WESTERN EUROPE CANADA INTERNATIONAL ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A002200250001-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 10
• Document Creation Date: December 12, 2016
• Document Release Date: July 18, 2001
• Sequence Number: 1
• Publication Date: November 26, 1975
• Content Type: NOTES

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Confidential
NOFORN
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Western Europe
Canada
International Organizations
Confidential
No. 0312-75
November 26, 1975
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Warning Notice
Sensitive Intelligence Sources and Methods Involved
(WNINTEL)
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
DISSEMINATION CONTROL ABBREVIATIONS
NOFORN- Not Releasable to Foreign Nationals
NOCONTRACT- Not Releasable to Contractors or
Contractor/Consu Rants
PROPIN- Caution-Proprietary Information Involved
USIBONLY- USIB Departments Only
ORCON- Dissemination and Extraction of Information
Controlled by Originator
REL ... - This Information has been Authorized for
Release to .. .
Classified by 010725
Exempt from General Declassification Schedule
of E.O. 11652, exemption category:
456(1), (2), and (3)
Automatically declassified on:
date impossible to determine
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WESTERN EUROPE -CANADA -INTERNATIONAL ORGANIZATIONS
This publication is prepared for regional specialists in the Washington com-
munity by the Western Europe Division, Office of Current Intelligence, with
occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
Dutch-German Defense Talks 1
Progress Made on Sugar Pact 3
Spanish Economic Reform Likely to
Prove Unpopular. 5
Canadian Postal Dispute Remains Deadlocked 7
November 26, 1975
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Dutch-German Defense Talks
The US defense attache in Bonn reports that the
most recent Dutch proposal for a force specialization
trade with West Germany is dead. The tirade, in-
formally proposed earlier this month by Dutch Defense
Minister Vredeling, called for the Netherlands to
take over West Germany's naval tasks iri the North
Sea in return for Bonn's assuming some of the Dutch
ground forces role in Germany. As part: of the swap, ,
the Dutch volunteered to take delivery of six frig-
ates currently on order for the West German navy.
Officials from two countries met on November 18,
but were unable to reach an agreement. According to
the defense attache, West German Chancellor Schmidt
objected to any proposal that would remove the
Netherlands' army brigade from its forward position
in Germany.
The West German navy also argued ghat in view
of recent Dutch defense economy measures there is
no assurance that the Netherlands would carry through
with the purchase, or would not decommission the
frigates after delivery. The West Gern-ans also sus-
pect that the Dutch would want to build the six
frigates in their own yards, a situation that could
cause trouble at home in view of West Germany's own
unemployment, especially among shipyard workers.
The Dutch tried the same pitch in 1973 when
they did not want to buy the nuclear-capable Lance
tactical missile system for their ground forces. A
NATO special study group concluded that. the Nether-
lands should either buy the Lance or find another
NATO member to obtain an3 operate the system for them.
The Hague turned to Bonn as the best candidate for a
bilateral trade, but the Germans--who felt strongly
that the Dutch should maintain some nuclear
responsibility--apparently made a counter offer that
was not acceptable to the Dutch.
November 26, 1975
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CONFIDENTIAL
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CONFIDENTIAL
Dutch advocacy of such trade-offs in defense
responsibilities has been aimed at reducing military
expenditures. Possibly in an effort to keep the
concept alive, both sides reportedly agreed in Bonn
last week to establish a mixed committee to continue
discussions of the general topic of specialization
of defense tasks. (CONFIDENTIAL NOFORN)
November 26, 1975
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Progress Made on Sugar Pact
Sugar exporters and importers appear to be making
progress toward a new International Sugar Agreement to
stabilize world supplies a.nd prices. The previous
agreement expired in 1973.
At the recent International Sugar Organization
meeting in London, working groups of major importing
and exporting countries reached a preliminary consensus
to further explore the possibility of managing world
sugar supplies and prices. Details have yet to be
worked out, but the basis for any new agreement will
probably rest primarily on the management of supplies
and prices through basic export quotas and some type
of buffer-stock arrangement. While the mood of the
discussions is much more serious than last spring,
participation by the EC and major countries is not
yet assured. Actual negotiations are nat scheduled
to begin until September 1976.
Both exporters and importers may now believe
that a new agreement is in their long-term interest.
Exporting countries are especially concerned with the
recent drop in world sugar prices from a 30 cent per
pound average in 1974 to a current level of 13 cents
and by the recent unsuccessful effort by Latin American
and Philippine producers to bolster sagging world prices.
At the same time, they also fear that another round
of spiraling sugar prices will lead to further cutbacks
in consumption and accelerate the shift to sucrose
substitutes. From the importers' side, their increased
interest in greater market stability is evidenced by
recent efforts of several countries to enter into long-
term bilateral contracts with exporters to assure
guaranteed supplies.
November 26, 1975
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The industrialized and developing countries will
be watching the sugar proceedings for signs of how the
relationship between the rich and poor is developing.
Last September's special session of the UN apparently
reversed the trend of increasing confrontation between
these groups by reaching agreement on the outline of
a plan to reconcile their interests. The poor developing
states will seek proof of the expressed willingness on
the part of the rich states to cooperate with development
aspirations of the Third World. The rich wish to see
if the developing states will curb their more radical--
and expensive--demands to gain agreement on economically
and politically realistic programs. (LIMITED OFFICIAL
USE)
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Spanish Economic Reform Likel~_to Prove Unpopular
Madrid gave final approval to a potE:ntially
unpopular program of new investments and continued
wage and price controls designed to prevE:nt further
weakening of the Spanish economy at a November 14
meeting of the Cabinet chaired by Juan Carlos.
The program will boost prices of petroleum products
and hold down wages. Many labor contracts are due to
be negotiated within the next six months. The measures
just adopted will extend by one year present controls
that limit pay and price boosts to increases in the
cost of living plus an additional 1 to 3 percent in
wages for some workers. In the past year, consumer
prices climbed at a 17.5 percent annual :rate; industrial
wages jumped 25 percent.
The huge increases in prices of petroleum products
will add to inflation but may ease Spain's trade
deficit. The price of industrial fuel oil may jump
25 percent, cooking gas 10 to 30 percent, diesel fuel
4 to 12 percent and gasoline 9 to 24 percent to a
high of $1.69 per gallon, depending on octane. Elec-
tricity prices will jump 8 to 20 percent..
Despite a rise of only 3 percent in oil import
volume, the value of oil imports was 22 percent higher
in the first six months of this year compared with the
same 1974 period. Spain's oil import bill this year
will run about $3.5 billion, pushing thE; 1975 trade
deficit to over $9 billion.
Madrid also is scheduling $1.7 billion in housing
investments spread over the next three years in an
attempt to cut unemployment in the construction industry
November 26, 1975
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now running at over 10 percent, compared with under
5 percent for the economy as a whole. Tax incentives
will be granted for other types of investment spending.
The program seems less anti-inflationary and more
stimulative than past measures taken by Madrid. It
is doubtful though that much will come of the new
moves. Wage controls pegged to the rapidly rising
cost of living index have done little to halt inflation,
and a spending program spread over 3 years will have
little immediate effect. The steep hikes in petroleum
product prices will likely trim the 1976 oil bill but
will have no effect this year.
'Phe program, particularly the wage controls and
gasoline price raises, will not be popular in Spain.
Adoption at this time does not seem essential and
the timing of such harsh measures seems doubly strange
in view of Juan Carlos' need to build support during
the early days of his reign. (CONFIDENTIAL)
November 26, 1975
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Confidential
Confidential
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