WEEKLY REPORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080016-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 28
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 16
• Publication Date: April 4, 1975
• Content Type: REPORT

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Top Secret
Weekly Review
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Top Secret
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April 4, 1975
Copy N2 658
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The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It ire- EAST ASIA
quently includes material coordinated with or prepared by the PACIFIC
Office of Economic Research, the Office of Strategic
Research, the Office of Geographic and Cartographic
Research, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and
therefore published separately as Special Reports are listed MIDDLE EAST
?
the _on?
nts
n
CONTENTS (Apri14, 1975)
1 Cambodia: The Deteriorating Situation
5 Vietnam: Disorder and Confusion
6 Indochina: Asian Reactions
8 Indonesia: The Oil Bonanza
WESTERN
HEMISPHERE
9 The Middle East: Reflections;
Geneva
13 Rhodesia: Impasse; Trade Routes
15 Angola: Donnybrook Begins
16 The Kurds: Time Runs out
17 Saudi Arabia: Settling in
18 Portugal: Campaign Begins
19 Turkey: A New Government
20 International Oil Meetin in P
I
22 Mexico: Visiting VIPs
23 Chile: Bracing for Winter
24 Argentina: Labor Discontent
24 Canada: Alberta Elections
25 Honduras: Military Takes Command
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LComments and queries on the contents of this
Publication a?e welcome. T ey may be d~:e.!ed to
the editor of the Weekl
J
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Cambodia: The Deteriorating Situation
A little more than five years ago, President
Lon Nol assumed the niantla of leadership in
Phnom Penh amid an impressive show of politi-
cal support and a popular rush to arms to de-
fend the new republic. The general relief and
sound of exploding rockets that marked his
departure from the capital this week testify to
the depth of his misfortunes-and those of his
government. Lon Nol and the group of officials
and dependents accompanying him are sched-
uled to spend ten days on Bali as the official
guests of the Indonesian government and then
go on to the US.
Lon Nol has not resigned, and Senate presi-
dent Saukham Koy is taking over his functions
in accordance with the constitution. Saukham
Koy and Prime Minister Long Boret-who is
with the presidential party in Bali but plans to
return to Phnom Penh-have both expressed
hope that some compromise settlement can now
be arranged with the Khmer communists. So far,
however, there is no sign that the insurgents are
willing to accept any arrangement other than a
total government surrender.
Lon Nol was hardly airborne when Phnom
Penh got some more bad news--the communists
had taken Neak Luong and Banam, the last two
government holdings on thq lower Mekong
River. Over 4,000 government troops and tens
of thousands of refugees were in the two towns
but, so far, only a handful of survivors have
reached Phnom Penh.
The fall of Banam and Neak Luong will
enable the communists to move a substantial
;portion of the 6,000 to 7,000 insurgent troops
along the lower Mekor,' to Phnom Penh. Com-
munist commanders have presumably begun
calling in dl; available units in order to increase
their attacks against the capital city. Although
the US airlift to Pochentong airport is con-
tinuing despite daily shellings, the time is
rapidly approaching when ammunition stocks
earmarked for Cambodia under present aid ar-
rangements will be exhausted. Under these con-
ditions, the government could fall before mid.,
month.
The Rebel Leadership
In the wings, insurgent ~eaders and their
administrative apparatus stand ready to take the
reins of power in Phnom Penh. T4 National
United Front of Cambodia and the Cambodian
People's National Liberation Armed Forces were
created five years ago as the overt administrative
and military organizations of the insurgency.
Although Sihanouk's Royal Government of
National Union may eventually be installed in
Phnom Penh, to date it has had no significant
role in Cambodia, serving merely as the institu-
tional conduit for the insurgents' external rela-
tions. The insurgent apparatus within the coun-
try is controlled and directed by the Khmer
Communist Party, which traces its origins back
to the early 1950s and Ho Chi Minh's Indochina
Communist Party. From a handful of leftist
revolutionaries and senior Cambodian cadre
from the Viet Minh, the Khmer party has ex-
panded to a membership of over 10,000 led by
about 20 central committee members.
Party leaders occupy virtually all key posi-
tions in the front and its mass organizations
from the national to the local level, and party
cadre form the backbone of the insurgency's
military arm. The composition of the party lead-
crship-the central committee-remains a closely
guarded secret, however. Sihanouk's "defense
minister" and "deputy prime minister," Khieu
Samphan, is the best known of the senior
leaders, but it is generally believed that Saloth
Sar is the party secretary general and probably
outranks Khieu in the central committee.
Widely traveled leng Sary--who now handles
most direct contacts with Peking and Hanoi-
also appears to occupy a strong position in the
committee hierarchy.
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From left to right, front: Hou Yuon, Sihanouk, Khieu Samphan, Hu Nim, and leng Cary
The picture of the rest of the central com-
mittee is dim. It includes a couple of better
known individuals such as Hou Yuon and Hu
Nim; many lesser knowns such as Son Sen,
Nuon Chea, Sok Thuok, Chou Chet, Tiv 01, Koy
Thuon; and a group of virtually unknown insur-
gent military commanders and regional party
chairmen. Their relative ranking i : a mystery.
Hou Yuon and Hu Nim, for exam pie, are iven
broad ^ro a anda covers e
they actually
wieta i e power. iven the emphasis on the
"armed struggle," it would seem only natural
that military leaders like Nuon Chea and Son
Sen would have more clout in the ceotral com-
mittee than their civilian colleagues.
All known central committee members are
fairly young-still in their 40s. Most qualify as
Cambodian intellectuals and were educated dur-
ing the 1950s in France-where they got their
leftist if not their communist ideology. They
subsequently worked as journalists or teachers.
Khieu Samphan and Hou Yuon, in fact, have
Page 2 WEEKLY REVIEW Apr 4, 75
doctorates in economics. A significant number
have had considerable experience in politics:
Khieu Samphan, Hou Yuon, and Hu Nim held
cabinet portfolios under Sihanouk during the
1960s. Almost all the known or suspected party
leaders are remembered as tough nationalists
and articulate, unyielding ideologues even be-
for.a their active involvement in the insurgency.
Another collective trait appears to be long-
standing opposition, and in many cases personal
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enmity, toward Prince Sihanouk. Saloth Sar, 25X1
Ier:g Sary, and Son Sen, for example? are among
a number of current communist leaders who
fled into the bush in 1963 following one of
Sihanouk's periodic crackdowns on his leftist
opposition. Despite sometimes intense persecu-
tion by the prince, others such as Khieu
Samphan, Hou Yuon, and Hu Nini stuck it out
until 1967 before bolting the capital.
All these common bonds can only have
grown stronger as the result of five years of
successful prosecution of the war. The party
leaders have had their differences, but they t,3ve
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leng Sary-
also worked together once a decision is reached.
Given the apparent intellectual sophistication of
most of the leaders, it is not surprising that
there is some evidence of differences on
international commi'nist issues. Reports speak
of heated ideolor il debates among Khmer
communists previously attached to Sihanouk's
entourage in Peking, and of "Soviet" and
"Maoist" factions within the leadership. An
apparently authoritative history prepared for
the party's "22nd anniversary" last September
pointed Toward such debate in referring to a
"state of aisunity still existing in the party" and
to "partisan factions."
One clearly defined area of friction has
been the question of the party's ties with Hanoi.
The relationship with the Vietnamese commu-
nists as always been ambivalent. Hanoi nur-
tured the Cambodian party while Sihanouk was
in power, and the ties became even closer after
the Vietnamese increased military support dur-
ing the initial years of the current conflict.
From the beginning, however, Hanoi has had to
buck an undercurrent of Khmer suspicion and
dist;ust rooted in Cambodia's historical ex-
perience with Vietnamese expansionism. As the
party assumed responsibility for its own military
and political affairs in recent years, its Viet-
namese connection appears to have become even
more contentious.
may involve some practical consiuerations:
North Vietnam's ability to extend postwar
reconstruction aid to a communist-controlled
Cambodia would be iimited, while Peking would
be in a position to provide liberal assistance to
help rebuild the country's war-torn economy.
The leadership's now apparent willingness
to retain Sihanouk as a nominal postwar leader
also seems to have been dictated by future
needs. Party leaders have long recognized that
the prince has given their movement a legiti-
macy both inside and outside Cambodia that it
would not otherwise have had. During a period
of postwar consolidation, Sihanouk's value as a
domestic rallying point and his ability to attract
international recognition and economic support
will help. The prince's close relationship with
Chinese leaders was probably a consideration,
and the party may, in fact, have been under
some pressure from Peking to retain Sihanouk.
who, along with several other top leaders, is
supposed to have received training in North
Vietnam-as the leading proponent of continued
close ties with Hanoi. Khieu Samphan is fre-
quently reported as heading a more nationalistic
faction that has apparently had some success in
strengthening the party's ties with Peking in
order to balance Hanoi's influence. Peking, for
its part, has appeared eager to cultivate these
ties, both to prevent Vietnamese dominance
over the Cambodians and to foreclose any pos-
sible intrusion of Soviet influence.
The party's already discernible drift toward
some middle ground between Peking and Hanoi
Nevertheless, the decision to accept even a
severely circumscribed postwar role for Siha-
nouk must have been a bitter pill for many
leaders. The prince symbolizes the old order
under which many party leaders suffered and
which the party has been struggling to replace
with a revolutiuuiary order. The party leaders
know first hand that Sihanouk is an unscru-
pulous and adroit political operator, and they
are probably more t Tan a little suspicious of his
intentions and of his capability to make mis-
chief for the party. Sihanouk, for his part,
appears painfully aware of the party's attitude
toward him. His recent claims that he will not
involve himself in postwar domestic affairs,
limiting his activities instead to the sphere of
foreign relations, may in fact refl-:ct the arrange-
ment he has been forced to accept as the price
for any role. Similarly, his frequent references
to the possibility of an early retirement prob-
ably reflect Sihanouk's recognition that his
usefulness will decline and the pressures to
jettison him will increase as the party gains
confidence in its ability to rule and as the new
regime's international position becomes estab-
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Vietnam: Disorder and Confusion
During the past week, communist forces,
have seized most of the remaining government
areas in Military Regions 1 and 2 as Saigon's
forces continued to fall back in disorder and
confusion. The chaos of Da Nang, complete
with milling crowds of refugees and shootouts
between desertc;5 and local police, was repeated
on a smaller scale in Nha Trang and other towns
along the central coast.
It appears that most of the equipment of
government forces was left intact and is now in
the hands of the communists. Some weapons
and military stores were destroyed by weli-
disciplined individuals before they evacuated,
but most of the heavy guns, trucks, tanks, and
masses of lighter weapons were apparently aban-
doned in haste. For the first time since the
North Vietnamese came south in strength, they
will probably be able to drive straight down
routes 14 and 1 toward Saigon.
The communists have moved quickly to
control the populations abandoned by the gov-
ernment. AL least a few cadre with bullhorns
reportedly moved through the streets of Da
Nang even before communist forces had come
into town, asking the people to stay and coop-
erate with the new authorities. Two weeks ago,
a communist uroadcast offered good jobs to
officers defecting from the government side. In
one area at least, the communist appeals seem to
have had some effect-the South Vietnamese
22nd Division reported that regional and pop-
ular forces had joined the communists in attack-
ing positions held by the division.
So far, there has been little sign that Hanoi
intends to expand the role of the PRG beyond
the diplomatic field, where it has been used to
aLtraci foreign support for the communist cause
in South Vietnam. There have been no an-
nounccments yet of a new PRG local admini-
stration in Pleiku, Da Nang, or any other re-
cently captured city, nor have ;'re communists
established an interim capital for South Viettiam
in any of the major cities now in their hands.
The South Vietnamese currently enjoy a
slight advantage in men and firepower in the
provinces around Saigon, but the North Viet-
nan,9se 341st and 316th divisions are believed
to be in or approaching Military Region 3 from
the north. The 320B Division, which recently
crossed into South Vietnam, has appeared in
Hue, and one of c,ie other communist divisions
in Military Regions 1 or 2 may shortly be head-
ing south to help lay siege to Saigon. In North
Vietnam. moreover, the 338th Division has been
detected heading south, and it too may be
destined to augment communist forces near
Saigon.
So far, the panic that precipitated the col-
lapse to the north has not yet becc,-ne evident
among the divisions protecting Saigon. Although
the senior military Leadership in Saigon seems to
be providing little guidance to regional and fi,!ld
commanders, a number of these local com-
manders are making personal appearances in the
field and generally encouraging their men to
make a stand. Details of recent developments in
the northern provinces, however, are trickling
into Saigon and the w;;i to fight of Saigon's
remaining forces wilt br tested.
President Thieu's prestige has beet ir-
reparably damaged and his effectiveness under-
mined by a growing sense of inevitable com-
munist victory. ivlc-.es to force Thieu's resig-
nation or ouster could occur at any time, but a
change in lea;iarship probable will not reverse
the fundamental political and military trends
now running against Saigon. A new government
presumably would be prepared to seek and
accept the best terms it could obtain from the
communists. In the event of a rapid South
Vietnamese military collapse, however, even the
possibility of a transitional non-communist
administration would disappear.
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Events in Cambodia and South Vietnam
are generating reactions elsewhere in Asia that
range from relative indifference to serious con-
cern. Even in Peking, the developments of the
past two weeks are being viewed as a sort of
mixed blessing.
China is taking two different and some-
what contrasting lines on Cambodia and Viet-
nam, reflecting firm support for the insurgent
effort in Cambodia, but manifesting a more
reserved and less supportive view of Hanoi's
offensive in South Vietnam.
Although most non-communist Asian
countries expected that Hanoi would eventually
dominate all of Indochina, the rapidity of the
deterioration of the past two weeks has come as
something of a shock. Since the late ]960s,
many Asian governments have been gradually
adjusting to the prospect of diminishing US
involvement in the region, and of the need for
accommodation with the communist powers.
The collapse of non-communist governments in
Indochina will not alter the fundamental process
of adjustment, but it may force some accelera-
tion of the pace.
Chinese press coverage on Cambodia
emphasizes the "inevitability" of a rebel victory
and gratuitously advises the US to terminate its
involvement there before suffering additional
embarrassment. By comparison, Peking's treat-
ment of events in Vietnam is cautious, relying
almost exclusively on North Vietnamese and
foreign pess reports. This caution on Vietnam
probably reflects concern about the possibility
of increased North Vietnamese and, more im-
portant, So-iet influence throughout Indochina
as a resul of recent communist successes.
Peking will continue its efforts to expand its
influence with both Sihanouk and the Khmer
communists, not only to cour.er Hanoi but to
impede possible Soviet 'nci. r.ions.
The less enthusiastic view of the deterio-
rating situation in South Vietnam is also due in
part to Peking's concern that increased public
support to Hanoi could have an adverse affe,-t
on Sino-US relations. The Chinese will not aban-
don their equities in Hanoi, however, and can be
expected to increase attention to Vietnamese
developments as the situation continues to
deteriorate. For example, the first authoritative
comment on the :urrent offensive provided
lukewarm support to `-lanoi and was mildly
critical of the US. Moreover, a North Viet-
namese delegation headed by Politburo member
Hoang Van Hoan arrived in Peking in late March
and met with Vice Premier Yeh Chien-ying,
presumably to discuss the situation in Vietnam.
Thailand is feelir.g a greater impact than
any other country. The Thai will net regard a
communist take-over in Cambodia and South
Vietnam as an immediate threat to their secu?
rity, but they are concerned over the long-term
implications of potentially hostile neighbors
along their eastern border. Bangkok will un-
doubtedly speed up the efforts already under
way to disengage from US policies in Indochina,
possibly by demanding an early halt to the
Thai-based US airlift to Phnom Penh. While try-
ing to preserve basic good relations with the US,
Bangkok may also press for a firm agreement on
US troop withdrawal. The Thai are exploring
the possibility of strengthening the Association
of Southeast Asian Nations as an alternative to
relying on the US, and they plan to conven_ a
meeting of the association's foreign ministers in
Bangkok to discuss a common strategy on Indo-
china. The Thai may also try to advdnce their
timetable for recognition of Peking and to
renew approaches for a dialogue with Hanoi.
In Japan, despite the widespread shock and
conflicting editorial advice emanating from the
press, the government is reacting to develop-
ments in Indochina in a relatively even-handed
way:
? Economic aid is being directed toward
assisting refugees and away from projc: is that
even indirectly contribute to the military
potential of either side.
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? A new ambassador has been named to
Saigon, in a business-as-usual gesture.
? Talks are continuing with Hanoi on
economic aid and the opening of an embacs-
there.
? President Lon Nol has been refused
permission to reside in Japan, but the gov-
ernmei,t is actively supporting efforts to get
Camhodian negotiations under way.
In bro .der terms, Japan has never felt its
security to be directly tied to events in Indo-
china, and its current diplomatic posture will
permit accommodation with whatever regimes
emerge in the region. Indeed, within the Japa-
nese governs art there is certainly as much, and
perhaps a good deal more, concern about the US
diplomatic setback in the Middle East-where
Japan counts on the US to help avert another
Arab-Israeli war and potential oil embargo. In
.:ny event, a number of Japanese have clearly
linked the two events and are concerned about
the capacity of the US to exert a global stabi-
lizing influence.
Unlike Japan, the South Korean govern-
ment has always seen important parallels
between its own security situation and that of
South Vietnam-though not Cambodia. Recent
events have added to persistent concerns among
South Koreans that the US miqht some day fail
to meet defense commitments to their country.
Official concern is expressed fairly openly '?n the
controlled press which lectures the US for not
supporting its allies in Asia, causing "catas-
trophe" in the region, and encouraging Asian
communist aggression. In seeking informal reas-
surances from their American counterparts,
however, officials in Seoul are more guarded,
draw distinctions with the South Vietnamese
situation, and express confidence in South
Korea's ability to defend itself. Their main cco-
cern at this point is the possibility that Nor'h
Korea might be tempted to escalate its cautious
air and sea penetrations into South Korean
operational zones, creating a major test of US
resolve to resist communist military intrusions.
The North Koreans, for their part, have been
among Hanoi's closest friends and :.re clearly
exultant over communist successes in South
Vietnam.
The Chinese Nationalists on Taiwan are
also fairly critical of the US role in Indochina,
with the local press accusing Washington of fail-
ing to recognize and effectively deal with what
the Nationalists characterize as communist
"t. icks." Although clearly shocked by the rapid
deterioration in South Vietnam and pessimistic
about the prospects in Indochina generally, the
press has been careful to avoid linking US
"abandonment" of its allies there with the more
important concern about the US comniitmpnt
to Taipei.
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A $4-billion rise in oil earnings has given
Indonesia its best two years of growth-8-10
percent a year in both 1973 and 1974. As re-
cently as the mid-1960s, the national economy
was debt-racked and stagnant. The Suharto
regime then rearranged its national policies and
debt schedules, leading to an annual average
growth for 1967-72 of 7 percent.
The recent acceleration results from the
dramatic boosts in oil prices, an increase in the
government's contractual share of oil revenues,
and a 29-percent jump in oil output. The aug-
mented oil revenues supported stepped-up
spending on development projects, salary in-
creases for government workers, the enlarge-
ment of national food stocks, greater imports of
consumer and producer goods, and a build-up of
foreign exchange reserves by nearly $1 billion.
This year, Indonesia should achieve real
growth of about 7 percent, despite the global
recession. Increased imports of machinery and
raw materials will promote rapid growth in agri-
culture, manufacturing, and the service sectors.
Although the volume of exports will probably
not grow this year, inflows of aid and private
capital point to another sizable surplus in inter-
national accounts.
would probably break out of the OPEC cartel
rather than accept a pro-rationing scheme that
would cost them substantial development gains.
Jakarta will continue its efforts to develop
other sectors of the economy. In agriculture,
increased use of high-yield rice varieties, chem-
icals, irrigation, and new techniques should
support a growth rate of 4-5 percent a year.
Manufacturing will probably grow about 10
percent annually, faster than in any other period
in Indonesian history. Both foreign and do-
mestic investment should rise rapidly in proc-
essed foods, metal fabrication, finished lumber,
and chemicals.
Beyond 1978 the course of Indonesian
growth will depend heavily on the international
oil market. If prices remain unchanged in this
period, Indonesia will probably be able to
sustain the ?.976-78 performance, meet its
scheduled debt payments, and end the decade
with ample foreign exchange reserves. This path
would not require concessionary aid com-
mitments beyond those already made, although
it would entail official borrowing on near-
cornmercial terms on the order of $300 million
annually.
Despite the encouraging growth outlook,
per capita income will be only about $200-$225
in 1980, compared with the current $150. The
country will also continue to experience high
levels of urban unemployment, intermittent
pressure on the government to reduce the gap
between rich and poor, and problems in
transportation and commur:cations that will
Oil rig assembly yard
lion in 1976, Indonesian exports should again
begin to grow at a rate adequate to permit
sustained national outpu growth of 8 or 9
percent. Oil and natural gas revenues could
nearly double by 1978. The r doriesians have
adopted policies encouraging the oil companies
to push production vigorously, and an increase
of 60 percent is clearly within reach in terms of
resources. Indeed, the Suharto government
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Initial recriminations in Egypt and Israel
over the breakdown of disengagement negotia-
tions have been tempered during the past week
as each side has contemplated the impli-
cations-in terms of diplomatic stagnation and
possible military action-of an end to US media-
tion.
President Sadat set a tone of moderation in
a major address on March 29. Shire then,
spokesmen for both Egypt and Israel have
spoken openly of possibly reviving the disen-
gagement talks under US auspices. At the same
time, Cairo went ahead and officially requested
the US and the USSR, co-chairmen of the re-
cessed Geneva peace conference, to reconvene
the plenary talks.
In his speech, President Sadat hinted at a
continued interest in US-sponsored bilateral
negotiationz, noting that r eneva is not the only
framework 'gypt has in mind for negotiations.
In a later endorsement of Sadat'c speech, the
Egyptian People's Assembly repeated the
oblique reference and added an explicit call for
continued dialogue with the US. Unofficial
spokesmen have 'old the press directly that
Egypt would like to resurrect the bilateral talks.
The Israelis, too, have expressed an interest
in resuming indirect bilateral talks with Egypt
under US auspices before the conference recon-
venes. Although Tel Aviv remains convinced
that its final position before the disengagement
negotiations broke off last we, k was correct,
Prime Minister Rabir, reportedly has ordered the
high-level preparatory group he formed for
those negotiations to continue its work and to
come up with new negotiating proposals.
Former foreign minister Eban, who reportedly
was asked by the government to participate in a
major campaign in the US aimed at preventing
an erosion of Washington's support for Israel,
has made it clear he believes Israel's first priority
is to repair the "atmosphere and content" of
Israeli-US relations.
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Egypt's formal request, on April 1, that the
multilateral-negotiations at Geneva be recon-
vened was clear ly an effort to keep all avenues
open-and to pre-empt criticism from other
Arabs who have disparaged Sadat's sole reliance
thus far on bilateral talks. Foreign Minister
Fahmi announced that Egypt would also like to
involve the UK, France, and "at least one" non-
aligned country in the conference. The Egyp-
tians apparently believe that broader partici-
pation will not only place greater pressures on
Israel, but might also provide a safeguard against
what President Sadat calls "polarization" of the
super powers' positions.
Sadat set the scene for the appeal to out-
side powers with his speech last weekend, which
launched a major diplomatic offensive. His
announcement that he would reopen the Suez
Canal on June 5 and extend the UN Emergency
Force mandate in the Sinai Peninsula for three
months beyond its scheduled expiration date of
April 24 seemed intended to demonstrate his
continued Jesire for peace. He directed his
remar-,s in such a way as to place an obligation
on "Vie world" and on Israel to help him attain
it.
Sadat deliberately played down militancy
and attributed his decisions to concern for
world reaction. Rejecting policies inspired by
anger and emotionalism, he stated his belief that
Egypt cannot be responsible either for con-
fronting "the international community" with a
sudden crisis by canceling the UN mandate in
April or for depriving the "peoples of the
world" of the important Suez Canal trade route.
By thus addressing himself to international opin-
ion, he seemed to be saying that the interna-
tional community must return the favor by
pressing Israel for negotiating progress.
Sadat undoubtedly also intended that his
decisions should put a burden on Israel to move
toward peace and refrain from military provo-
cation. A reopened canal could to some 3xtent
serve as a restraint on Israel as well as on Egypt
against renewing warfare, and the decision to
extend the UN mandate will place equal obli-
gation on each side to abide by the cease-fire.
Although Sadat did not mention Israel in con-
nection with the reopening of the canal, an
Egyptian official later said that Israeli shipping
would be excluded. He did not, however, specif-
ically exclude Israeli cargoes on ships flying
other flags.
Despite a generally lukewarm reaction to
the specifics of Sadat's proposals, the Israelis
reportedly believe that his speech strengthens
the possibility that separate pre-Geneva talks
with Cairo can be held. The rest of the Arab
world, on the other hand, has reacted to Sadat's
speech with silence, probably indicating a gen-
erally negative attitude. Sadat did not clear his
decision on the UN mandate with Syria, whose
mandate on the Golan Heights expires at the
end of May, arrJ the Syrians are probably once
again resentful of his tendency to make major
decisions unilaterally. Only hours before Sadat
delivered the speech, Damascus radio stated that
Egypt and Syria had decided not to renew either
mandate unless "tangible" progress had been
made toward achieving Israeli withdrawal.
Palestinian leaders, momentarily pleased at
the breakdown of talks between Egypt and
Israel, were alarmed at Sadat's reaffirmation of
essentially moderate policiee r,n March 29. The
Palest irtians are again worrying that Egypt -night
still attempt to reach a unilateral agreement
with Israel, and that any such agreement would
ignore Palestinian interests. Palestine Liberation
Organization leaders feel threatened even by
Egypt's moves to renew the UN mandate and
open the canal. These initiatives draw attention
to differences between Egyptian and Syrian
policy, and to the fact that the Palestinians, :o
their immense discomfort, are caught in the
middle.
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SUEZ CANAL
If the Suez Canal is reopened as early
as June, the waterway will have less capacity
than it had before it was closed in mid-1967.
Night transits will be impossible and day
operations curtailed because new navigation
lights and systems for ship monitoring and
communications are unlikely to be installed
before October.
Ships using the waterway during the
first months after it reopens will be lirlited
to drafts of 35 feet, rather than the 38 feet
permitted before the canal was closed.
ON THE ROAD TO GENEVA
The Soviets arr continuing to call for a
resumption of the Geneva talks, but they seem
to have reservations about rushing back to the
negotiating table without a clear indication of
where the chips may fall.
Although Moscow's propaganda broadcasts
are aimed at keeping events moving toward
Geneva, in private the Soviets still seem to have
doubts about when and if the talks will be
resumed. So far, the Soviets have not even com-
mented on the Egyptian proposal for a return to
Geneva. The Egyptians introduced an unex-
pected complication by ,uggesting that addi-
tional parties be invited-an idea that probably
did not sit well in Moscow. In addition, the
Soviets probably have a lingering fear that the
US will continue to play a dominant role, even
at Geneva. Last week, Y. D. Pyrlin, deputy chief
of the Foreign Ministry's Middle East division,
told a US official that the Arabs have not yet
clarified their positions and that Moscow does
not expect to know where things stand before
mid-April.
I he question of Palestinian representation
at Geneva and the broader problem of Pales-
The Canal Authority has worked out a
temporary traffic control system and has
trained a cadre of pilots. In a dry run during
the first week in March, operations
reportedly went smoothly. Before June, the
British are to carry cut a precautionary final
sweep for explosives. This check is intended
to reassure potential users and to dispose of
arty explosives thrown into the Ovate- :.'_; by
Egyptian land forces who rlp:arprl thy' shore-
tinian disunity still trouble the Soviets. Pyrlin
complained that the Soviets, who publicly
i*ecogniza Arafat's leadership, cannot confer
with the Palestinian leader unless members of
his entourage are present. The Soviet official
gave no sign that Moscow has a clear idea of
how to get around the representation problem,
but he did say that an effort is being made to
schedule a visit to Moscow by Arafat in April.
The Soviet Union, nevertheless, is re-
portedly planning to send a 30-man contingent
of Middle East experts to Geneva early in April
in expectation of a resumption of the Middle
East peace conference. Soviet embassies in the
Middle East were instructed to begin forwarding
reports directly to Geneva on April 1.
Discussing Soviet-Egyptian relations, Pyrlin
confirmed that economic talks have been
suspended, but that the Soviets expect them to
resume by late April or early May. The main
issues remaining are Egyptian debts and the
integration of Soviet-Egyptian joint projects
into Moscow's n --,v five year plan. Pyrlin added
that General Secretary Brezhnev would prob-
ably not go to the Middle East before autumn.
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Prospects for a complete cancellation of
settlement negotiations between Ian Smith's
white regime and black Rhodesian nationalists
increased this week as a result of a ruling against
a major black leader by a court in Salisbury. The
deepening impasse poses hard choices for South
African Prime Minister Vorster and the leaders
of the four black states who have been collab-
orating for months in a joint effort to mediate a
solution.
under detention. At a meeting last month, Vor-
ster is believed to have leaned hard on Smith to
release the black leader. Now, Vorster must
either bring more effective pressure to bear on
Salisbury-he has potential economic leverage in
addii.ion to the withdrawal of South African
police units from Rhodesia, which is already
well advancad-or risk seeing his policy of de-
tente with black Africa go down the drain. He
has committed much of his prestige to the
policy.
On April a special Rhodesian trib+mal
declared that the government's re-arrest of
Ndabaningi Sithole a month ago-he had been
released from ten years' confinement only last
December-and his detention without trial were
"fully warranted." The court did not rule on the
accusation made by Smith's aides when Sithole
was picked up, that he had plotted to kill rival
leaders of the nationalists' African National
Council. Instead, Sithole's detention was upheld
on the basis of evidence-withheld from the
public hearing before the tribunal last week-
that he had encouraged terrorism by Rhodesian
guerrillas and thus had undermined the true
agreement the Smith regime concluded with the
nationalists last December.
The change in the government's apprcach,
which became apparent at the hearing, was
almost certainly dictated in part by a weak case
against Sithole on the plotting accusation. The
broader charge is probably also viewed as likely
to increase support among Rhodesian whites for
the action against Sithole. Smith apparently is
unconcerned-indeed, he may be glad-that the
judicial decision makes more difficult a face-
saving compromise between his regime and
Sithole's colleagues on the council, who have
vowed not to resume even preliminary talks
with Smith until Sithole is frc~:d or tried pub-
licly. Smith went along with the truce and
settlement effort only reluctantly, because of
pressure from Vorster.
Vorster is surely highly displeased by
Smith's apparent determination to keep Sithole
The African mediators, who have similarly
invested their prestige in the settlement attempt,
had counted on Vorster to prevail on Smith to
resolve the Sithole case satisfactorily. Publicly,
they have backed the position of the Rhcdesian
nationalists on the issue and implied that their
countries-Zambia, Tanzania, Botswana, and
Mozambique-would support full-scale guerrilla
warfare if Smith scuttled settlement negotia-
tions. Privately, they have sought to restrain
hard-line Rhodesian insurgent leaders, who also
only accepted the truce under pressure. The role
of the African mediators has evoked accusations
from some other African states that they are
sacrificing African interests and aiding Smith by
cooperating with Vorster.
Last week, Zambia's President Kaunda
risked additional African criticism when he
boldly rounded up many Zambian-based Rhode-
sian insurgent readers and ordered the constitu-
ent groups of the African National Council to
terminate the separate organizational structures
and facilities they have maintained in Zambia,
despite their agreement in December to merge
into the council.
If Kaunda has effectively clamped down on
the insurgents' bases in Zambia, he may be in a
position to forestall an early resurgence of
guerrilla attacks in the wake of the Sithole deci-
sion. On the other hand, Kaunda may find it
politically untenable to resist any new African
pressures to step up the insurgency.
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Rhodesia could lose its vital trade routes
through the ports of Lourenco Marques and
Beira unless a constitutional settlement pro-
viding for black majority rule is worked out by
June, when Mozambique becomes fully indepen-
dent from Portugal.
Mozambique benefits substantially from
the rail and port earnings it derives from
handling Rhodesia's overseas trade. So far,
Mozambique's transitional government, which is
dominated by the black Front for the Libera-
tion of Mozambique, has not applied the UN
economic sanctions against Prime Minister
Smith's regime. Front President Samora Machel
is clearly aware, however, that after indepen-
dence his country will be subject to increased
foreign and probably irresistible pressures,
especially from other African states, to partici-
pate in the sanctions.
The impact of losing the Mozambique out-
lets would be severe as the two ports handle the
overwhelming majority of Rhodesian trade. The
alternative routes, two rail lines and two roads,
would have to be substantially upgraded inside
South Africa and Botswana to handle the in-
crease in Rhodesian traffic. Moreover, South
ZAMBIA
Lusaka
Sa his bu ry*
RHODESIA
iu.i< i
African facilities already are heavily congested.
As many as 40 ships have been lined up at the
major east coast harbor at Durban, and Pretoria
is unwilling to disrupt its own domestic services
to accommodate diverted Rhodesian goods.
As a result, the loss of the Mozambique
ports probably would force Rhodesia to cut its
trade by more than half. Export earnings,
mainly from agriculture, mining, and mineral
processing, account for about 25 percent of
Rhodesia's gross domestic product. A reduction
in imports would not only cut into the delivery
of parts and equipment needed to maintain capi-
tal stock but would alsc limit the supplies of
fuel and raw materials for industry. Rhodesia is
self-sufficient in most foods.
Rhodesia faces other significant economic
problems that will probably slow economic
growth this year even if Mozambique leaves the
trade routes open. Unfavorable weather during
the current growing season will result in a sub-
stantial reduction from last year's record har-
vests. Falling prices for Rhodesia's raw-material
exports will reduce income from trade. A 10-
percent tax surcharge, imposed in September to
help pay increased military costs, will tend to
dampen consumer demand. Moreover, the high
cost of oil and other imports will continue to
aggravate inflation, which doubled last year to
about 7.5 percent.
The increasing economic troubles will re-
duce Rhodesia's attractiveness to white immi-
grants, who fill skilled and professional positions
that are largely denied to blacks. A public rela-
tions program mounted early in 1974 to in-
crease white immigration has been a failure-net
immigration dropped to 600 persons in 1974
compared with 1,640 in 1973 and 8,840 in
1972. The white birth rate has been falling and
is now less than 1 percent annually. Slowing
growth in the economy will also retard the ex-
pansion of job opportunities for blacks, which
are already barely keeping pace with the Qrowth
of the black population.
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ANGOLA: DONNYBROOK BEGINS
The transitional regime, in office less than
three months, has been badly shaken by almost
two weeks of intermittent clashes between armed
members of the two largest of the three nation-
alist groups that share power in the government.
Each group appears bent on gaining military
dominance over the other before Angola
becomes independent next November. Their
rivalry could culminate in civil war well before
then.
The fighting, which broke out on March
23, has set partisans of the National Front for
the Liberation of Angola against those of the
Popular Movement for the Liberation of Angola.
Most of the violence has been centered in black
slum areas of Luanda, the capital, although
fighting has occurred elsewhere. Atrocities-by
both sides-have been plentiful; on March 25 or
26, for example, National Front troops captured
and then massacred 49 soldiers and civilians of
the Popular Movement. At times, the exchanges
of fire have been heavy, with mortars, bazookas,
rocket-propelled grenades, and heavy machine
gul-is employed. Altogether, more than 200
persons have been killed.
Portuguese soldiers, who are looking ahead
to their departure over the next year, have had
only limited success in curbing the fighting.
They have been assisted by troops of the Na-
tional Union for the Total Independence of
Angola-the third group in the transitional gov-
ernment-which is striving for a law-and-order
image. On March 28, a cease-fire agreement was
signed following mediation by Portuguese For-
eign Minister Antunes and Inter-territorial Minis-
ter Santos. The agreement has been consistently
violated by both sides, however, and seems un-
likely to take hold.
The two contending groups have been
bitter rivals for more than a decade. Ever since
their struggle against Lisbon ended some months
ago, each has suspected the other of preparing
for civil war, and both have been building up
their forces. At the time the fighting broke out,
the National Front had an estimaed 2,000
troops in the capital-twice as many as the Pop-
ular Movement. To offset its numerical disad-
vantage, the Popular Movement armed many
untrained civilians, mainly unemployed teen-
agers.
Under the terms of the cease-fire agree-
ment, the nationalist groups are each to limit
their troop strength in the capital to 500 men.
So far the Nationai Front has refused to reduce
its force until all civilians have been disarmed, as
also called for in the agreement. Moreover, the
National Front reportedly is bringing reinforce-
ments-and more weapons-into Angola from its
base in neighboring Zaire, where it enjoys strong
backing from President Mobutu. The Front,
however, apparently has no immediate intention
of moving these troops into the capital.
Disarming the civilians could prove to be
an impossible task even if the Popular Move-
ment were to cooperate, wF ich hardly seems
likely. Most civilians would probably hide their
weapons rather than give them up. The Portu-
guese army, which is trying to remain neutral, is
unwilling to take on the responsibility for con-
fiscating illegal weapons. Under the circum-
stances, Angola is almost certainly in for an
extended period of internecine violence that will
reinforce long-standing hatreds and the desire
for revenge.
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THE KURDS: TIME RUNS OUT
The border between Iraq and Iran was
closed on schedule this week upon the expira-
tion of Baghdad's cease-Pre with the Kurdish
rebels and of the amnesty it had offered to
those who surrendered by April 1. The closure,
which halted the heavy flow of military and
civilian refugees from Iraqi Kurdistan, was
carried out in accordance with arrangements
made by Baghdad and Tehran after they con-
cluded their reconciliation accord in Algiers
early last month.
An Iraq force of about 100,000 troops
began moving promptly to eliminate remaining
pockets of resistance and to establish control
over all Kurdish-inhabited areas of Iraq. Early
reports indicated that the force was encounter-
ing little opposition. The approximately 9,000
rebels who last month vowed to continue the
struggle are only lightly armed and appear to
have little prospect of getting new supplies.
By agreement, some Iraqi troops were
deployed on the Iranian side of the frontier to
assist the Shah's forces in closing the border to
additional refugees on March 31. In return,
Iranian officers were sent over to the Iraqi side
to man observation posts; Algerian observers
were present in both countries.
The Iraqi government has agreed to accept,
for an additional month, Kurdish refugees in
Iran who want to return to Iraq. The extension
was apparently requested by Iranian Prime Min-
ister Hoveyda during his visit to Baghdad last
week. Tehran was already providing shelter for
some 140,000 Iraqi Kurds before its accord with
Baghdad and is anxious for as many of these
earlier refugees to return home as can be per-
suaded. The displaced Kurds are an adminis-
trative headache and also a potential security
problem for Iran. An Iranian official estimated
on April 1 that about 200,000 Kurdish refugees
wet.: in Iran.
Baghdad, for its part, is not very anxious to
have any of the refugees return. To accom-
modate Tehran, which had asked Iraq to make a
greater effort to reassure Iraqi Kurds in Iran that
they would not be subject to reprisals if they
came back, an Iraqi Red Crescent team went to
Iran last week to interview refugees. A US offi-
cial in Iran reported later that the trip was a
failure from the Iranian point of view.
Hoveyda's trip to Baghdad again under-
scored the public commitment of both sides to a
smooth implementation of the Algiers accord.
In a communique, issued after Hoveyda's depar-
ture, the two countries expressed satisfaction
with the progress of their rapprochement and
pledged to work for closer cooperation in all
areas. According to an :nterview with Iraqi
strong man Saddam Husayn Tikriti in a Tehran
newspaper, cooperation may even extend to
some kind of collective security arrangement in
the Persian Gulf. The statement attributed to
Saddam Husayn goes well beyond the official
communique, which said only that the two sides
"affirm that the region should be spared all
foreign interference." Until the recent accord,
Baghdad was actively promoting gulf security
arrangements directed specifically against Iran.
There has been no official Iranian com-
ment on the interview. The Shah has, however,
frequently spoken of his desire for ,acuritN, co-
operation among Persian Gulf countres, arguing
that defense should be the responsibility of the
littoral states. Up to now he has excluded Iraq
from such an arrangement and has supported
the US naval presence in the gulf as a counter to
Soviet naval activity in the area. He has con-
sidered this activity-and, indeed, Soviet influ-
ence in Iraq-a threat to the security of both
Iran and the gulf.
Reducing Soviet influence continues to be
one of th;: Shah's principal foreign policy goals.
He probably hopes to use his accord with Sad-
dam Husayn-and the resulting collapse of the
Kurds' rebellion-to press Baghdad, directly and
through other Arab governments, to reduce its
reliance on Moscow. The Shah, in turn, will
almost certainly be called upon, at least by the
nore radical Arabs, to demonstrate that Iran is
not a mouthpiece for US nn'*c\t in fho
area.
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SAUDI ARABIA: SETTL.iNG IN
Last weekend the new Saudi leadership
announced some top-level appointments that
partially clarify the power relationships under
newly installed King Khalid. The King has asked
the Council of Ministers to stay on, and the new
regime appears set for a while.
Following the precedent established by
assassinated King Faysal, Khalid took the titles
of prime minister and foreign minister. The US
embassy in Jidda believes, however, that Crown
Prince Fahd, who has advanced from second to
first deputy prime minister, will probably
assume most of the functions of prime minister.
Khalid, who held the post of first deputy pr -)r
to his accession, never showed much interest in
affairs of state.
Prince Nayif-one of seven full brothers,
including Fahd, who together form the royal
family's strongest power bloc-has been moved
up from vice interior minister to minister of
state for interior affairs. The pros otion makes
Nayif a member of the Council of Ministers,
giving Fahd additional support in that key
group. Nayif will run the Interior Ministry on a
day-to-day basis under the aegis of Fahd, who
keeps the ministerial title.
Somewhat balancing the gains by Fahd's
cam,. national guard commander Prince Abdal-
lah, a strong supporter of Khalid, has been
named second deputy prime minister. For so~,~
time before Khalid became king, Abdallah
apparently had been urging him to wield power
in his own right if he goL the chance, instead of
leaving it to Fahd. The step up the ladder by
Abdallah-he is now number three in the hier-
archy--probably galls Defense Minister Prince
Sultan, another brother of Fahd, who has suf-
fered a de facto loss of place b , th? action.
The appointment of " rince Saud, one of
Faysal's sons, as minister of state for foreign
affairs does not appear to strengthen either
camp and may have been intended as a mark of
respect for the late king and as a gesture to
younger members of the ruling family. Saud is
intelligent and well educated, but he did not
play a significant role as deputy oil minister in
his previous po,', perhaps ''ecause oil minister
Yamani's dynamic ~:arsonality gave him little
scope. The extent of Saud's actual power in his
new job may well depend on th:? strength of his
relationship with Fahd, his uncle. Relations
between them are now apparently good, al-
though this was not always true in the past.
In a statement on March 31 that generally
stressed continuity with Faysal's policies,
1~halid-speaking through Fahd, who delivered
the speech-announced his intention to form a
"consultative council" at some time. He claimed
Faysal had planned such a council, but had died
before he could establish it. Khelid did not
elaborate on the concept, which may, in fact,
have originated with Crown Prince Fahd. It has
reportedly been under consideration for at
a year within Saudi ruling circles
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cluding ;,1il sentences and fines, for anyone at-
tempting to disrupt the campaign. It also out-
lawed permanently the ultraleftist Reorganizing
Movement of the Proletarian Party, a major
offender in earlier incidents.
The election scheduled for April 25 is the
first opportunity for the Portuguese people to
express their views on the revolutionary policies
being pursued by the Armed Forces Movement.
Moderates have been hoping for a strong
showing by their parties in order to convince the
Movement that its more radical policies have no
popular support. They also hope to demonstrate
that the communists and their sympathizers
have representation in the government greatly
out of proportion to their standing with the
electorate.
PORTUGAL: CAMPAIGN BEGINS
After two postponements, the campaign to
,.:ect a constituent assembly officially opened
on April 2. The ruling Armed Forces Movement,
however, lost no time in demonstrating that it
plans to dictate the provisions of the new con-
stitution to the popularly elected assembly.
Thus far, the election campaign has been
free of the harassment of democratic parties
that had marked political rallies in recent weeks.
Charges by the Communist Party and an ultra-
leftist student group, each claiming that the
other attacked its headquarter, are the only
incidents reported so far. Last week, the Revolu-
tionary Council established stiff penalties, in-
step that seems3d sign dotonredu eo thea ole"of
the constituent assembly that will be elected. It
gave political parties 48 hours to approve a plan
that reportedly will ensure continuing military
dominance of Portugal's affairs for three to five
years. Although details have not been released,
the Movement's plan probably spells out provi-
sions of the new constitution dealing with its
own role. Under the terms of the Movement's
program issued immediately after the coup last
April 25, the popularly electe . constituent as-
sembly was to have been solely responsible for
drafting the constitution.
In anoth_, important development this
week, Prime Minister GoncalveL established a
council within his newly appointed cabinet. The
body will be composed of Goncalves, the four
ministers without portfolio representing the
four coalition parties, three military ministers,
and the minister of information. This council
will meet weekly to set legislative policy, and its
decisions will be ratified by the full cabinet.
While the measure is primarily a move to in-
crease efficiency and to minimize inter-party
conflicts, it also could be an effort to lessen
disagreement over legislation that the Movement
wants enacted-1
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TURKEY: A NEW GOVERNMENT
With the formation of a four-party right--
of-center coalition, Justice Party leader Suley-
man Demirel took over the reins of government
from Prime Minister Sad Irmak on March 31.
Demirel will present his government program to
parliament -n April 6 for debate and a confi-
dence vote. He has a narrow majority in pa,m:a-
ment, but former prime minister Ecev't is
waging an intense campaign to split off some of
his support and defeat him. Even if Demirel fails
to receive a vote of confidence, he would stay on
in a caretaker capacity until another government
could be formed.
The new government is built on a shaky
foundation. Demirel must depend on support
from outside his coalition for a majority. The
coalition itself is fragile, based primarily on the
shared opposition of the four rightist parties to
Ecevit's left-of-center Republican People's
Party. In addition to Demirel's Justice Party, the
cabinet includes the National Salvation Party,
the Republican Reliance, and the National
Action Party.
Demirel is likely to run into trouble in
trying to work with Salvationist leader Erbakan
and National Action leader Turkes, both of
whom were appointed deputy prime ministers.
It was Erbakan's erratic and obstructionist be-
havior as Ecevit's coalition partner that brought
down the government last Septt -fiber. Turkes
has been associated with right-wing extremists,
and his party claims to have 100,000 "com-
mandos" at its disposal. The presence of these
two parties in the government is likely to con-
tribute to further political polarization and
raises the possibility of increased violence.
Outbreaks of violence by opponents of the
new government could work to Ecevit's advan-
tage in his effort to prevent Demirel from gain-
ing the vote of confidence. Ecevit's primary
interest is in getting parliament to call early
elections, which he still believes he would have a
good chance of winning. If Demirel succeeds, on
the other hard, he is not likely to move to
elections unless his coalition runs into trouble.
No sharp turns in 'Turkish policy are Iikel./
under Demirel, although his coalition partne,s
will probably try to move him further to thi
right and press him to harden the government's
stance toward a Cyprus settlement. The Na-
tional Salvation Party will be in a better p-)sii.ion
to influence government policy on don eS;tic
matters than on foreign affairs becaus,: he
Justice Party gave the Salvationists severil im-
portant economic portfolios.
In foreign affairs, Demirel will have the
assistance of Foreign Minister Ihsan Caglayangil
of the Justice Party, who served in that same
post in an earlier Demirel government. The de-
fense minister, Ferit Melen of the Republican
Reliance, is also capable and respected. He
served as both defense minister and prime min-
ister in the period following Demirel's ouster by
the military in 1971.
Clarifying his policy toward a Cyprus set-
tlement, Demirel has announced that the "only
solution is a two-zone federal system." He has
reiterated his belief in close relations with the
US and NATO, but has warned that these re-
lations will suffer unless there is an early re-
sumption of US i + Tur-
key. 25X1
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The first preparatory meeting for the
French-inspired conference of oil producers and
cJn umers opens in Paris on April 7. The princi-
pal concern of the meeting will be to agree on
the agenda and the participants for the main
conference to be held later this year.
French President Giscard has invited three
groups to attend:
? The developed states. represented by
the US, Japan, and the EC.
? The developing states, represented by
Zaire, India, and Brazil.
? The oil producers, represented by Iran,
Saudi Arabia, Venezuela, and Algeria, all of
whom are OPEC members.
The developing and the oil-producing states
will meet in Paris over the weekend to
coordinate strategy for the preparatory meeting.
They seem likely to side together against the
industrialized states. Among the oil-producing
states, Algeria and Venezuela in particular will
emphasize their ties with the developing world.
Both wouid like to see the main conference go
beyond a discussion of world energy concerns to
include yet another examination of worldwide
development strategies and the role of other raw
materials. Iran and Saudi Arabia, less firmly
allied with the developing states, will back only
limited discussion of development issues in
tandem with energy talks.
In fact, the seven states will be even less of
a monolithic bloc than might appear. Algeria,
the most radical, has dominated the Third
World's efforts in economic forums in the last
year. India, a former leader of the developing
world, has been hardest hit of all the
participant by the increase in oil prices. Brazil,
at the other extreme, is an emerging
semi-industrialized state, with a growing
oil-producing capability. Venezuela will try to
balance its roles as both a developing state and
an oil producer, hoping to demonstrate its new
importance in international forums while
asserting its claim to leadership of Latin Ameri-
can states.
The three participants representing the in-
dustrialized nations have prepared their position
carefully in the International Energy Agency.
The 17-member agency, which was founded last
November, will sit as an observer at Paris. As the
meeting proceeds, its members have agreed to
confer whenever necessary to coordinate policy.
France, the only EC state that has not
joined the energy agency, may make it difficult
for the EC to arrive at a common position. Only
last week, Paris apparently began dragging its
feet again on points that the other eight believed
had been settled. Paris was the lone holdout, for
example, when the EC permanent representa-
tives committee met in Brussels to consider the
final wording of community plans for oil
conservation and information control. Although
the French representative argued that the timing
of the EC meeting was inopportune, it is more
likely that Paris was miffed at having to follow
the lead of the energy agency. The French may
well agree ultimately on the plans, but they
mean to show that they can at the very least still
make heir influence felt.
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Presidents Ecieverria (r) and Perez sign communique ':,mowing recent meeting
Five presidents, a Shah, a queen, a prince, a
prime minister, a premier, a vice premier, and a
former chancellor have made official visits re-
cently to Mexico or are scheduled to do so in
the next three months. This steady stream of
foreign dignitaries reflects President Echeverria's
campaign to enhance Mexico's prestige and
standing as a leader in Latin America and the
Third World. Echeverria is also eyeing a Nobel
Peace Prize and, possibly, the job of UN secre-
tary general after his presidential term is up in
two years.
Queen Elizabeth, Prince Bernhard of the
Netherlands, Venezuela's President Perez, and
former West German chancellor Willy Brandt
have already made appearances. Making the
rounds from March 27 to April 4 was China's
Vice Premier Chen Yung-kuei, the highest rank-
ing Chinese official to visit a Western country
since the end of the Cultural Revolution in
1966. The vice premier toured the countryside,
comparing notes with Mexican agrarian officials.
Coming attractions are presidents Ceausescu of
Romania, Tito of Yugoslavia, Nyerere of Tan-
zania, and Senghor of Senegal. Also on the
schedule are Sweden's Premier Palme and Prime
Minister Manley of Jamaica. The Shah of Iran is
scheduled to arrive on May 11 for a six-day stay.
Except for the African heads of state and
the Shah, the guests are returning visits made by
Echeverria during the past couple of years, but
scheduling them in such rapid order shows that
the Mexican leader is energetically seeking to
put Mexico-and himself-in the limelight.
Despite the fact that both Perez and Echeverria
are making an obvious grab for leadership in the
hemisphere, the Venezuelan's visit went quite
smoothly. The two presidents agreed to create
the Latin American Economic System, an organ-
ization that will exclude the US, later this year.
As they have with all visitors to date, Mexi-
can officials will attempt to win support for
Echeverria's brainchild, the Charter of Eco-
nomic Rights and Duties of States, which the
President feels puts him in the running for the
peace prize. The attempt to sell the charter was
not notably successful with Willy Brandt, who
praised it for its "guiding principles," but judged
that it required refinements to meet the
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legitimate needs of the industrialized nations.
Echeverria should have much better success with
Premier Palme and the East European and Afri-
can leaders.
When the Shah arrives, the Mexicans are
I''kely to stress the opportunities for investing in
Mexico. One report indicates that Mexico hopes
to influence Iran to invest in a Yucatan tourist
project. The Shah, for his part, may try to
interest Mexico in joining OPEC. Mexico is cur-
rently not anxious to become a member because
it enjoys the high OPEC-set oil prices but is not
subject io US trade restrictions on the organiza-
tion's members.
In addition to the visiting VIPs, Mexico is
pushing to play host to more and more inter-
national conferences as well as for positions in
international organizations. For example,
Mexico is p?iposing its attorney general for
chairmanship of the UN Commission on Nar-
cotic Drugs and is campaigning hard for Mexico
City to be chosen as the headquarters site of the
World Tourism Organization. Echeverria has also
invited thp Cltjh of F,,ome to meet n Mexico this
year.
25X1 25X1
Economic forces largely beyond the mili-
tary government's control portend a bleak
winter for Chile. Low world copper prices are
depressing export earnings while the cost of
essential imports remains high. An impending
huge balan':e-of-payments deficit means that
imports will have to be cut by 35 percent. This
will sharply reduce total output and lower
employment and living standards. Thus far no
steps have been taken to curb imports. Instead,
the armed forces leaders, acutely aware of the
potential political impact of economic hardship,
are seeking tc ease the government's current
austerity program in order to avert massive pop-
ular unrest. Their civilian advisers, however, are
worried that welfare measures will jeopardize
the attack on inflation and thus worsen the
nation's chances for long-term economic
progress.
T: 1e government has announced new wage
bonuses for lower paid workers and pensioners.
It has begun funding temporary hiring of the
unemployed by local municipalities and re-
portedly plans to provide free food directly to
widows with children, the aged, and others who
cannot support themselves. When the inevitable
import curbs finally come such programs are
bound to be expanded, and the fight against
inflation will suffer severely.
The government's civilian economists be-
lieve that the armed forces' concern with the
immediate impact of austerity is causing them
to underestimate the political and economic
dangers of failing to control inflation. The civil-
ians want to cut the central government budget
deficit drastically and break the inflationary
spiral with a deflationary "shock," despite the
fact that this means greater short-term austerity
and unemployment. Even if this advice were to
be accepted, the civilians' approach would have
to be abandoned later this year as the magnitude
of the economic deterioration that will be
caused by import curbs sinks in. At the mo-
ment, however, the military men are focusing on
other remedies for inflation, such as direct con-
trols on prices. Price controls have already been
reimposed on items such as textbooks and
school uniforms, and manufacturers of clothing
and shoes hive been ordered to begin direct
sales to the public at prices not more 10 percent
above wholesale.
A widespread belief that monopolists, mid-
dlemen, and other privileged economic groups
have been reaping windfall profits from exces-
sive mark-ups and financial speculation has ;ed.
senior military figures to renew previous warn-
ings that such abuses will no longer be tolerated.
Arrests have been made in cases of alleged tax
evasion and infraction of foreign-exchange and
other economic regulations. The long-threatened
major crackdown could be in store as winter
comes to the Southern Hemisphere.
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President Peron ',vith Lopez Rega (directly behind her)
ARGENTINA: LABOR DISCONTEIr
President Peron, trying to soften the r?ood
of confrontation that has developed between
the Peronist labor movement and her govern-
ment, has agreed to meet with key labor spokes-
men on April 4. At this stage, the prospects for
a successful outcome are not bright, but a clash
may be temporarily avert?d.
Mrs. Peron's aloofness and her reliance on
Social Welfare Minister Lopez Rega have
angered labor, which is the backbone of the
Peronist movement. Pressure has grown to the
point where she can no longer ignore the power-
ful trade union organizations without risk of
losing their support.
Aside from the agreement to talk, labor
leaders will probably demand: a larger share of
power; changes in the cabinet, including the
removal of Lopez Rega; and some other sub-
stantial concessions, particularly a large role in
economic policy planning. Labor's views are
widely shared by others, including the military,
opposition parties, and many moderate Peron-
ists, including cabinet members and the influ-
ential governor of Buenos Aires Province. Mrs.
Peron's apparent unwillingness to sack Lopez
Rega, however, could stand ;n the way of a;i
accommodation.
Mrs. Peron is holding meetings with repre-
sentatives of other political parties in an effort
to stem the rising tide of opposition to her
government. Spokesmen for the President are
promising a conciliatory approach on her part.
the influential Peronist newspape:rAfay oria
has balled the coming round of talks as possibly
the last chance "to eliminate men and pro-
cedures that damage the government and distort
the thought and programs of Juan Peron."
There is no evidence, however, that Mrs. Peron
will heed the demands to get rid of Lopez Rega.
Under the circumstances, it is increasingly prob-
able that her i)olitical will deteriora+?
further. 25X1
CANADA: ELECTIONS IN ALBERTA
Premier Lougheed's sweeping victory in
Alberta's provincial election on March 26 re-
affirmed public support for his tough energy
policies. Lougheed and his Progressive Con-
servatives wanted a strong mandate to
strengthen their hand at the federal-provincial
energy conference set for April 10. Alberta
leaders wili go to the conference determined to
obtain higner domestic prices for the pro,.ince's
important o;l and natural gas resources.
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Although a decisive Progressive Conser-
vative win was never in doubt, even his most
ardent supporters were surprised by the mag-
nitude of Lougheed's victory-69 of the 75 seats
in the provincial assembly. The Social Credit
Party, which controlljd the government for
thirty years prior to 1971, dropped from 24
seats to 4; Independents won one seat. The
left-wing New Democratic Pal *y barely kept its
one seat while the Liberals-Prime Minister
Trudeau's party-failed to win even a jingle seat.
Throughout the campaign Lougheed
stressed the need for solid public support in
petroleum negotiations with Ottawa. The rivalry
between Ottawa and the western provinces was
evident in Lougheed's campaign tactics, in
which he emphasized that a vote for his party
was a vote for Alberta and that a vote for
Alberta was a vote for western Canada. Al-
bertans, who feel they have been slighted by
Ottawa, have been pressing for more control
over their own affairs.
Lougheed's ability to present himself as the
spokesman for Alberta in the debate with
Ottawa over commercial and political issues was
the key to his landslide victory. Now that
Alberta's oil and natural gas resources-over 80
percent of total Canadian production-have
supplemented its agricultural wealth, Albertans
feel they have the economic muscle to call the
tune in the struggle over provincial-federal
supremacy.Alberti,ns hope to erase "the master-
servant relationship" they feel has dominated
relations between Ottawa and Alberta. In
addition to trying to get higher prices for oil and
natural gas at the upcoming conference,
Lougheed will insist that the federal government
back down on its plan to tax the oil industry on
royalties paid to the province. Lougheed's
impressive victory does not augur well for future
relations between Ottawa and Alberta, now
HONDURAS: MILITARY TAKES COMMAND
Honduran military leaders have persuaded
Chief o? State Lopez to relinquish command of
the armed forces, and they probably intend to
assume wider responsibility for directing the
affairs of the country. Lopez will remain as
chief executive, according to an announcement
issued March 31 by the Superior Defense
Council.
Lopez' removal from the position that he
had used since the late 1950s to guarantee his
control of the government is the latest step in a
process under way for several months in which
senior military officers have taken over a larger
share of decision making.
Colonel Juan Alberto Melgar, a protege of
Lopez, rias succeeded him as armed forces
commander. Melgar, who previously demon-
strated little interest in affairs of state, will
probably depend heavily on the advice of a
collegium of military officers, including younger
ones who reportedly have persuaded their supe-
riors that decisive leadership is needed.
Dissatisfaction with Lopez has grown
steadily in the military during the last year or
so. Despite strong pressure from fellow officers,
deteriorating economic conditions, and deep
divisions in his government, Lopez continued to
procrastinate. Important decisions, including the
need to replace the roreign minister who re-
signed last October, were put off, and relief
efforts for the victims of the hurricane last year
have faltered.
Although his power clearly has been cir-
cumscribed, at least for the time being, Lopez
can still summon powerful support. His ex-'
tensive web of business interests and the con-
tinued loyalty of some top officers-perhaps
including Melgar-could enable him to regain a
pre-eminent part. Whatever his role, nonetheless,
it seems likely that the military will now provide
mole dynamic leadership and pay more heed to25X1
the advice her, reform-minded officers.
25X1 25X1
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