WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006700030002-6
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• Document Creation Date: December 19, 2016
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• Content Type: SUMMARY

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14..r
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Secret
43:
18 October 1968
No. 0043/68
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The WEEKLY SUMMARY, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It fre-
quently includes material coordinated with or prepared by the
Office of Economic Research, the Office of Strategic Research?
and the Directorate of Science and Technology. Topics requir-
ing more comprehensive treatment and therefore published sep-?
arately as Special Reports are listed in the contents pages.
The WEEKLY SUMMARY contains cla$sified information af-
fecting the national security of the United States, within the
meaning of Title 18, sections 793 and 794, of the US Code, as
amended. Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
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Europe
CZECHOSLOVAKIA BOWS TO NEW SOVIET DEMANDS
Stepped up Soviet efforts to force the Dubcek
leadership into submission have been partly suc-
cessful.
SOVIET-FINNISH LEADERS HOLD TALKS
Premier Kosygin and President Kekkonen used their
meeting in Finland last week to reassure each
other that the invasion of Czechoslovakia would
not affect the carefully constructed relationship
between their two countries.
MOSCOW SHOWS CONCERN ABOUT FUTURE OF NPT
Soviet diplomatic activity at the United Nations
General Assembly session has made clear Moscow's
concern that some key states--notably West Ger-
many--are in no hurry to adhere to the nonproli-
feration treaty.
SOVIETS ATTEMPT TO SOLVE COMPUTER PROBLEMS
In an effort to overcome a long-standing weakness
in the civilian sector of their computer effort,
the Soviets reportedly have decided to make their
third generation of general-purpose computers
compatible with Western programing techniques.
SLOW PROGRESS TOWARD A EUROPEAN "CAUCUS"
Efforts to develop closer ties between Britain
and the Continent have gained new impetus as a
result of the Czechoslovak crisis, but the pro-
spects for success, in the face of hardening
French opposition, are not bright.
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Far East
VIETNAM
The low level of Communist military activity this
week confirms previous indications that the enemy's
so-called third offensive has ended. Although
Hanoi has called home from Paris its highest rank-
ing negotiator, North Vietnam's propaganda contin-
ues to :reflect inflexible insistence on its basic
demands. In Saigon, President Theu has shown
deep concern over the adverse political repercus-
sions of the recent. military alert?
CHINESE COMMUNISTS BEGIN TO REBUILD PARTY
The importance of reconstituting the party as a
viable authority has been stressed in official
propaganda since National Day on 1 October, but
the problems are enormous.
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Middle East= A ^ica
COMMUNISTS TO SUPPLY MORE ARMS TO ARAB STATES
A second round of arms negotiations between the
USSR and the Arab states appears to have culmi-
nated in a new series of agreements that will
enable the Arab states to modernize their armed
forces and to expand their inventories somewhat
over pre-war levels.
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MOROCCO STRENGTHENS RELATIONS WITH THE USSR
The current Soviet naval visit to Casablanca
underlines the gradual warming of Morocco's
relations with the Soviet Union over the past
two years, a course Rabat initiated when it was
unable to expand aid from Western sources.
NASIR'S EGYPT MUDDLES ALONG
Nasir still has a number of bothersome domestic
problems, but for the moment, at least, the Egyp-
tian domestic scene remains fairly quiet.
EGYPTIAN OIL INDUSTRY RECOVERS FROM WAR LOSSES
The Egyptian petroleum industry has made a remark-
able comeback from the blows it suffered last year,
and is making vigorous efforts to expand production
still further.
SENEGAL FACES CONTINUED UNREST
President Senghor's capitulation last month to the
demands of dissident students should avert another
major domestic crisis this fall, but it leaves him
vulnerable to demands from other disenchanted ele-
ments at a time when Senegal's problems are multi-
plying.
Western Hemisphere
PANAMANIAN MILITARY TOPPLES ARIAS GOVERNMENT
A group of "young turks" in the National Guard
ousted the 11-day-old government of Arnulfo Arias
because of his moves to reorganize the guard and
transfer a number of its key personnel.
BRAZILIAN GOVERNMENT BREAKS UP STUDENT UNION CONGRESS 26
On 11-12 October, the government succeeded in dis-
banding the 30th congress of the illegal National
Students' Union and arrested over 700 delegates.
Most of the top leaders were caught in the round-
up, but an unknown number of radical students
avoided arrest and may attempt to take control of
the student movement in their states.
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PERUVIAN MILITARY GOVERNMENT CONSOLIDATES POSITION
The military regime that. took over in Peru after
the coup on 3 October is now firmly established
and is beginning to turn. its attention toward
running the country.
DOMINICANS BEGIN TO FOCUS ON 1970 ELECTIONS
Political jockeying is starting to fill the vac-
uum created by the drift and stagnation presently
characterizing the Balaguer administration.
THE BAHAMAS GAIN ADDITIONAL AUTONOMY
The recent constitutional conference in London
gave the :Bahamas responsibility for internal se-
curity. Although the British retain responsi-
bility for defense and some foreign relations,
they will consult with the Bahamas on these mat-
ters.
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This week Moscow achieved one of its most important "normalization"
goals in Czechoslovakia-the signing of a status-of-forces agreement with
Prague.
The event was hard on the morale of the exhausted Czechoslovak
leadership, and growing dissidence-which could get out of hand-was evi-
dent among the people.
The agreement leaves much to be desired from the Czechoslovak
viewpoint. There will be no immediate departure of Soviet troops in more
than token numbers. Moreover, there is no understanding yet on ap-
portioning occupation costs, no clear provision concerning billeting of oc-
cupation forces, and no accord on criminal jurisdiction.
Soviet officials have warned again that the East Germans will harass
West German activities scheduled soon for Berlin. One of these, a convention
by the West Berlin branch of the National Democratic Party, became a
"non-event" with the self-dissolution of the party's Berlin branch on 16
October. The East Germans will probably go ahead with their plans to harass
other activities, however, if only to distract popular attention from Czecho-
slovakia.
Tensions continued to abate in the Balkans. The Rumanians have
reduced the alert status of their internal guard and "intervention troops."
After a recent, rambling, disjointed speech by Polish leader Gomulka,
party rank and file are wondering if he still is up to the task of running the
country. Even his close followers have doubts that he can maintain his
position without making further concessions at the party congress on 11
November.
The Italian Socialist Party will hold its national congress, the first since
1966, from 23 to 27 October. The Socialists will probably decide to re-enter
j)ermitting formation of a new center-left coalition.
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CZECHOSLOVAKIA BOWS TO NEW SOVIET DEMANDS
Stepped-up Soviet efforts to
force the Dubcek leadership into
submission have been partly suc-
cessful.
Premier Kosygin led a high-
ranking Soviet Government: dele-
gation to Prague on 16 October
to get formal Czechoslovak ac-
quiescence in a status-of-forces
agreement that will provide the
basis. for the indefinite station-
ing of Soviet troops in Czecho--
slova.kia. Premier Cernik signed
for Czechoslovakia. Details of
the treaty were not immediately
In a speech at the treaty
signing ceremony, Kosygin said
that the bulk of the Soviet and.
other Warsaw Pact troops will
be withdrawn by stages in the
next few months. Taken with his
strong statements on the contin-
uing need to defend the socialist
community, this formulation sug-
gests that it will be at least
well into the winter before even
the 100,000 level is reached,.
The Kosygin delegation's
arrival in Prague followed Pre-
mier C:'ernik's talks in Moscow
on 14-15 October. The large
delegation Cernik brought with
him apparently concerned itself
with the legal and financial is--
sues raised by the presence of
Warsaw Pact troops.
the Soviets have de-
ve oiled a "no--nonsense" attitude
toward Prague.. Rather than be-
ing treated as equals in nego-
tia.ting with the Russians, the
Czechoslovaks were presented with
a new set of demands that in--
cluded a sharp reduction in Czech-
oslovak Communist Party membership,
reorganization. of the party's
structure, and. installation of
new leaders. The talks were re-
portedly so one-sided that the
Czechoslovak party presidium sub-
segU.ently approved the conduct of
the delegation, but not the re-
sults of the negotiations.
Dubcek, in an emotional
speech on 11 October, for the
first time publicly acquiesced
in virtually all the Soviet de-
mands, and announced his inten-
tion to steer Czechoslovakia back
on the road to orthodoxy. He said
that no opposition to Moscow would
be allowed and that his policies
would be guided by the principles
of Communist party supremacy and
of alliance with the USSR.
Dubcek's remarks may have
deepened divisions within the
leadership over compliance with
Mosdow's edicts. He blamed sev-
era], of his colleagues for bring-
ing about the invasion by being
"too slow" in taking effective
countermeasures against "antiso-
cialist elements." In addition,
Dubcek make it clear that offi-
cials who had dragged their feet
in the past now had one last
chance to fall into line, and
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WEEKLY SUMMARY 18 Oct 68
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that he expects compliance with
the demands of the "new reality"
from party and government func-
tionaries as well as from the
people.
Dubcek also made it clear
that while he himself would not
resign voluntarily, Soviet dic-
tates will be implemented with or
without him. He indicated that
he would stay because he had the
trust of the people and implied
that any Soviet-implemented suc-
cessor might be much worse.
Moscow, moreover, may be-
lieve that it has found and can
begin to exploit the nucleus of
Czechoslovak opposition to Dub-
cek. Pro-Soviet Communists have
held at least two meetings, one
of which concluded by adopting
a resolution condemning the "weak-
ness and incompetence" of the Dub-
cek regime.
Moscow's announce-
ment on 12 October that it will
publish a Czech and a Slovak
language newspaper in Prague in-
dicates that it is intent on
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giving its supporters there a
guaranteed forum.
The resurgence of party con-
servatives is probably respon-
sible in art for a growing dis-
sidence among the population at
large. Some non-Communist polit-
ical groups, which have been
banned since the invasion, re-
portedly have been meeting in se-
cret and allegedly are being en-
couraged by provocateurs. More-
over, some intellectuals believe
that it is time for the Czecho-
slovaks to show their disapproval
of Prague's growing subservience
to Moscow, and that it may be
necessary to go to jail to get
this message across. There is
also talk of the need for a new
intellectuals' manifesto similar
to the sensational anti-Soviet
tract, entitled "2,000 Words,"
which was published last summer.
The Czechoslovak party 25X1
presidium plans to present to 25X1
a meeting of the central commit-
tee, tentatively scheduled for
later this month, a list of party
tasks drawn up in the light of
several "situation reports" pre-
pared by Czech and Slovak offi-
cials. Resignation of some high-
level liberals, maly I--
at that meeting. 25X1
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SOVIET-FINNISH LEADERS HOLD TALKS
Premier Kosygin and Presi-
dent Kekkonen used their meeting
in Finland last week to reassure
each other that the invasion of
Czechoslovakia would not affect
the carefully constructed rela-
tionship between their two coun-
tries.
Kosygin's surprise visit
came in response to a standing
invitation Kekkonen had extended
during his visit to the Soviet
Union last June. It was not
until early October, however,
that the Finns received word
that Kosygin would be arriving
on the 7th for a. two-day visit.
The secrecy surrounding the
visit--apparently maintained
because local elections were be-
ing held--was sharply criticized
by the Finnish and Scandinavian
press on grounds that it encour-
aged speculation about the
possibility of a crisis in rela-
tions between the two countries.
From the Finnish point of
view, the most urgent problem
concerned the Czechoslovak situ-
ation and the disturbing impli-
cations this had for Finland's
relations with Moscow. Kekkonen
was reportedly badly shaken by
the Soviet invasion. He believed
the move would undermine his
long-standing effort to estab-
lish a relationship of confidence
with the Soviet leadership.
Kekkonen probably thought
it desirable to seek assurances
from Moscow that the officially
cordial relations between the
two countries had not been af-
fected and that the events of the
past summer did not portend a
period of East-West tensions.
Kekkonen probably also wanted
to assure Kosygin that the anti
Soviet sentiment that had sur-
faced in Finland during the Czech-
oslovak crisis would. not affect
Helsinki's commitment to its pol-
icy of maintaining friendly rela-
tions with Moscow.
The Soviet Union, for its
part, clearly welcomed an. op-
portunity to demonstrate a "busi-
ness as usual" attitude and to
receive Helsinki's pledge of con-
tinued friendly relations. The
informal visit also served to
cement Kosygin's close personal
relationship with Kekkonen.
The difference between the
friendly atmosphere of Kosygin's
talks with Kekkonen and the cool-
ness that prevailed during his brief
meeting with Finnish Communist lead-
ers was particularly noticeable.
The Finnish Communists have been
loudly critical of the interven-
tion, and there have been reports
that Soviet officials have boasted
of their ability to overthrow the
liberal leadership of the Finnish
party if it dnes not halt i+-c:
criticism.
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WEEKLY SU14MARY 18 Oct 68
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MOSCOW SHOWS CONCERN ABOUT FUTURE OF NPT
Soviet diplomatic activity
at the United Nations General As-
sembly (UNGA) session has made
clear Moscow's concern that some
key states--notably West Germany--
are in no hurry to adhere to the
nonproliferation treaty (NPT).
Moscow is disturbed about the
NPT's loss of momentum, and fears
that additional delay will invite
further efforts by nonnuclear na-
tions to weaken the treaty.
Foreign Minister Gromyko
urged prompt and wider acceptance
of the NPT in his policy address
at the General Assembly and has
made strong demarches in private.
The USSR's chief disarmament
delegate at the UN this week
sought US agreement to an assembly
agenda which, in Moscow's view,
would facilitate early resumption
of the Geneva disarmament confer-
ence. He was eager to forestall
another conference of nonnuclear
countries, a possibility which
the UNGA will discuss but which
he described as "extremely danger-
ous" for the NPT. The Russians
also continue to show interest in
beginning the strategic arms talks
with the US that were set back by
the invasion of Czechoslovakia.
The USSR has been highly
sensitive about nonnuclear nations
holding back on the NPT while try-
ing to wring concessions from the
nuclear powers. The Russians were
vexed when the recent conference
of nonnuclear states in Geneva
spawned proposals aimed at pushing
the NPT into the background and at
perpetuating a nonnuclear organi-
zation. By the time the conference
ended, Soviet delegates were active
in lining up the blocking third of
the votes needed to reject such
proposals. 25X1
The Soviet invasion of Czecho-
slovakia has led some states to de-
lay action on the NPT in order to
demonstrate their displeasure.
Others have merely used the Czecho-
slovak affair as an excuse to put
off signing the treaty. The NPT
was opened for signature on 1 July
and will go into effect when its
nuclear sponsors--the US, USSR,
and UK--and 40 additional states
have ratified it. So far only
Ireland and Nigeria have completed
this process, while several impor-
tant nonnuclear states have not
yet even signed. In addition to
West Germany and Japan, these in-
clude some NATO countries, Israel,
India, Pakistan, a Africa.
F
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SOVIETS ATTEMPT TO SOLVE COMPUTER PROBLEMS
The Soviets reportedly have
decided to make their third gen-
eration of general-purpose com-
puters compatible with Western
computer programing and manage-
ment techniques. If implemented,
such compatibility could save
the Soviets many years of scien-
tific effort and many millions
of rubles. It could also avoid
diverting personnel away from
high-priority military and scien-
tific programs. At the same time,
however, it will result in Soviet
reliance on, and a continuing lag
behind, Western computer technology.
Development of programing
and management techniques, of
"software," for general-purpose
computers in the civilian sector
has been a long-standing weakness
of the Soviet computer effort.
Soviet computer manufactur-
ers design and produce computer
hardware but take little or no
part in the development of im-
proved software. Repair, main-
tenance, and programing is left
to the computer users.
Although the Soviets are
developing a new generation of
computers, they lack the soft-
ware and personnel to make full
use of this new potential, at
least: in the civilian sector.
Lack of cooperation on the part
of Soviet computer manufacturers,
a largely uncoordinated approach
to the problems of computer uti--
lization, and the allocation of
talent to national defense as
opposed to civilian programs have
been the major obstacles to prog-
ress.
Given the priorities and
resources devoted to national de-
fense, however, software devel-
opment for military computers
probably has not been so retarded.
Soviet progress in missile de-
velopment and air defense, two
military programs that rely
heavily on computers, gives
testimony to the ability of the
Soviet military to make effective
use of the computer technnlnrTxT
available
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SLOW PROGRESS TOWARD A EUROPEAN "CAUCUS"
Efforts to develop closer
ties between Britain and the Con-
tinent have gained new impetus
as a result of the Czechoslovak
crisis, but the prospects for
success, in the face of harden-
ing French opposition, are not
bright.
Since the Soviet interven-
tion in Czechoslovakia, discus-
sion of expanded European coopera-
tion has focused primarily on
proposals put forward by Belgium's
Foreign Minister Harmel. What
is needed, in his view, is a
European "caucus" capable of
promoting increased cooperation
among the six Common Market na-
tions and Britain in such non-
EEC fields as defense and foreign
policy, as well as in certain
sectors of science, technology,
and monetary policy only tangen-
tially covered by the Common Mar-
ket treaty.
In the latest formulation
of his plan, Harmel proposed or-
ganizing the caucus around a re-
vitalized Western European Union
(WEU), to which both Britain and
the Common Market nations belong.
Alternatively, he has suggested
casting it either as a European
"identity" within NATO or as a
new European grouping outside any
existing framework and perhaps
open to any interested applicant.
Although they were early
advocates of a NATO-based caucus,
the British have recently been
attracted to the less precise con-
cept of an "independent" Euro-
pean grouping--something on the
order of the "political confer-
ence" proposed this week by the
WEU Assembly. Ideally, the Brit-
ish are looking for a means of
assuring West German support.
They have already prepared the
way for such cooperation on two
specialized projects: the draft-
ing of tactical nuclear guide-
lines for NATO, and the joint
production of a multirole air-
craft. They have also sought to
prod the Germans off dead center
by threatening to establish spe-
cial ties with Italy and the
Benelux powers.
Thus far, Bonn has proved
unmovable, largely because of
renewed concern over the Soviet
threat. Chancellor Kiesinger,
still convinced that French sup-
port is vital to German security,
has effectively ruled out anything
that might offend De Gaulle, in-
cluding the possibility of
greatly expanded cooperation
within the WEU. Reflecting
another source of German anxiety,
Foreign Minister Brandt has
rejected even the prospect of
a European "identity" within
NATO, on the grounds that it
might divide the alliance and
encourage US disengagement.
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All three Benelux powers
have expressed interest in Bar-
mel's WEU proposal but they
realize that institutionally the
seven-nation grouping, which
makes major nonmilitary deci-
sions by unanimous vote, cannot
take on any kind of expanded role
without active French support.
Thus, the only practical al-
ternative appears to be Harmel's
vague proposal for an independent
European grouping. If the ac-
tivities of such a body were
limited to NATO military affairs,
the French would be in a poor
posit! on to play the role of
spoilar- inasmuch as De Gaulle
has formally dissociated him-
self from allied defense plan-
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Le Due Tho, Hanoi's highest ranking negotiator in Paris, was recalled
this week for consultations, but North Vietnamese propaganda continues to
reflect inflexible insistence on its basic demands. Hanoi has also been
concentrating on enhancing the status of the Liberation Front as a means of
strengthening its claim that the Front must be granted a principal role in any
negotiations for a political settlement of the war. The Front has been
pictured as a functioning government in South Vietnam.
In the South, the enemy's so-called third offensive has ended. Military
actions have tapered off and Communist main force combat units are
rebuilding and refitting in base and sanctuary areas. An increasing number of
reports allude, however, to a "Fourth Offensive" or a new winter-spring
campaign. Most of these reports indicate that the enemy intends to open the
new offensive phase to coincide with the US elections.
During the past week, President Thieu and other South Vietnamese
leaders have shown deep concern about the adverse political repercussions of
the unsubstantiated coup rumors and the military alert of 8 to 10 October.
In an attempt to fend off some criticism of his moves, Thieu has allegedly
claimed in private that he acted in response to American advice or pressure.
The thorny problem of rebuilding the Communist Party as a viable
governing authority has become the central issue in Communist China.
Directives such as appeared in the party theoretical journal Red Flag have
been so ambiguous, however, that officials will have great difficulty in
implementing them. This suggests that central leaders have not yet come to
grips with underlying issues. Until political disputes are resolved both at the
provincial and national level, there will be little real progress in rebuilding an
effective governing structure under party control.
The dispute between the Philippines and Malaysia over Sabah continues
to sour relations between the two countries. A provocative speech at the UN
this week by Philippine Foreign Minister Ramos, apparently acting on
instructions from President Marcos, caused the Malaysians to call off min-
isterial talks that had been set for next week in Tokyo. Chances for effective
regional cooperation in Southeast Asia were further damaged this week when
Singapore rejected Indonesian appeals and executed two Indonesian marines
who had been picked up for sabotage during the confrontation period.
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:SOUTH VIETNAM
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VIETNAM
The low level of Communist
military activity this week con-
firms previous indications that
the enemy's so-called third of-
fensive has ended. Both large-
unit and, to a degree, guerrilla
actions have tapered off as the
ground fighting has settled into
another of its periodic lulls.
There are, however, a number
of developments that could presage
a new round of enemy military ac-
tivity in a few weeks. An in-
creasing number of reports allude
to an upcoming "Fourth Offensive"
or a winter-spring campaign. Al-
though there are some variations,
most reports generally indicate
that the enemy intends to open a
new offensive phase in late Oc-
tober or early November to coin-
cide with the US election. Most
sources characterize the impend-
ing phase as consisting of spot
attacks and feints against major
cities, including Saigon, com-
bined with a vigorous campaign of
terror, sabotage, and hit-and-run
guerrilla raids in the countryside.
At present, over 40 percent
of the Communist main force com-
bat units are rebuilding and re-
fitting in base areas, border
sanctuaries, and out-of-country
havens. As this process is com-
pleted, most of the enemy units
are likely to be recommitted to
key sections of the country to
participate in the annual winter-
spring campaign. Some of these
combat forces may also be reas-
signed to new operating areas.
Enemy operations in any forth-
coming offensives will probably be
guided by the revised general
strategy employed during the last
phase, which began on 18 August.
It has become increasingly appar-
ent that the Communists modified
their tactics in mid-summer. Com-
pared with the Tet and May drives,
they displayed greater flexibility
in their choice of targets and in
their commitment of troops. The
recently concluded offensive was
more along the lines of the tra-
ditional Communist seasonal cam-
paign, in which an attempt is made
to keep the pressure up for a
fairly long time, but with limited
objectives.
Any new country-wide offensive
by the Communists may include at
least a limited attack on Saigon.
A series of recently captured docu-
ments reveals continuing efforts
to stockpile arms and munition
near the cap ital. 25 1
25 1
Meanwhile, Viet Cong guer-
rilla forces continue to harass
allied outposts, terrorize local
government officials, and cut
many provincial roads and water-
ways. These forces also appear
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to be working closely with Com-
munist political cadres in their
continuing organizational work in
the countryside.
Throughout most of South
Vietnam's rural areas, these lo-
cal Communist forces have been
directing an intensive appeal to
the populace for increased agri-
cultural production in order to
provide food for Viet Cong troops.
This year, some enemy forces in
sections of the South, particu-
larly in northern I Corps, have
faced relatively severe rice
shortages, caused in large meas-
ure by bad weather.
Viet Cong guerrillas also
are preparing a substantial. ef-
fort to thwart the issuance of
the new government: identification
Viet Cong have
been seizing villagers' present
identification papers, including
voting cards and family books.
Elsewhere, in the delta province
of Chuong Thien, the Viet Cong
have forbidden the people to re-
ceive their new identification
cards. In Bac Lieu, local Commu-
nist sappers have allegedly laid
explosives at the sites designated
for the exchanging of identifica-
tion cards.
North Vietnam
Hanoi called home its highest
ranking negotiator from Paris this
week. Politburo member Le Duc Tho
:Page 12
left for Hanoi on 14 October and
made .a two-day stop in Moscow for
consultations. North Vietnamese
propaganda continues to reflect in-
flexible insistence on their basic
demands in the Paris talks.
Hanoi is devoting increased
attention to enhancing the status
of the Liberation Front as a means
of strengthening the claim that
the Pront must be granted a prin-
cipal role in any negotiations
for a political settlement. Ef-
forts to expand the Front's quasi-
diplornatic representation abroad
were reflected in the arrival of
personnel to open new information
centers in Paris and Stockhol
this week.
Front offices are
also sc e u e :o open this month
in Tanzania and Syria. These
moves have been accompanied by
propaganda efforts to build up
the Front as a functioning govern-
mentin South Vietnam.
South Vietnamese Political
Developments
During the past week, Presi--
dent"Thieu and other South Viet-
namesle leaders have shown deep
concern about the adverse politi-
cal repercussions of the unsub-
stantiated coup rumors and the
military alert of 8 to 10 October.
The President still distrusts
Vice President Ky and those around
him, despite a lack of firm evi-
dence that they have been actively
engaged in coup plotting. For
their part, Ky and marine com-
mandant General Khang claim they
realize that a coup now would be
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disastrous for South Vietnam's
future. Old scores, Khang says,
cannot be settled until after the
Communists have been defeated.
The evidence seems to indi-
cate that, aside from Ky, one of
President Thieu's greatest con-
cerns is the threat from members
of the old Can Lao Party. Prior
to the fall of the Diem regime
in 1963, this secret group had
penetrated other political par-
ties, the military commands, and
government agencies and ministries,
and Thieu reportedly has a morbid
fear that its former members still
possess considerable capability to
conspire against him.
Along with Ky and his col-
leagues, the Catholic members of
the Can Lao are among the most vo-
ciferous anti-Communist Vietnamese,
and it may have been with them in
mind that Thieu publicly denied
that he has been working for a co-
alition with the Communists at the
behest of the US.
One view about recent events
circulating among Catholics, as
well as others, is that Thieu may
have trumped up the coup alert as
a pretext for eliminating opposi-
tion elements. This view was prob-
ably reinforced when it became
known that Thieu had ordered the
secret arrest and brief detainment
of six prominent Can Lao members.
In an attempt to fend off
criticism of some of his moves,
Thieu has allegedly claimed in
private that he acted in response
2 1
Publicly, the President has
taken the line that the original
coup rumors were trumped up by
Communist provocateurs and others,
and that the alert was a precau-
tionary measure. At the same
time, Thieu did his best to keep
stories about the alert out of the
Saigon press.
Meanwhile, Thieu and newly
returned General Big Minh have ap-
parently reached an understanding
that Minh will act as a private, in-
formal adviser. Minh clearly re-
sents the widespread impression in
South Vietnamese political circles
that he is easily manipulated by
others, and seems primarily con-
cerned with demonstrating his inde-
pendence from all groups. Accord-
ingly, he is likely to avoid pub-
licized contacts with Thieu, at
nt.
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CHINESE COMMUNISTS BEGIN TO REBUILD PARTY
On 15 October, Peking radio
broadcast an editorial published in
the theoretical journal Red Flag
which again stressed the importance
of "party-building," but in terms
so ambiguous that officials will
have great difficulty drawing up
any blueprint for action. This
suggests that central leaders have
not yet come to grips with underly-
ing issues involved in reconstitut-
ing the party as a viable authority.
No significant progress toward con-
vening the long-postponed ninth
party congress, which would formally
dismiss chief of state Liu Shao-chi
from his posts, has been observed.
The central problem is the
question of personnel: who is to
be recruited into the party, which
old members of the party are to
be given key posts, and which old
members are to be demoted or forced
out of the party altogether. The
Red Flag editorial states that. new
party members will not be chosen
by election. Presumably they will
be selected by higher authorities,
but there is as yet no indication
that provincial authorities or
lesser officials have been given a
free hand. Such. "recruitment"
as has taken place almost cer-
tainly represents efforts by
loca leaders to strengthen
theist own hands by bringing
into the party their own sup-
port.b.rs.
There is as yet no sign that
an autonomous organizational party
structure has been uniformly estab-
lished in any province, although
party units in a number of places
see to be performing some house-
keeping functions, probably rather
sporladically. The all-important
partly links between Peking and
the provincial capitals still seem
brolen everywhere.
Many provincial governing
bodijes are composed of individuals
who were in sharp political opposi--
tion earlier in the Cultural Rev-
olution, and all sides are undoubt--
edlt attempting to gain control
over; the embryo party structure.
Unt>F1 political disputes are unam-
big4ously resolved both in Peking
and in the provinces, little real
progress in rebuilding an effective
ov rnin structure can be expected.
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The uneasy lull along the Arab-Israeli frontiers continues, with only
minor firing incidents taking place during the past week. King Husayn has
ordered a rigorous crack-down on the Palestinian terrorist groups and seems
prepared for a major confrontation with them. The Voice of Fatah in Cairo
has responded vociferously. Meanwhile, Arab reaction against the proposed
sale of US Phantom aircraft to Israel continues to be strong.
Arms negotiations between the Arab states and the USSR appear to
have culminated in a new series of agreements which could result in modern-
izing the Arab armed forces and expanding their weapons and equipment
inventories somewhat beyond pre-war levels. Soviet activity elsewhere on the
continent includes the current visit of a naval group to Morocco and
increased arms shipments to the Nigerian federal government.
Since late September, Nigeria has made no significant progress in its
push to capture the remaining Biafran-held positions, and the Biafrans are
continuing to mount counterattacks. The arms airlift to Biafra from Gabon
and Ivory Coast has continued. Secretary General Diallo Telli is attempting
to reconvene the Organization of African Unity's committee on Nigeria, but
the possibility of a negotiated settlement remains very slim.
Both Britain and Rhodesia took a more conciliatory tack toward
negotiations in their recent talks, partly to avoid the onus of breaking them
off, but there has been very little change in their terms for a settlement. The
two sides remain far apart, particularly on constitutional safeguards for
Africans.
In northeastern India and in Sikkim, recovery efforts continue in the
wake of the violent storms of early October, which left hundreds dead and
thousands homeless. One direct result of the disaster has been the postpone-
ment of state elections in West Bengal from November to next February. In
Kashmir, tension appears to have increased following Sheikh Abdullah's
inflammatory reaffirmation of his demand for a plebiscite to determine the
state's future. Across the border in West Pakistan, rioting in Karachi, which
began over student grievances, has rapidly developed antigovernment over-
tones, and the government h now closed schools and colle es in the city
through the end of this month
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COMMUNISTS TO SIJPPL.Y MOIRE ARMS TO ARAB STATES
A second round of arms ne-
gotiations between the USSR and
the Arab states since last year's
war appears to have culminated in
a new series of agreements. The
arms to be delivered under them
will enable the Arab states to
modernize their armed forces and
to expand their inventories some-
what over prewar levels.
A new Soviet.-Egyptian arms
agreement was concluded during
President Nasir's visits to Mos-
cow this summer. It is believed
to have taken into account a So-
viet assessment, of Egypt's mili-
tary requirements through the
early 1970s and to provide for
deliveries over the next few
years.
Syria's chief of staff led
a delegation to Moscow in late
July and apparently met with
limited success. An arms deal
of modest proportions was con
cludd,
A mili-
tary delegation headed by Iraq's
chief of staff completed a two-
week visit to Moscow on 2 October.
Although no details of the discus-
sion$ are available, additional
fighter aircraft, spare parts,
and :nmunition are high on Iraq's
requ .rements list.
Soviet deliveries to the
Middle East continue at the pre-
war rate, and have recently con-
sisted mainly of support equip-
ment such as vehicles and com-
munications vans. No new major
types of military equipment have
been noted that were not in Arab
hands or earmarked for delivery
to them before the war a year ago
last June.
Czechoslovakia, despite the
Soviet occupation, continues to
meet commitments under its arms
sales contracts. Deliveries of
L-29 -jet trainers have recently
b en
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MOROCCO STRENGTHENS RELATIONS WITH THE USSR
The Soviet naval visit to
Casablanca from 15 to 20 October
underlines the gradual warming
of Morocco's relations with the
Soviet Union. This improvement
has come about despite the pri-
vate apprehensions of many Moroc-
can officials regarding the ex-
panding Soviet influence in Al-
geria and the western Mediter-
ranean.
The visit, involving a mis-
sile cruiser and a destroyer
plus two submarines, was so-
licited last June by the Soviets
e"]- n(9 JjA C annrnt7cr1 he. V4 -- i1-.,-
owing its initial approval,
the visit was delayed a month,
apparently as a Moroccan reac-
tion to the Soviet invasion of
Czechoslovakia, which officials
privately and the press publicly
denou ced although the King and
his government maintained offi-
cial ilence.
In mid-1966, the Moroccans
took he initiative to improve
relations with the USSR. They
did this at a time when Moroc-
can relations with France had
reached their nadir, when the
US was cutting back on economic
and military assistance, and when
only inadequate aid could be
found from other Western sources.
In October of that year, King
Hassan made a long-delayed state
visit to Moscow where he signed
scientific and economic agree-
ments nvolving some $43 million
worth f aid projects which are
just n w getting under way.
The King has purchased some
$2 million worth of Soviet small
arms for Morocco's auxiliary forces
and was also offered transport
aircraft. Subsequently, Morocco
concluded a $20-million arms deal
with Czechoslovakia but declined
a Bulgarian offer to develop an
internal Moroccan air service.
It likewise refused to permit the
USSR to extend Aeroflot's Moscow-
Rabat air service to Havana after
permitting a number of trial flights
over that route.
Other evidence of improved
ties with Moscow includes the open- 25X1
ing last June of a Soviet consul-
ate in Casablanca, and the forma-
tion of a Soviet-Moroccan trade
corporation in addition to the
trade mission set up even before
diplomatic relations were estab-
lished a decade ago. The Moroc-
can Government has also permitted
the proscribed Moroccan Communist
Party, which maintained close con-
tact with the Soviet Embassy, to
emerge legally as the Party for
Liberation and Socialism. More-
over, a five-year trade agreement
signed last July has greatly ex-
panded trade with the USSR. Morocco
reportedly is pushing the sale of
its citrus fruit to the USSR to
such an extent that some sales have
meant a financial loss and reduced
operations by its own processing
plants.
Moroccan officials see improved
relations with Moscow as a hedge
against the possibility of renewed
hostilities by the Soviet-equipped
and advised Algerian Army, which
continues to be Rabat's r'
tion. 25X1
25X1
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SECRET
NASIR's EGYPT MUDDLES ALONG
An air of quiet prevails in
Cairo but President: Nasir still has
a number of persistent domestic
problems to deal with.
Reports of civilian and mili-
tary discontent and of antiregime
sentiment have been less frequent
recently, although the basic un-
rest probably remains fairly wide-
spread. There is :Little to suggest
that Nasir has lost his grip on the
governing apparatus, and no single
Egypt's universities and sec.-
ondary schools opened in early Oc-
tober with no recurrence of the
student demonstrations that trou-
bled the regime in February. The
reforms Nasir instituted in the wake
of the February unrest do not appear
to have met the student's demands
for greater political freedoms, how-
ever, and the regime is surely alert
for signs of further trouble from
this group.
The restructuring of the Arab
Socialist Union (ASU), part of the
program of political change that
Nasir announced on 30 March, is
nearly complete, but the ASU--Egypt's
only legal political organization---
does not appear to have changed
radically. Much of the old leader-
ship has emerged at. the top of the 25X1
"new" ASU, and final authority ap-
pears to remain with Nasir. The
tend-man "Higher Executive Committee"
has. yet to be formed, however, and
Nasr may encounter some difficulty
in selecting members who will satisfy
the; wishes and inter is of all the
4-inng in t. 25X1
25X1
EGYPTIAN OIL INDUSTRY RECOVERS FROM WAR LOSSES
The Egyptian petroleun'. industry
has made a remarkable comeback from
the blows it suffered last year, and
is making vigorous efforts to expand
production still further.
Despite Israeli seizure of the
Sinai oilfields, crude oil produc-
tion elsewhere in Egypt now sur-
passes the annual rate of '3.5 mil-
lion tons achieved before mid-1967.
The Suez refineries, shelled by the
Israelis last October, have been re-
stored to nearly 80 percent of their
capacity. Egypt's major producing
field, El Morgan, as well as the
Suez refineries, remain vulnerable
to Israeli harassment, however.
Largely through the efforts
of US oil companies, crude oil
production is expected to reach an
annual rate of over 10 million tons
by the end of this year. During
1968, 3.5 million tons probably will
be exported, yielding about $33 mi.l-
lion in foreign exchange. This will
be partly offset by Egyptian imports
of over 1 million tons of crude oil,
almost all from the USSR, for the
Alexandria refinery. Production at
the oilfields at El Alamein began
in August, however, and is scheduled
to rise to 50,000 barrels per day
by the end of the year, so that such
imports will not be necessary in
1969.
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%We
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Sallum
SIWA OASIS
( USSR)
ABU MAD!
(Itabor) .. l
EL ALAMEIN
(US)
Port
.Said
Tel Aviv-Yafo (; JORDAN
ISRAEIY 2
Ashqelon
Egyptian Oil Developments
Selected oilfield
Oil pipeline:
existing
--- proposed
BELAYIM
(6-10
EL
WEST COAST- MORGAN.
SUEZ (Egyptian) I (US)
Egypt, increasingly pinning
Lts hopes on oil as a potential for-
aign exchange earner, is actively
iegotiating new oil exploration con-
:essions with Western oil companies.
'irms from Japan, Denmark, and
'rance have expressed interest, and
[taly's state-owned ENI, which re-
.ently discovered natural gas de-
)osits in the Nile delta, is plan-
iing to step up its activities.
the USSR also is moving ahead with
)lans to help Egypt develop its
)etroleum industry.
Soviet experts under contract
to the Egyptian General Petroleum
Company have started an aerial sur-
vey of the Siwa Oasis in Egypt7s
western desert, to be followed by
a seismic and geological survey.
An exploratory drilling program is
scheduled to begin in December.
A proposal to construct a 42-
inch oil pipeline linking the Med-
iterranean and the Gulf of Suez
as been resurrected, primarily be-
-se of the closure of the Suez
Canal and the accelerated shift to
mammoth tankers unsuited to canal
transits. The pipeline is to have
an initial annual capacity of 50
million tons--about a quarter of
the amount that transited the canal
in 1966--with the possibility of
adding lines
Israel, meanwhile, is moving
ahead with construction of its 42-
inch oil pipeline from Eilat to the
Mediterranean. Completion of the
first stage, planned for mid-1969,
will give this pipeline an annual
capacity of about 20 million tons.
Completion of the second stage
would raise the capacity to between
50 million and 60 million tons an-
nually. X1
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SAUDI
ARABIA
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SENEGAL FACES CONTINUED UNREST
President Senghor's capitu-
lation last month to the demands
of dissident students should avert
another major domestic crisis
this fall, but could prompt fur-
ther demands from other disen-
chanted elements of Senegalese
society. Senghor, whose tradi-
tional base of support may be
eroding, will find it difficult
to cope with further challenges
to his government, which is plagued
by serious economic problems.
After last spring's stu-
dent and labor strikes, Senghor
concentrated on mending his
fences with the labor movement
while refusing to negotiate with.
the radical Dakar University
student group that had fomented
the disturbances. In June, he
announced that the largely French-
funded and -administered uni-
versity, which had been shut down
during the disorders, would remain
closed for a year so that "Afri-
canization" could be accomplished.
Continued student agitation,
new expressions of support for
student demands from labor lead-
ers, and pressure from the French
forced Senghor to back away grad-
ually from his position. Last
month he concluded an agreement
with leaders of the radical student
group that satisfied all major
student demands, including the
reopening of almost the entire
university. For their part, the
students agreed to call off strikes
threatened for this fall.
Senghor's climb-down, in ad-
dition to further damaging his
prestige, may well have cleared
the way for other groups to make
demands on his government. The
national labor union. is the most
likely claimant, especially as
the wage increase granted last June
will probably be neutralized in
the near future by anticipated in-
creases in Senegal's already high
cost of living. The union still.
has a list of demands outstanding
since last May, and labor leaders,
already aroused by Senghor's
recent attempts to counter their
influence, will be reluctant to
abandon their new-found and
demonstrably effective militancy.
Senghor will have to deal
with challenges from these increas-
ingly dissatisfied urban elements
amid indications that his tradi-
tional support is eroding. There
have been, for instance, frequent
reports of developing peasant un-
rest over declining rural income.
The newly installed leader of the
major Muslim brotherhood---which
largely controls vital peanut
production, and has been the single
most important organizational
backer of Senghor--has been only
lukewarm in his support of the
President.
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Senghor has tried unsuccess-
fully to instill new vitality
into his party organization,
which was remarkably ineffective
in coping with the crisis last
spring. In the event of further
disorders, Senghor might be
forced to rely solely on the army
for domestic support. Although the
army presumably still is loyal
to the President, sentiment is
said to be growing within its
ranks for large-scale reforms of
Senegal's social and institutional
structure.
Senghor's ability to under-
take the necessary reforms will
be impaired by lack of government
revenue. The national budget
has been strained already by the
costs of the recent crisis and
by declining revenues from pea-
nuts, the country's major export.
This year's peanut crop will be
mediocre at best, and available
funds will be further reduced by
the expected decrease French
financial assiptance. 25X1
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Most of the attention in Latin America this week was focused on
Panama, where the National Guard deposed President Arias on 11 October
after only eleven days in office. The Panamanian coup followed by eight
days the military ouster of Peruvian President Belaunde. The military govern-
ment of Peru is now firmly in control and apparently intends to retain power
for a long time.
Latin American students were generally quiet for the first time in
several weeks. So far, the Mexican students have kept their promise of no
violence during the Olympic Games. The only significant student activity
took place in Brazil where demonstrations were held to protest the arrest of
more than 700 delegates to the 30th congress of the illegal National Students
Association.
There are an increasing number of rumors and reports from Venezuela
that efforts will be made to disrupt the national elections scheduled for 1
December. The discovery of a guerrilla sabotage camp near the Puerto
Cabello Naval Base has aroused military fears that the base may be a target
for pre-election sabotage. Assassination attempts against presidential candi-
dates Rafael Caldera and Miguel Burelli are also reportedly being planned.
In the Dominican Republic, political maneuvering in anticipation of the
presidential election in May 1970 may end the relative political calm that has
existed in that country for several months. Final political alignments will
depend on whether President Balaguer decides to run and, if not, whom he
will back. He will probably withhold his decision as long as possible, thus
adding to political uncertainty and perhaps unsettling the military.
Argentina is seriously considering the purchase of as many as 16 French
Mirage supersonic fighter aircraft as replacements for its obsolete US and
British planes.
Prime Minister Burnham's coalition government in Guyana is near the
point of breaking up over a dispute involving a proposed electoral law. The
junior coalition party is opposed to the legislation, and Burnham has said he
will dismiss all its cabinet ministers unless they change their stand and
support him. Burnham is probably taking such an uncompromising attitude
now because he plans to dissolve parliament next month in preparation for
national elections in December.
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PANAMANIAN MILITARY TOPPLES ARIAS GOVERNMENT
A group of "'young turks" in
the National Guard last Friday
ousted the 11-day-old government
of Arnulfo Arias and installed a
military junta.
The take-over, led by Colonels
Torrijos and Martinez, was trig-
gered by Arias' moves to reor-
ganize the guard and transfer a
number of its key personnel.
Since the coup, the junta gov-
ernment claims to have uncovered
evidence that Arias intended to
dismiss some of the senior offi-
cers whom he had already rele-
gated to lesser posts.
he was not in disagreement with
the action taken :by his former
subordinates.
The coup leaders persuaded
Vallarno's former deputies,
Colonels Pinilla and Urrutia, to
head the new junta government,
and have stated publicly that
they intend to retain power un-
til "order and respect for laws
and the constitution" are re-
stored. Members of the new
government have indicated that
new elections will be called,
possibly in a year or less "if
conditions permit," but no date
has been set.
General Vallarino, the for-
mer first commandant, had resigned
earlier in the day and apparently
was not involved in the plot, al-
though he admitted afterward that
Col. Jose M.
Pinilla
Leader of
military
junta
The coup ringleaders ap-
peared to have their move well
planned and coordinated. Troops
quickly seized control of major
f=ormer
President,
Arnulfo
Arias
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government installlations and
closed pro-Arias newspapers and
radio stations--a move that gave
the military leaders an added
advantage because news of their
undertaking leaked out slowly.
Arias, evidently caught by
surprise, fled to the Canal Zone
along with his cabinet and some
loyal military aides. Despite
restrictions against political
activity in the zone, Arias used
his sanctuary to issue calls for
an armed uprising through leaf-
lets and clandestine radiobroad-
casts. His hopes for a general
strike and widespread opposition
members of his coalition and even
close political collaborators
seem ready to desert him.
Much of the speculation on
the next step by the junta now
appears to concern the problem
of foreign recognition and a re-
turn to constitutionality. The
guard leaders are probably will-
ing to have some of Arias' coali-
tion parties represented in the
new government and may accept
Arias' first vice president,
Raul Arango, as president once
Arias can be persuaded to leave
the zone and go into exile.
Arango, influential politicians
from many parties, and top junta
officials are reportedly recep-
tive to such a "constitutional
solution." Arango is not a
particularly strong personality,
but is unlikely to be offensive
to most of the military or to
the country's wealthy elite, whom
he represents.
Thus far, opposition to the
junta has come primarily from
Panama's militant students--
dominated and led by Communists--
and some scattered activists of
Arias' own Panamenista Party.
These elements, however, have
been unable to incite serious 25X1
disturbances, and have done lit-
tle more than engage in harassing
resistance tactics. The guard,
for its part, has acted with
restraint to avoid touching off
serious rioting. Although Com-
munist elements can be expected
to exploit antimilitarist senti-
ment, it is not anticipated that
they could marshal enough sup-
port to pose a major threat
to the government at this time.
Indeed, a quick return to civil-
ian government would probably
reduce their chances for any
si nificant support . 25X1
25X1
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BRAZILIAN GOVERNMENT BREAKS UP STUDENT UNION CONGRESS
The Brazilian Government has
succeeded in disbanding the 30th
congress of the illegal National
Students' Union (UNE). On the night
of 11-12 October, police aut.hori-
ties--alerted by the presence of
cars carrying armed students--peace-
fully arrested 700 to 1,000 student
delegates at a small. town approxi.-
mately 45 miles west of Sao Paulo.
Those detained included UNE presi?-
dent Luis Travassos, UNE vice pres-
idents Jose Arantes and Edson Soares,
and Rio de Janeiro student leader
Vladimir Palmeira. The arrested
students were taken to Sao Paulo,
where the police intend to conduct
a thorough investigation to deter.-
mine what charges can be placed
against them.
Despite the fact that it has
been forced to operate clandestinely
since it. was banned by the govern-
ment of former president Humberto
Castello Branco in 1964, the UNE
has remained the dominant student
organization and probably commands
at least. the tacit support of most
Brazilian students. Recently, how-
ever, it has suffered from disagree-
ments among key leaders on questions
of tactics and policy. The struggle
at the national level appears to be
between a group composed in part of
students sympathetic to Communism
as well as others of no fixed po-
litical orientation, and the even
more militant Popular. Action. (AP)
group which won Control of the UNE
at the 1.967 congress.
The basic difference between
the two groups appears to be more
a matter of degree than of substance.
AP militants advocate broadening
student protests to include national
and international issues as well as
legitimate educational complaints,
and have rejected outright all gov-
ernme:nt attempts to discuss student
issues.
This same split between radi-
cals and extreme radicals exists in
at least some of the UNE's subor-
dinate state organizations. In
Sao Paulo, for example, two groups
are contesting for control of the
student movement. Although they
manage to cooperate on some issues,
they also waste much time and en-
ergy fighting each other instead
of the government. The leader of
the more militant group, in which
the AP dominates, is Catarina Mel-
loni;; the head of the rival or-
ganization is Jose Dirceu, one of
the prime candidates for the UNE
presidency.
Although the police round-up
did net some of the AP-oriented
delegates to the congress, Cata-
rina Melloni and an undetermined
number of other AP students were
in dormitories at Sao Paulo Uni.-
verssity at the time and thus es?-
caped arrest. She charged that
Dirceu and some of his followers,
who had organized the congress, had.
withheld its location from the AP
delegates in order to keep them
from voting for their candidates
for the top UNE posts. Following
the arrest of most of the top Sao
Paulo student leaders--including
Dirc!eu--at the congress Catarina
Melloni and other Al? militants re-
portedly attempted to seize con--
trol of the leftist Sao Paulo stu-
dent movement but this move appar-
ently was blocked by Dirceu's fol-
lowers.
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..0V SECRET Nwe
The arrest of most of the top
UNE leaders constitutes an ex-
tremely serious blow to the left-
ist student movement--a major
thorn in the side of the Costa e
Silva government. Some of the
jailed leaders, however, had exer-
cised a somewhat restraining in-
fluence over the more militant
student activists--particularly
the AP members and sympathizers,
who may now be free to step up the
militancy of the student movement.
Demonstrations protesting the
arrest of the UNE delegates have
taken place in several cities,
principally in the chronically
tense northeast, and students in
other areas are meeting to decide
their futur,- course of action.
25X1
PERUVIAN MILITARY GOVERNMENT CONSOLIDATES POSITION
The military regime that took
over in Peru after the coup on
3 October is now firmly estab-
lished and is beginning to turn
its attention toward running the
country.
The military apparently in-
tends to remain in power until the
"revolutionary government" has
accomplished its objectives. At
the same time, it is trying to
undercut political opposition by
calling for a national referendum
that will "let the people decide
if they want elections under the
present constitution or under a
new one." Initial reaction to
this proposal is divided between
those who believe it represents a
first move toward political nor-
malization and those who see it
as a strategy designed to postpone
general elections.
President Velasco also ap-
pears to be trying to neutralize
a potential source of trouble,
the labor confederation led by
APRA, Peru's major political
party. The new labor minister
had threatened to recognize the
Communist labor confederation if
the APRA group did not cease its
attacks on the government and drop
demands for a general wage increase.
An accommodation seems to have been
reached on 10 October.
The nationalization of the
International Petroleum Company's
holdings has gained the approval
of all major political groups and
has generated wide popular support
for the government, but its long-
range political and economic ef-
fects may prove costly. If just
compensation is not made, Peru
stands to lose US economic aid
and its sugar quota. Moreover,
much-needed new foreign investment
is likely to be delayed, despite
the government's assurances to
other large companies that their
operations will be "scrupulously
respected." 25X1
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SECRET
DOMINICANS BEGIN TO Focus ON :L970 ELECTIONS
Political :maneuvering in
anticipation of the Dominican
presidential elections slated for
May 1970 is beginning to fill
the vacuum created by the drift
and stagnation of the Balaguer
administration.
President :Balaguer' s own in--
tentions regarding 1970 are un-
clear, although there have been
tentative signs that he is con-
sidering running again. The gov--
ernment, for example, has re-
cently appeared to be currying
labor's favor by adopting a some-
-what more flexible and responsive
attitude toward its grievances.
Balaguer is aware that an
early decision to run again would
produce strong opposition from a
broad spectrum of Dominican pol-
iticians. Similarly, an early
announcement of his retirement
could lead to a loss of political
control. For these reasons,
Balaguer seems likely to mask
his intentions as long as pos-
sible. In an. apparent effort
to speed his decision and gain
his favor, some of the Presi-
dent's partisans are already
calling for his re-election. If
]3alaguer decides to stay out of
the race, some of his supporters
are likely to swing over to the
very conservative vice president,
Francisco Augusto Lora.
Hector Garcia Godoy, former
provisional president and current.
ambassador to the US, is attempt-
ing to organize a moderate "move-
ment of national. unity" behind
his own candidacy. A moderate
former leader of the left-of-
center Dominican Revolutionary
Party (PRD) is heading the drive,
and Garcia Godoy has privately
requested the support of the small
but growing Social Christian party.
The creation of an effective mod-
erate coalition, however, will.
face many obstacles. Some Social
Chrisit:ians, for example, believe
their party should present its
own candidate.
The PRD's electoral inten-
tions are unclear and seem likely
to turn on the frequently capri-
cious wishes of party elder states-
men Jan Bosch, who has said he
will return from. his self-imposed
European exile late. this year
or early next. Many Dominican
politicians doubt that Bosch will
run again, and one prominent PRD
leader has already come out against
his candidacy. In the meantime,
the P~.D is trying to exploit labor
discoi.tent against the Santo Do-
mingomunicipal government in or-
der to retain popular support for
future politicking.
On the conservative side of
the political spectrum, exiled
General Wessin's Democratic
Quisgiaeyan Party (PQD) continues
to agitate for the return of its
:Leader, who has indicated he will
enter the 1970 contest. President
]3alaguer is once again talking of
permitting Wessin's return--per-
haps date this year. Balaguer
believes that Wessin's political
acumen is limited and that he will
rapidly alienate his right-wing
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supporters through political
blunders once he is back.
SECRET Nwe
parties and candidates will sur-
face. The campaign may also
place strains on the military,
which presently appears rela-
[ti_,L~ imit-Rd hnhind Balacr
As the electoral picture
become clearer, it seems likely
that latent conflicts among the
THE BAHAMAS GAIN ADDITIONAL AUTONOMY
The Bahamas has gained sig-
nificant additional autonomy from
Britain and has taken an im-
portant step toward eventual in-
dependence. Government leader
Lynden Pindling--who now assumes
the title of prime minister--won
almost all the concessions he
was seeking during a recently
concluded constitutional confer-
ence in London.
The most significant gain
for the Bahamas was responsibility
for internal security, including
control of the police. Although
the British-appointed governor
will retain "ultimate authority"
over internal security, the Ba-
hamians believe he will use this
power only in the event of a
Pindling apparently hopes
that local responsibility for in-
ternal security will lead to more
effective control of Haitian and
Cuban exiles, and will discourage
the illegal influx of Haitian
refugees seeking economic op-
portunities. His government is
trying to buy patrol boats in
the US for use in preventing il-
legal activities.
Under the new constitution
worked out in London, the Bahamas
has authority to negotiate foreign
trade, labor, and cultural agree-
ments. Although the British re-
tain responsibility for defense
and other external affairs, they
will consult with the Bahamas on
these matters. Other constitutional
changes ensure that a majority of
the Senate will be responsive to
the elected government. The pres-
ent governor, who was appointed
last July to replace the very un-
popular Governor Gray, apparently
intends to be more of a diplomatic
representative of Britain than a
colonial ruler.
In separate but related nego-
tiations, the British guaranteed
90 percent of the Bahamas' sterling
reserves against possible further
devaluation. In return, the Bahamas
will keep 80 percent of its re-
serves in sterling.
Pindling was enthusiastically
greeted on his return from London,
and his successful conduct of the
negotiations appears to have
strengthened his political position.
He apparently intends to move
for full independence within
the next few years as his gov-
ernment gains additional ex-
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