually created, as a
useful device for exerting greater control over
fedayeen operations as well as for countering
criticism by Baghdad and Palestinian "rejection
front" groups of Syria's willingness to negotiate
a settlement of the Arab-Israeli dispute.
Some observers see Asad's proposal as a
mean: of finessing Israel's refusal to deal with
the PaI?stine Liberation Organization by in-
cluding PL;) representatives in a Syrian delega-
tion at the Geneva peace talks when they are
resumed. During a press conference on March 9,
Asad acknowledged that his offer might provide
such an opportunity. The Syrian leader may also
hope the joint command concept could provide
a framework for resolving the dispute between
the PLO and Jordan and that it might eventually
bring Amman into closer military arrangements.
PLO chairman Yasir Arafat, who appar-
ently had no advance knowledge of Asad's pro-
posal, publicly welcomed it and agreed to dis-
cuss the matter with the Syrian leader this week.
Arafat shares Asad's concern over the current
Egyptian-Israeli negotiations, but his basic wari-
ness of Syrian motives makes it unlikely that ie
would agree to any arrangement that could re-
strict his maneuverability.
The Israelis, preoccupied with preparations
for the new round of talks, did not take kindly
to Asad's initiative. Officials in Jerusalem pub-
licly expressed "grave concern" that he joint
command proposal would "not add to the suc-
cess" of Secretary Kissinger's mission. The Is-
raeli press flatly labeled Asad's move an effort
to foil the political talks. One influential daily,
which has close ties to the ruling Labor Party
and often reflects official opinion, concluded
that Asad, Arafat, and the Soviets had decided
to increase the pressure on Sadat not to offer
any quid pro quo for a further Israeli with-
drawal in the Sinai. The only question .ow, the
paper said. is
pressure
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KENYA: TENSIONS SHARPLY INCREASE
The murder of J. M. Kariuki, a vocal critic
of President Kenyatta's regime and a spokesman
for Kenya's have nots," has increased tension,
especially in Nairobi. The atmosphere had al-
ready become highly chargad by a recent series
of unsolved bombings in Nairobi, one of which
resulted in considerable loss of life, as well as a
train derailment and other incidents.
Kariuki, a member of parliament, was a
leading figure among the northern clans of
Kenyatta's Kikuyu tribe. The northerners have
long been at odds with Kenyatta because his
southern Kikuyu clan has bene9ted handsomely
from its hold on political power since inde-
pendence. Kariuki's murder may touch off
de,noostrations among the northern Kikuyu and
other discontented groups, such as the uruat.
poor, who considered Kariuki their champion.
On March 12. university students responded to
the news of Kariuki's murder by marching
through Nairobi, but they were dispersed by
police.
TRINIDAD-TOBAGO: OPEC APPLICATION
Trinidad has again applied for full member-
ship in the Organization of Petroleum Exporting
Countries. Its first application in 1972 was re-
jected, probably because it was then only a
minor producer. Since then, its production has
risen to at least 200,000 barrels per day, about
tha same as Ecuador, an OPEC member.
In addition, in 1972 Trinidad was largely a
refinery center for Texaco and Shell. The gov-
ernment has since bought all of Shell's pro-
ducing, refining, and marketing operations in
Trinidad and has established a national oil
company to operate the former Shell properties.
Page 23 WEEKLY REVIEW Mar 14, 75
Many Kenyans will attribute responsibility
for Kariuki's death to Kenyatta or some of his
close associates. Suspicion will be increased by
the government's unsuccessful efforts to
suppress news of Kariuki's death. Moreover,
Kariuki, who disappeared on March 2, had been
under surveillance by security officials, and his
political activities had been circumscribed by
the government.
The shooting of Kariuki is reminiscent of
the murder in 1969 of Tom Mboya, another
popular figure who was a rival to Kenyatta's
clan. The government then was able to cope
with the disorders that erupted among Mboya's
fellow Luo tribesmen at his funeral. This time,
the government may have more difficulty. The
public is probably more restive because of
continuing unemployment, high prices, and the
accumulation of farmland and wealth by leading
figures associated with the regime, especially
The government also intends to acquire some
equity in the remaining US-owned oil operations.
Until now, the US has been by far the
largest market for Trinidad's petroleum. This
relationship could become strained since Prime
Minister Williams is eager to place his country
squarely in the camp of Third Worlu oil pro-
ducers and is optimistic that this time Trinidad
will be admitted by OPEC. This ambition may
have been one motive for his stop in Indonesia
u ring his recent trip to the Far East. It could
aiso explain his expression of concern about the
effect of the new US Trade Act on OP
bers. 25X1
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COLOMBIA: SITTING ON THE FENCE
Two rapid-fire announcements in late Feb-
ruary provided dramatic evidence of the "ideo-
logical pluralism" championed by President
Lopez in conducting his country's foreign
affairs. First, Lopez announced his acceptance
of President Ford's invitation to make a state
visit to the US. Just one day later, Foreign
Minister Lievano disclosed that Colombia would
re_ume diplomatic relations with Cuba. On
March 6, relations with Cuba were reinstated.
Lopez has long advocated Cuba's return to
the inter-American system and has been an out-
spoken critic of US policy on Cuba. In addition,
Lievano has made Cuban relations a personal
project as well as a high-priority concern of his
ministry. In 'November, Colombia joined Vene-
zuela and Costa Rica in sponsoring a resolution
to lift the Organization of American States'
sanctions against the island. When the resolution
failed to carry, Lopez was deeply disappointed
and Lievano felt humiliated. Beginning then,
Colombia abandoned pursuit of Cuban relations
through international bodies for fear of another
defeat. The country's unilateral movement to-
ward relations was reinforced by Venezuela's
announcement of ties with Havana in December.
Notwithstanding the resumption of Cuban
relations, Lopez considers the prestige of his
pending visit with President Ford of substantial
personal and political value. Even the mere pros-
pect of the visit will spare him possible embar-
rassment early next month, when Secretary
Kissinger is scheduled to visit Caracas and other
Latin capitals, but not Bogota. Although Lopez
obviously favors president-to-president discus-
sions, he has publicly deplored the ministerial
dialogue now being assayed by Secretary Kis-
singer; in Lopez' view, it weakens existing inter-
American organizations. Lopez is also eager to
cultivate a statesmanlike image as a counter-
point to the broad criticism his far-reaching
austerity programs have earned him at home.
Indeed, the importance Lopez assigns to
his foreign policy goals is evident in the domes-
tic price he seems willing to pay for their imple-
mentation. His own foreign policy advisory
committee, more politically realistic than he,
counseled him against resuming full diplomatic
relations with Cuba. Criticism has also come
from within Lopez' Liberal Party as well as from
the opposition Conservative Party. Some mem-
bers of the traditionally apolitical military hier-
archy have even spoken out. They reportedly
fear that Cuban diplomatic pouches will again
become a supply line for Colombia's Marxist
guerrillas, as was the case before relations were
suspended in 1961. There is no indication, how-
ever, that the Castro government has any cur-
rent interest in supplying Colombian insurgents.
Nevertheless, Lopez must add the military's con-
cern to the displeasure already voiced by some
officers at their having to perform a police role
in controlling current demonstrations over eco-
nomic issues.
In his approach to Cuba, Lopez has clearly
not been deterred by Colombia's long years of
excellent relations with the US. On the con-
trary, he considers the established momentum
sufficient to sustain good relations with the US
despite the strains that may result from his Cuba
initiatives. His fundamental desire for a cohesive
inter-American system derives in large part from
a conviction that certain key countries-among
them Colombia, of course-are destined for
Latin leadership. In this context, the US be-
comes an equal-but at the same time, an ~,ut-
side-influence with which to contend. Thus,
Lopez' re-establishment of Colombia's relations
with Cuba and his prospective state visit to
Washington are complementary aspects of an 25X1
actively neutral foreign policy. He can be
expected to take great pains to maintain the fact
as well as the appearance of that policy.
Page 24 WEEKLY REVIEW
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ARGENTINA: OPTING FOR SHORTAGES
In a blur of economic policy actions last
week, Argentina attempted to shore up its ex-
ports and balance of payments by devaluing the
peso and, at the same time, to reverse the recent
erosion of real wages through a wage hike and
re-imposition of price controls. The net effect,
however, will be to stiml.:late widespread domes-
tic shortages of consumer and producer goods
and to depress profits and discourage badly
needed investment.
Effective March 1, Argentina workers were
granted a 15-percent pay hike-only partially
offsetting the nearly 40-percent increase in the
cost-of-living since November. Buenos Aires
then halted all foreign-exchange operations and
devalued the peso by 33 percent !financial rate)
to prevent further erosion of export markets
already faltering because of the escalating prices
of Argentine products.
The pay hike and the devaluation will
seriously aggravate inflationary pressures as in-
creased purchasing power stimulates demand
and the prices of imported goods rise. At the
same time, higher prices for imports of raw
materials and semi-finished goods for the domes-
tic market will add to production costs.
To head off renewed rounds of price in-
creases and subsequent labor demands, Argen-
tina followed up the devaluation %,:ith a strict
re-imposition of price controls. All prices for
domestic goods were frozen at February 28
levels. With the resulting profit squeeze, pro-
ducers will be forced to reduce output and in
some cases, to re-orient it to export markets in
order to take advantage of higher export prices.
With supplies to domestic markets thus de-
clining while aggregate demand grows, wide-
spread shortages and numerous black markets
are inevitable.
Buenos Aires will probably be forced by
the need to restrain wage increases to maintain
the price freeze at least until the more than
1,400 labor contracts are renenotiated. Current
agreements, in force for nearly to years, expire
Lineup for food
in June. Meanwhile, producers will find that
investments needed to maintain productive
capar ity are best postponed in the face of lower
profits. The resulting economic dislocations and
shortages will mean increased labor and business
unrest, and Argentina's policy makers will find
that their problems have not disappeared but
have simply changed shape.
DIPLOMACY IN THE ANDES
Chile's recent diplomatic efforts to
strengthen its position in relation to Peru have
begun to pay off. The 13-year hiatus in relations
between Chile and Bolivia was recently ended,
and two weeks ago Santiago announced that
relations with Colombia-strained since last
May-would again be raised to the ambassadorial
level. Peru has also been active on the diplo-
matic front in an effort to reduce tensions with
Chile.
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When President Pinochet met with Bolivian
President Banzer in early February, Pinochet
agreed to help Bolivia end its landlocked status.
With an eye to creating a buffer against Peru's
revanchist sentiments, Chile's junta and the na-
tional defense staff reportedly have approved a
plan that would establish an international in-
dustrial zone in Arica-on former Peruvian ter-
ritory. Under this plan, Peru and Brazil in addi-
tion to Bolivia would be given port facilities and
land for the construction of industrial plants.
Prior to Banzer's meeting with his Chilean
counterpart, Peruvian Presidential Press Sec-
retary Zimmermann met with Pinochet in the
border town of Arica. Zimmermann indicated
that Peru was "willing to make concessions" to
avoid war between the two nations. He also
reportedly said that Peruvian President Velasco
wanted to meet with his Chilean counterpart
when the former's health improved.
Peru has already taken note of Chile's
diplomatic maneuvers. Peruvian Foreign Min-
ister de I:, Flor conceded that Chilean-Bolivian
relations are good and that these newly forged
ties could be used against Peru. Chile, for
example, might lease Bolivia a corridor to the
sea. Should this occur, Peru would appear to
have no legal recourse under the 1929 treaty
that fixed the border between Peru and Chile.
Under that treaty, former Peruvian territory
cannot be "ceded" to a third party without
Lima's consent, but there is no prohibition
against leasing.
Page 26 WEEKLY REVIEW Mar 14, 75
Pinochet reportedly remains unconvinced
by Peru's statement of intentions. He still
believes that war is highly likely once Peru is
prepared. Velasco's current illness and the pos-
sibility that he will step down or be replaced
may act to soften these concerns, however.
Initially, Peru may alert its troops in the south
to preclude any pre-emptive Chilean move dur-
ing a government transition in Lima. Any of
Velasco's successors will most likely be more
unify the military cliques behind him.
home than with adding to tensions with Chile,
unless he needs to use the Chilean problem to
concerned with strengthening his position at
25X1
BRAZIL: DISGRUNTLED CONSERVATIVES 25X1
Senior military conservatives opposed to
President Geisel's liberalization program are
apparently behind the wave of arrests ,nd
detentions of suspected subversives in several
cities. 25X1
Some of those arrested recently-including
journalists, attorneys, and students-are accused
of being members or supporters of the illegal
communist party. Their arrests have drawn
protests from the press and bar associations, as
well as from a leading liberal cardinal. In addi-
tion, the security services are claiming that
several opposition party legislators, at the fed-
eral and state levels, were elected with strong
communist party backing.
The disgruntled conservatives, some of
whom command the security services, probably
hope that by dramatizing the subversive threat
they can convince Geisel that he should slow
down or even abandon his efforts to ease polit-
ical restraints and decrease emphasis on national
security matters. Among those most displeased
by the liberalization effort are the army minis-
ter, General Frota, and some of the top army
commanders. Frota is so incensed by recent
newspaper coverage o'r one particular arrest that
he is pressing for legal action against the offend-
ing paper. The conservatives are particularly
vexed with Geisel's too adviser, General
Golbery, whom they view as the chief ar:hitect
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I I
of liberalization and the man responsible for the
government's pair showing in the elections last
fall.
At least some of the conservatives are
genuinely concerned that liberalization will
embolden subversives. Others, however, are
worried that their influence and prestige will
suffer if the administration significantly reduces
the priority of national security matters. More-
over, some officers undoubtedly fear that ex-
cesses committed over the past 11 years in the
name of national security could be exposed.
Indeed, the opposition party, greatly strength-
ened in congress, proposes to study the whole
question of violations of human rights. The gov-
ernment has voiced its disapproval, however,
and will use its congressional majority to defeat
the plan.
The apparent impunity with which regional
security officers operate indicates that Geisel
still has not brought these services fully under
his control. Despite the discontent of some con-
servatives, however, they do not constitute a
threat to the government's stability at this time,
but they are certain to impede the progress of
25X1
25X1
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International Oil
PRODUCERS AND CONSUMERS
French President Giscard's proposed con-
ference of oil producers and consumers moved
closer to realization last week as four oil-pro-
ducinr states-Iran, Venezuela, Saudi Arabia,
and Algeria accepted Giscard's invitation to a
preparatory meeting of ten states in Paris on
April 7. The industrialized states that were in-
vited-the US, Japan, and a representative of the
EC-will announc?. their intentions next week
after a meeting of the US-backed International
Energy Agency to consider final approval of a
plan for the development of alternative energy
sources.
Tentative approval of the plan at the
energy agency's meeting last week moved the
consuming states closer to the common stand
that the US has insisted is a prerequisite to any
meeting with the oil-producing countries. The
delegates agreed that the International Energy
Agency's goal of reduced dependence on im-
ported oil would be jeopardized if the price of
imported oil could at some time in the future
undercut sales from new energy sources. Accept-
ance of the principle that oil should not be sold
below a certain price was the major break-
through of the meeting. The level at which this
price should be set will be the main issue in
negotiations on how to implement the plan.
The plan must be reviewed by the energy
agency's 18 members before the governing
board holds its meeting in Paris next week. At
that time, the board will probably adopt the
plan and endorse the participation of its mem-
bers in the preparatory meeting of producers
and consumers.
Although France is not a member of the
International Energy Agency, it will also have a
hand in reviewing the plan. The eight EC mem-
bers in the international agency will want to
discuss the plan with France as part of the EC's
own efforts to forge a common energy policy
and to avoid being committed to price levels to
which France would not be bound. Paris might
be able to block agreement by the eight, but this
is not likely, if only because Giscard probably
realizes that a stalemate in the energy agency at
this point would delay the meeting of oil pro-
ducers and consumers.
At their summit meeting in Dublin earlier
this week, the EC leaders agreed to establish a
special high-level committee to study the prob-
lems of energy and its costs in preparation for
the conference between producers and con-
sumers that they want to take place in July. One
question to be decided by the committee is
whether to accept demands by some of the
developing states-in large part influenced by
Algeria-to broaden the oil conference to in-
clude other raw materials. The developing states
are themselves not united in their support of
such a proposal. Many argue that the special
problems confronting developing states because
of high oil bills would i nored in a meeting
with a broad agenda.
25X1
25X1
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