f r h t E c o n o m i J-rrtorioJan&Q &ec"bö>"i, .anoav'^ tY> ,U • Vvoss Colic, H o o i - o S

SERIES JSLSu¿Ü¿Jk<£MíLSUB SERIES_____________BOX O r b _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ EFOLDER /<?

THE ECONOMIST JANUARY 13, 1979 49

THE WORLD International

Sliding to the stops

As time drips by, the chances that Mr Shapour^atHtlar's government can rule a post-Shah Iran steadily diminish. The obvious alternative is a wholehearted army takeover, very different from the hesitant martial rule that made way for Mr Bakhtiar. But the anger and turbu­lence of Iran’s street demonstrators make it necessary to ask how many people a determined army would have to arrest or shoot in order to impose its control.

Iran has come close to being urirulable. The growing economicTlsIocation has now been made total by the striking oil workers: Iran without oil is not only a country without exports, but a country virtually without power supply in a cold winter. In response to appeals, in particu­lar from Ayatollah Khomeini (see next page), some refinery workers have agreed to produce fuel for domestic con­sumption—but their return is reluctant and tentative. Even more^minous is the drift towards moTT'anarchyTorfe Incident ih a"smairtown south of Teheran was the mob lynching, and hanging from lamp- posts, of two unfortunate Afghans al­leged to be thieves. How many more such lynchings have gone unreported?

Mr Bakhtiar’s government was ap­proved by the Shah on January 6th. But that now means very little. The Shah, against whose person the wrath of the demonstrators is directed, would seem to have little role in any future Iran. So long as he stays the streets are less easily calmed; this much must be evident, even to an army conditioned to be wholly loyal to its king. The people who have been telling the Shah that he must stay on at all costs are in large part those whose own position depends on his continued patronage.

This week’s cabinet is composed large­ly of relatively, or completely, new faces, and that is greatly to its credit. A Nat­ional Front politician (and the front, for what it is worth, has largely disowned Mr Bakhtiar) described it as a “talented and

honest group” . The worst thing about it is that it is incomplete, lacking the vital link with the army.

At first Mr Bakhtiar seemed to be doing well. He succeeded in exiling Gen­eral Oveissi, the army chief and former martial law administrator—but General Oveissi has now been replaced by Gener­al Badrei, said to be even tougher. He almost persuaded General Fereidoun Jam, a suitably senior and suitably re­spectable former officer, to become his minister of war. General Jam left his home in London last weekend to take a look at what was going on in Teheran. A look was enough: having found out, pre­sumably, that as minister of war he would not have control over the armed forces, he turned the job down. From then on, Mr Bakhtiar’s attempt to save the coun­try from even worse than it has already suffered began to look doomed.

The majority (which in Iran is proving less than silent) may wish him weTnFhe makes a bid to impose this government’s authority. But he has, as yet, no power

group behind him. The armed forces do not support him, nor does the “organ­ised” opposition (the feebleness and con­fusion of Iran’s opposition should be blamed on the Shah, who permitted none; in this vacuum the NationaTFroni looks back 25 years to its dead chief Mossadegh or even further backward into the Islamic mists shroudiriTtHe'selTexlled and aged divine, Ayatollah Khomeini).

The Shah’s former western allies have falLen_silent, waiting and watching for what comes nexT~ NcTTumour tolinv of them, but their inaction may be no more than recognition that their influence is limited. In response to concern lest Iran’s disease spread^across the~Gul( to~Saudi Arabia, the United States is sending the updated version of a gunboat: a squadron of its F-15 fighters plus their ground crews is to be despatched to Saudi Arabia later this month and will stay there, it is said, for about a week. On the face of it, this does not seem a particularly useful gesture; it is one that will annoy more people than it comforts.

Iran’s future looks increasingly a choice between extremes. The west has every reason to fear that Russia will make the most it possibly can of the shattering of the west’s long marriage to tHe~Stiah. But, on present signsra~thtJVe~sharply to the right is still more likely than one to the left.

Watching things getting worse

50 INTERNATIONAL THE ECONOMIST JANUARY 13, 1979

Khomeini in France

The visitor who may pay his wayFROM OUR PARIS CORRESPONDENT

Reports last week suggested that the Ayatollah Khomeini, the Shah’s most implacable opponent, was negotiating a visa to India for use when his three- month period as a “tourist” in France ran out. On January 5th he got a reprieve: the French government decided to grant him a three-month extension. The ayatol­lah has taken absolutely no notice of the government’s repeated warnings that he should not use his stay in France to preach the Shah’s downfall; even Presi­dent Giscard d’Estaing’s personal call for moderation had no noticeable impact. Perhaps it was not seriously intended to. So the decision to let him stay suggests that the French government is hedging its bets; there is a chance, after all, that its tolerant welcome will pay off politically in the months to come.

Under respectful but persistent ques­tioning from newspapers including Le Monde, the aged divine has begun to shed glimpses of light on his plans for governing Iran should his chance come. The first stage in the creation of an Islamic republic should, he says, be the appointment of a committee of Moslem believers (ulemas, or religious teachers, could attend either as members or ob­servers) to “consult together” on the formation of a parliament, but this parlia­ment would at some stage be subject to election (democratic elections figure in the plans of other Islamic militants in other authoritarian Moslem states). In an interview with a Beirut newspaper, the ayatollah said that he did not accept the idea of a one-party system (and here he is at odds with other Islamic militants).

As an answer to those who saw the ayatollah following in the steps of the late Archbishop Makarios, Khomeini says that he himself would hold rio govern­ment office but would remain the nation’s guide. He and his followers would nomi­nate a candidate for president of the future republic, who would then seek popular election. The republic, he says unsurprisingly, would have friendly rela­tions with both America and Russia so long as they did not try to intervene in its affairs. In various interviews he has criti­cised America (especially), Britain, Rus­sia, China and Iraq for the support that their respective leaders have given to the Shah. The ayatollah’s most important influence remains His total refusal to accept any compromise that involves the Shah.

Afghanistan

When Russia signs, look for troubleThe signing of a “friendship” treaty with the Soviet Union tends to be a portent of violence to come. India signed one in August, 1971, three months before its army turned East Pakistan into Bangla­desh. Vietnam signed one on November 3rd, less than two months before its army conquered Cambodia. And Afghanistan signed one on December 3rd.

The likeliest target for an Afghan mili­tary offensive is its own tribesmen in the north-east of the country, who have been resisting the new communist government since it seized power in a bloody coup last April. This week some 5,000 guerrillas, armed mostly with antique and home­made weapons, were reported to be pre­paring for battle near the capital of Af­ghanistan’s Kunar province. ' The government is said to have moved 12,000 troops into the area.

These counter-insurgency forces, like all of Afghanistan’s troops, are thought to be accompanied now by Soviet advis­ers, some of whom have been killed in clashes with dissident tribesmen. Military aides constitute about half of the 5,000 Russians who are believed to be helping the pro-Soviet regime. The Russians are also said to have stepped up arms ship­ments to Afghanistan and to have pro­vided 100 T-62 tanks and 26 Mig-23 fighters. The Chinese are alleged to have got involved in Afghanistan too, to the extent of supplying .submachine guns and rifles to guerrillas in the snowbound re­gion adjoining the border with China.

Violence erupted in the Pushtu-speak­ing Kunar and Paktia provinces last sum­mer after the arrest of some religious leaders. The government has since tried to reconcile its communist programme with protestations of loyalty to Islam. Its only religious enemies, it claims, are members of the ultra-orthodox Moslem Brotherhood, who are alleged to be sup­ported in their anti-government activities by unnamed foreign powers. But a de­fence of Islam none the less continues to be the main battle cry of the insurgent tribes.

When the Afghan leader, Mr Noor Mohammed Taraki, was making his mili­tary pact with the Russians in Moscow in December, his forces were reported to be using helicopter gunships and Migs to attack villages along the border with Pakistan. It is estimated that 10,000 Af­ghans, including tribesmen, religious leaders and refugees from military and civilian purges, have fled to Pakistan’s

North West Frontier province, where they are being sheltered by fellow Pushtu-speaking Pathans.

Pakistan’s military government is ner­vous about a spillover of Afghanistan’s internal struggle into its own restless tribal regions. But so far its relations with the Taraki government have been formal­ly correct, in spite of provocative encour­agement on Kabul radio for Pathan sepa­ratism. Pakistan insists that it is providing no military support for the Afghan rebels and it continues to allow Afghan goods to be transshipped through Karachi.

Russia’s already dominant role in Af­ghanistan has undoubtedly been strength­ened in the nine months since the coup. The two countries have signed more than 30 trade and aid agreements; officials are being encouraged to learn Russian; and articles critical of the Soviet Union are censored out of foreign magazines. Yet the west has not been altogether excluded from Afghanistan. The United States has kept up a $14m aid programme. Last month a French engineering company won a contract for a $53m sugar beet processing plant.

The ubiquitous Russian presence has plainly failed to give the Taraki regime a sense of security. Afghanistan's “Saur” revolution has devoured its children fas­ter than most: successive purges have eliminated the army’s chief of staff, the air force commander who directed the April coup, and virtually all the leaders of the Parcham party which joined with Mr Taraki’s Khalq (people’s) party to overthrow President Daoud. Kabul re­mains under all-night curfew, heavily armed troops guard all government of­fices and Mr Taraki never moves without military escort. His fears are probably justified.

Algeria____________________

On military approvalThe 1,500 young delegates to this week’s congress of the National Union of Alge­rian Youth made it perfectly clear whom they would like to see succeed President Boumedienne, who died on December 29th. They reserved their standing ap­plause for Colonel Mohammed Yahiaoui, the man Boumedienne appointed in 1977 to revitalise the country’s sole political party, the National Liberation Front.

Colonel Yahiaoui is well placed in the succession race. He organised and pre­sided over the congresses of the other movements (workers, peasants, women and former fighters in the war for inde­pendence from France) affiliated to the

THE ECONOMIST JANUARY 13. 1979 INTERNATIONAL 53

more than a jaunt in the Caribbean sun. The two-day private talks gave the lead­ers of the United States, Britain, France and West Germany a fine chance to try to co-ordinate their foreign policy. “Those 48 hours together were worth 48,000 foreign office telegrams’’, beamed Mr Callaghan, unctuously but not entirely inaccurately.

Each of the four got something he wanted. President Carter went home de­lighted with the backing he received from his European allies for the Salt-2 strategic arms accord he is about to conclude with Mr Brezhnev. President Giscard d'Esta- ing, a dignified host, enhanced his repu­tation for knowing how to keep France in the centre of things. Mr Callaghan, no doubt happy to have a break from the economic horrors awaiting him at home, put up a good show (and emerged as a star in the eyes of news-deprived journal­ists who appreciated his lively assessment of the summit outcome). And Mr Schmidt’s presence furthered Germany’s cautious move forward from economic giant to major political power.

What made the summit unusual was the decision to steer clear of economics, a topic which often brings the west’s lead­ers together, and to concentrate on the world political power balance. On mat­ters ranging from their relations with China and Russia to military security and a string of international problems—Iran, Cambodia, Turkey, southern Africa—the four insisted that any differences they had were merely of emphasis, not of sub­stance. Before the summit it had not looked quite like that. The Europeans, and in particular the West Germans, had been disturbed by some of Mr Carter’s

policies. Whether they are quite as reas­sured now as is claimed may be doubted, but they all decided that it was best to look cheerfully united.

It was China that served as a spring­board for consensus among the four. They could all agree on the desirability of trying to persuade Mr Brezhnev that the west’s honeymoon with Peking, however novel its charms, is not an “encircle­ment” of the Soviet Union. Mr Carter even managed to portray his decision to establish full diplomatic relations with China as a move that could eventually benefit Russia. And Mr Callaghan em­phasised the defensive nature of the Har­rier jump jets which, as he announced during the summit, Britain would sell to China as part of a projected trade pack­age worth f l billion this year (some 80 aircraft would eventually be sold over a longer period). Whether Russia wants China to be able to defend itself better is another matter. Only Mr Schmidt, it seems, went on worrying about “poking sticks into the bear’s cage” .

Sensitivity towards Russia was not re­stricted to the handling of China. Mr Carter seems to have persuaded the Brit­ish and German leaders to agree, with what private reservations is not clear, that his planned Salt-2 deal with the Russians is about the best he can get. But, although the European trio accepted Mr Carter’s word that he was taking their interests into account in Salt, they are aware that the threat to their security posed by Russia’s new SS-20 missiles and Backfire bombers will not be taken up until the next, Salt-3, stage of the negoti­ations. West Germany, the only non­nuclear power at the summit, would like

to have a say about this problem. The complication is that such negotiations are liable to involve the French and British nuclear forces; but France is unwilling to toss its force de frappe on to the table.

All in all, the four leaders chose to claim that they felt the west’s position to be stronger today than it was two or three years ago. But they refrained from setting a date for a Guadeloupe follow-up, so as not to give their partners the idea they were setting up a directorate of the west.

China

Remains to be seenThe de-deification of Mao may be affect­ing his mortal remains. The white marble mausoleum in the centre of Peking’s Square of Heavenly Peace has been closed, and partly covered in scaffolding, since December 24th, two days before the late chairman’s 85th birthday. Some recent visitors have reported changes in the colour of the cadaver—in anticipa­tion, perhaps, of this week’s wallposter demands that the crystal sarcophagus be removed from public view and that “feu­dal idolatry” should cease.

Mao’s birthday was celebrated this year, as it never was during his lifetime, with reminiscences by old comrades and the republication of old writings, all care­fully selected to conform with present policy. But there was no spontaneous show of feeling to match the public griev­ing on the third anniversary of the death of Zhou Enlai (Chou En-lai in pre-1979 spelling) two weeks later. Wreaths and poems were placed on the same martyrs’ monument which was the focus of the April, 1976, pro-Zhou riots. This time they were joined by paper money, in­tended as donations for another memori­al hall, to the former prime minister, whose progressive canonisation is parall­eling the closing down of the Mao cult.

Other old venerables are also coming in for posthumous adulation in Peking, among them the recently rehabilitated former defence minister, Peng Dehuai (Peng Teh-huai), who rated a eulogy from Deng Xiaoping (Teng Hsiao-ping) himself. But what was remarkable about this speech was that it skirted right round the central event in the last 15 years of Peng’s life: his purge in 1959 by Mao for criticising the Great Leap Forward. This flagrant omission casts a strange light on Mr Deng’s protestations about devotion to truth and the approach to truth of the new propaganda chief, Mr Hu Yaobang (Hu Yao-pang) who has also taken over Mr Deng’s old job as party secretary- general. If, as the People’s Daily asserted on December 21st, “historical truth will

54 INTERNATIONAL THE ECONOMIST JANUARY 13, 1979

out”, it hasn’t yet.Mr Deng re-emphasised his regime’s

commitment to free speech in one of several recent meetings with visiting Americans. He told a group of senators this week that Peking’s Democracy Wall will be kept open indefinitely. But, he stressed, China does not regard human rights as a fit subject for talks between governments—meaning that he does not want the matter raised during his forth­coming visit to Washington.

Nobody took greater advantage of the new licence for free speech in Peking this week than Cambodia’s Prince Sihanouk, who expressed thoughts pent up during three years’ house arrest at a six-hour press conference. The prince announced that China had offered to build him a palace if he seeks refuge there after his plea on behalf of his jailers at the UN Security Council;

Argentina and Chile

Prelate of peaceFROM OUR BUENOS AIRES CORRESPONDENT

The Pope, and his splendid cardinal- envoy, have succeeded in averting war between Argentina and Chile. On December 21st the countdown for a strike by Argentine comnTandarinfcfcfis- puteif territory south of the Beagle Chan­nel had begun. Then cams an eleventh- hour annouffcement of the Pope’s offer to send a peace envoy. Chile immediately, and Argentina- one day later, accepted the Vatican’s good offices.

To many observers, Argentina’s Presi­dent Jorge Videla appearedjo be grasp­ing at a straw. The pessimistic view was thaFtEe~Pope had acteiTtooTateTand that war was inevitable. But nobody—least of aTPlhe United States, which had been trying to stave off the war and was largely responsible for getting the Pope to act— reckoned with the man whom Pope John Paul chose as his peacemaker.

Cardinal Antonio Samore turned out to be a brilliant practitioner of personal diplomacyTTireiess, bubb 1 ijig_ovenwith hymour and good^l7~£ie.aming_Pick- wickian prelate who was also the soul of discretionTTle threw himself into his job whiTiest, providing journalists with co­lourful, but harmless, copy and flying off to Santiago to hobnob with General Au- gusto Pinochet.

After four crossings of the Andes, Cardinal Samor6 persuaded the foreign ministers of both countries to sign an agreement at Montevideo on January 8th. Argentina and Chile promised to draw back their troops and warships, abstain from the use of force in the future and to reopen negotiations while formally

asking the Pope to mediate—a request immediately granted.

The cardinal had achieved the near­impossible. When he arrived in Buenos Aires on Boxing Day, Argentina had more than 100,000 men poised ready for attack along its Andean frontiers. Chile had at least 45,000 men ready to repel them. The navies of the two countries glowered at each other across the disput­ed waters of the Beagle Channel. War­planes were ready in combat condition. Newspaper headlines grew bigger and blacker. At dinner parties, diplomats gos- sipped that hardline Argentine generals were said to have boasted to their officers that they would soon be “pissing in the Pacific” .

But Cardinal Samori laboured gatierit- lyjo make it possible for Argentina’s and Chile’sThegotiators, who had come close to agreement in October, toj^frajrig.then- proposals. The peace Jfonmila. given the kissoFlife by Cardinal Samori, is for a demilitarised binational zone to be set up covering the disputed area of the Beagle Channel. Chile would retain the posses­sion of the three uninhabited islands granted by a British arbitration team in 1977, but Argentina would be allowed enclaves on nearby islets and on Cape Horn. Both countries would accept the principle that Argentina’s territorial wa­ters be restricted to the Atlantic and Chile’s to the Pacific. Chile would accept a 12-mile limit around the three disputed islands.

Argentina’s military junta had original­ly feared that such a settlement would have given the country’s hardline gener­als, notably General Luciano Menendez, the commander in Cordoba, and General Carlos Suarez Mason, the first corps commander in Buenos Aires, the pretext for a coup. But it eventually became clear to the senior commanders, and to the government itself, that once the hard­liners had embarked on a war against Chile their next objective would be Gov­ernment House in Buenos Aires. Work­ing to “win the peace” was equated with rallying round President Videla. When Cardinal Samoa's peace initiative was finally crowned with success, there were audible sighs of relief—not least from Government House.

Peru

Pre-emptedFROM A CORRESPONDENT IN LIMA

Peru’s army this week launched a first strike against a general strike. Shortly before a three-day stoppage was due on January 9th, the government imposed martial law, and had 700-800 union lead­

ers rounded up. At lam on Tuesday, fully-equippeacombat troops moved into Li m aVlihah fyTo wns'a n d“ tooLUp ~p o s i - tions at tjTe~maifrcrossroads in the capi­tal. Little violence has so far been reported.

Previous genera^ strikes in Peru have been both violent,and effective. In July, 1977, 40 people were killed in clashes between strikers and troops, causing the government of General Morales Bermu­dez to panic and break off negotiations with the International Monetary Fund for desperately needed credits. Last May, another general strike, held in protest against food and petrol price rises of up to 150%, claimed almost as many lives. But on that occasion the army stood behind the new civilian finance minister, Mr Silva Ruete, in enforcing the austerity measures demanded by the IMF in ex­change for its seal of approval. Without an IMF nod, Peru would have been unable to persuade the country’s credi­tors to roll over more than $l,750m worth of debts falling due this year and next.

As part of the austerity, Peru’s armed forces have been persuaded to change their free-spending ways; the navy, for example, was made to cancel two of four frigates it had ordered from Italy. The increase in the defence budget over the coming year has been kept down to 20%—inflation is running at 75%—and other government departments have ac­cepted no increase at all. The new eco­nomics team (the finance minister and the governor of the central bank) has staggered price increases of essential goods to make them frequent and small rather than occasional and huge. None the less, austerity has been biting deeply in a country- where some_iO%~ of tHe urban population is living a („subsistence level, and where reahyages havFbeen cut irTKalf in the past three years.

The communisTdominated General Confederation of Peruvian Workers called the strike against this economic hardship. THFTSiimrfmnlsrpa^ ing~TcT prompt supporters of General Velasco Alvarado, the radical soldier who ran Peru between 1968 and 1975, to try to seize power again. The party is trying to prevent the general election and the return to civilian rule promised for next year. At an election last June for an assembly to draw up a new democratic constitution for Peru, the Communists won only 6% of the vote, compared with 35% for Apra, the„country’s traditional left-ta 1 k i n g, right-1 e anmgjjopuli st-party, an3~~25% for the rigfff-of-centre Social Christian party. Apra’s leader, the octo­genarian president of the constituent as­sembly, Mr Victor Raul Haya de la Torre, is now co-operating with the gov­ernment in exchange for the promise of