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28 JULY 1986 

Southeast Asia Report 



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28 JULY 1986 




Expanding USSR Fishing Agreements in Pacific Prompt Concern 
(Editorial; THE AUSTRALIAN, 21-22 Jun 86) .........eeeeees 

Former RAN Officer on Risks of U.S. Ship Visits 
(Edmund Doogue; THE AGE, 26 Jun 86) .... ........... secccee 

Ambassador Urges U.S. To Respect Canberra's Interests 
(Samuel Washington; THE AUSTRALIAN, 30 Jun 86) ........+... 

Hayden Calls for Tribunal To Judge Pol Pot 
(Cameron Forbes; THE AUSTRALIAN, 27 Jun 86) .......eeeee0s 

Party Factionalism, Unions Threaten PM's Economic Strategy 
(Paul Austin; THE AUSTRALIAN, 23 Jun 86) e*eneneeneeneeneneeneeneee 

Hawke Adviser Interviewed on ALP Factionalism 
(Graham Richardson Interview; THE WEEKEND AUSTRALIAN, 
28-29 Jun 86) eeeeseveeeeeeceeee eee eee eeee eee e eee eee eee eee eee 

Role, Impact of Socialist Forum Analyzed 
(Paul Austin; THE AUSTRALIAN, 23 Jun 86) ....seeeeeeeeeees 

Educator Hits ‘New Right’ Threat Against Unions 
(Alex Carey; THE AUSTRALIAN, 27 Jun 86) ...ceeeeeesesecees 

Military Objections to OTH Radar Reported 
(Peter Young; THE AUSTRALIAN, 23 Jum 86) .....seeeseeeeees 

Defense Establishment Criticizes Dibb Report 
(Peter Young; THE AUSTRALIAN, 25 Jun 86) ....eeeeeeeseeees 

Yinance Department Figures Show $800 Million Deficit Growth 
(Robert Garran; THE AGE, 21 Jun 86) .....eeeeeeees oeeccese 






Federal Treasurer Outlines Long-Term Economic Strategy 
(Paul Keating; THE AUSTRALIAN, 21-22 Jun 86) .....c.ceeeees 

Editorial Urges Industry To Resist Protectionism 
(THE AGE, 20 Jun 86) eeeseeeeeceeeeeeeeeeeeeeeeeeeeenes eee ea 

WA Premier's Economic Measures Analyzed, Lauded 
(Editorial; THE AUSTRALIAN, 25 Jun 86) eeeeoeeeeeeeseeeeeeeee 

Coal Cancellation Cuts Exports to Israel by 66 Percent 
(Douglas Davis; THE AUSTRALIAN, 25 Jun 86) ......cceeeeees 


Ople Writes About Good Government Commission 
(Blas F. Ople; THE MANILA EVENING POST, 1 Jul 86) ........ 

Columnist on Critical Period for Aquino Government 
(Amando Doronila; THE MANILA CHRONICLE, 1 Jul 86) ........ 

Solicitor General Produces Evidence of Marcos Graft 
(Gerry N. Zaragoza; BUSINESS DAY, 2 Jul 86) .............. 

Commission Denies Request on Marcos Return 
(Gerry N. Zaragoza; BUSINESS DAY, 4 Jul 86) eeeeeeeeeeeeee 

Local Government Officials’ Terms Expire 
(Rey G. Panaligan; MANILA BULLETIN, 1 Jul 86) ............ 

Columnist on Military's Power Over Civilians 
(Amando Doronila; THE MANILA CHRONICLE, 2 Jul 86) ........ 

Graft, Smuggling Reported in Customs Bureau 
(BUSINESS DAY, 2 Jul 86) eeeneeeeneeeeeeeeeeeeeeeeeeeeeeeeee 

Government Agrees To Lift All Import Restrictions 
(Daniel Cc. Yu; BUSINESS DAY, 27 Jun 86) eeeeeeaeeeeeeeeeeee 

Government To Retaliate Against Import Controls 
(THE MANILA TIMES, 27 Jun 86) e*eeeoeve,eeoeeeeeeeeeeeeeeeeenneenee 

Business Sees No Change in Economic Policy 
(Daniel Ce Yu; BUSINESS DAY, 1 Jul 86) eeeneeeeeeeeeeeeneenee 

Coconut Planters Bank Elects New Board 
(Ramon R. Isberto; BUSINESS DAY, 1 Jul 86) .....eeeeseeees 

Lack of Coconut Export Taxes Could Reduce Revenue 
(Carol E. Espiritu; BUSINESS DAY, 2 Jul 86) eeeneeeeeeeeneeee 

Coconut Authority Seeks Cocofed Sequestration 
(BUSINESS DAY, 2 Jul 86) e*eeneeeeeeeeeeeeeeeeeeeeeeeeeeeeee 


















Article Reviews Dispute Over Coconut Bank 
(Ramon R. Isberto; BUSINESS DAY, 2 Jul 86) ......cececceees 

24 Corporations Petition Supreme Court Over Sequestration 
(R. Panaligan; MANILA BULLETIN, 2 Jul 86) ......cccceccccees 

"Economic Indicator’ Column on Central Bank Loans 
(BUSINESS DAY, 2 Jul 86) eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeweesee 

Drop in Peso to Dollar Rate, Averages Reported 
(BUSINESS DAY, 3 Jul 86) eeeseeeeeeeeeeeeeeeeeeeeeeeeeeeen ee @ 


VODK Commentary Hails Control of Angkor Wat Area 
(Voice of Democratic Kampuchea, 19 Jun 86) ..... ........... 

Sihanouk Army Official Discusses Resistance 
(Jacques Bakaert; BANGKOK POST, 27 Jun 86) ................ 

VODK Applauds ICK Ad Hoc Committee Statement 
(Voice of Democratic Kampuchea, 29 Jun 86) ................ 

VODK: 300 SRV Troops Desert From Sisophon Battlefield 
(Voice of Democratic Kampuchea, 29 Jun 86) eeeeeeeeeeeeeenee 

VODK Condemns SRV Rejection of ASEAN's Call 

(Voice of Democratic Kampuchea, 1 Jul 86) ................. 
VONADK Rounds Up SRV Casualties for June 

(Voice of the National Army of. Democratic Kampuchea, 

1 Jul 86) eeeeoeeveeveeoeeeeeee ee eee eeeeeeeeeeeeeeeereeeeeeeeeee 

Roundup of VONADK Battle Reports 26 Jun-3 Jul 
(Voice of the National Army of Democratic Kampuchea, 
27 Jun-3 Jul 86) eeeeoeeoeaveeeeeeeeeeeeeeeeeeeeeeeeeeneeeeenee 

VODK Reviews DK Forces' Activities in Kompong Thom 
(Voice of Democratic Kampuchea, 5 Jul 86) ....cceceeeeceees 

VODK Cites UN Official Blaming SRV Stubbornness 
(Voice of Democratic Kampuchea, 6 Jul 86) .......... ···.... 

VODK Reviews DK Forces’ Rainy Season Activities 
(Voice of Democratic Kampuchea, 7 Jul 86) ..........··..... 

VODK Commentary on Coming Nonaligned Summit 
(Voice of Democratic Kampuchea, 8 Jul 86) ................. 

SFRY's Mojsov Sends Message of Thanks to Khieu Samphan 
(Voice of the National Army of Democratic Kampuchea, 

8 Jul 86) eeeeveeeeeo eevee eee eee ee eeeeeeeeeeeeeeeeeeevueeneeeeeee 


















VONADK: Soldiers Mutiny 
VONADK: SRV Convoy Ambushed 
VONADK: Sandan District Capital Hit 



USSR Journal Interviews Nguyen Co Thach 


(PROBLEMY MIRA I SOTSIALIZMA, No 5, May 86) ............... 




Sydney THE AUSTRALIAN in English 21-22 Jun 86 p 20 

{Editorial: "Pacific Dangers"] 


Vanuatu, for example, has 
THE move by the Soviet Union to 

negotiate a fishing agreement with Ht mae pi ps a with 

Fiji is a disturbing sign of the Soviets’ Lee during ts * 

— ae 2 Ge confrontation with America. It is 
The Soviets’ first breakthrough in formally a member of the Non-Aligned 

the South Pacific came when it cap Gan oa Gadieue tam oak 

a fishing agreement with the island Vietnam. 

nation of Kiribatl Recent reports In the Pacifie region it is itkely that 

indicate that the Kiribati Government 

agreement is working out, and is surrogates. It is also likely that by 

considering extending port facilities to exploiting Third World and anti- 


ae oo a eee He the first stage of 
themselves are no cause for great growing presence. 
alarm. However, when viewed in the ;; The increasing entanglement of 
context of other regional anti-democratic regimes around the 
developments they form part of a world with the fate of the Pacific is 
general trend in which Western also demonstrated dy the factions of 
influence and values are under the Kanak independence movement in 
in the Pacific, New Caledonia, which are strongly 
while the Soviet Union and its friends supported by Vanuatu, and which have 
are laying the foundations of strong also looked to Libya for financial and 




development in such a way that the 
Soviet alternative is seen to be. 
unattractive. We should not merely sit 
by and let the situationdrift[| — 

CSO: 4200/122i 

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28 July 1986 


Sydney THE AUSTRALIAN in English 30 Jun 86 p 8 

[Article by Samuel Washington] 


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CSO: 4200/1221 


28 July 1986 


Sydney THE AUSTRALIAN in English 27 Jun 86 p 6 
[Article by Cameron Forbes] 


MANILA, 26 June. — Australian The US Secretary of State, Mr 
Perctgn Master ean Shultz, joined Mr Hayden in ruling out 
called forthe seiting up of tribunal Support for any, Caihbndid ot ot 
aimed at removing, as an obstacie to —— — thats coment 
in Cambodia, the Pol Pot ened strongly urged the interna- 
of the Khmer Rouge. eet vommunity to support an eight- 
Mr Hayden wants the culpability of Poh tty 
the Pot Pot leadership established anti-Vietnamese coriition which ts 
once and for all and the credentials of beaded by Prince Sihanouk. 
other members of the Khmer Rouge A major element in the eight-point 
tested proposal — which has already been 
Se ee ar Se Se cae rejected by Vietnam — is quadripar- 
and “tle of the Rouge to tite government inci the Khmer 
pate in Khmer national Rouge. 
The Khmer Rouge, a member of the Mr Hayden said that the presence of 
ts it, Cambodia, is nominally Pol Pot and ne phy 
war bie impediment for a num- 
headed by Khieu Samphan. od countries, Australia, 
Bui Pol Pct, who was ultimately re- in considering a range of otherwise 
wisely regarded as ail being ibe 
* the tribunal 
major force in the movement. na nen teateemnes” eal tel te te 
Mr Hayden was speaking at a con- moval of the Pol Pot presence would 
ference of Asean, western and Japa- eliminate owe of the most serious im- 
nese f ministers held at the pediments to progress. 
conclusion of the anaua!l Asean Mr Hayden said he had made the 
N be tpt nt hay patted 
namese representati soone 
arcs rg later a system would have to be devel- 
At a later brie be declined to oped for dialogue with genuine repre- 
ae aan Ook ie cee sentatives of the Khmer people, 
ca ne “excluding people 
— — —— — wwe * 
proposal was tee Malerion en- Mr Hayden cautioned against being 
7 Loe too optimistic about any major change 
Forel i — AA. Abmad in Vietnamese towards Cambo- 
Ithauddeen, who said be hoped dia, even after the Vietnamese Com- 
— — — munist Party's Sixth Congress which 

the maiter further. will be held later this year. 

1 ey a i 
Ha ult Mae 
He Fae 

Ht He ite alpine 

CSO: 4200/1221 


JPRS*SEA=86«1 26 
28 July 1986 

Sydney THE AUSTRALIAN in English 23 Jun 86 pp 1, 2 

{Article by Paul Austin] 


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pee eile ele 

The plans were not accepta- in the coffin of the accord”. mentsi” to the maintenance 
ah hy Shy Mr Tanner said Mr Hawke of the accord. 
the accord an tnstrument for was proposing to introduce “If we contrac 
suppressing real wages. Liberal policies, which would policies, then the deficit will 
Workers had already accep- lay the groundwork for the get completely out of hand,” 
eb aS peremn cee = Se Coalition to coturn to govern 
last national wage case. It was ment “after we've done - 
unacceptable for Mr Hawke to dirty work for them” 5. o,. “intolerable” for a 
demand that they accept fur- He said supporters of Mr ~_— y+ 
ther discounting, Hawke in the Labor move- am A Ay un- 
because had nothing to ment had accepted unpopular 
do with the balance of pay- decisions on uranium mining, Bas Hipwe aatd Ghe sich of Sie 
ments crisis. Aboriginal land rights end fi- Hawke's plans was that “all 
Mr Half said the reso- nancial deregulation because that has been achieved in the 
lution ou a more viable the Government had been de- last three or four will be 
plan for tackling the crisis, in- livering on jobs and economic squandered Govern- 
cluding proposals for a more growth. ment by pursuing policies 
interventionist Mr Hawke's plan put this at which are not in line with the 
policy. | risk. accord and not in line with 
“If the resolution's proposals “Are you going to cop wage the fundamentals of eco- 
were adopted by the Govern- cuts, higher unemployment nomic policy”. 
ment then Joan Sutherland and cuts, or a The federal secretary of the 
would sing louder, Deck would point blind devotion SPU, Mr Greg Swerd, said the 
run faster and it would help ceases and you say enough is most important task for the 
Ben Lexcen get the Australian ? If you'll accept this, ALP and the union movement 
dollar floating again,” he con- anything,” Mr was to convince the Govern- 
cluded. Sa ment that the strategy of the 
resolution was seconded Mr Howe told the confer- accord remained correct. 
» ng A ence Gat eapeeeny F — 
staffer, : funda- or wage-earners 
who described Mr Hawke's ad- — oe turther discounting. 

dress as “the first major nail 

cso: 4200/1221 

28 July 1986 



Sydney THE WEEKEND AUSTRALIAN (Weekend Supplement) in English 28-29 Jun 46 

pp 1, 17 

[Interview by David O'Reilly with Senator Graham Richardson, ALP Right Ally 
of Prime Minister Robert Hawke: "Hawke's Number Cruncher"; passages in 
slantlines published in italics; first paragraph is AUSTRALIAN's introduc- 




Richardson, to use his own 
parlance, had a big win. He 
didn't crush the Left in a fac- 
tional coup or swing the 
Prime Minister, Mr Hawke, 
aivund to his own eye-to-the- 
vote view on some policy 

He simply got given a bigger 
office. Twenty-five  centi 
metres bigger. to be precise. 

Following recent changes to 
the already cramped office ar- 
rangements in Canberra's 

Is the granite facade of the Harrke Gevernment and the 
Australian Leber Party's Right Wing machine starting 
te crack? Although the Right showed thelr power in 
NSW recently when Barrie Unsworth was swopt into the 
position of Premier designate, the resignation this week. 
of Peter Barren, a senior member of Mr Hawke's 
Manchu Court, has indicated that the ferthooming ALP 
Federal Conference in Hebert may net be all smooth 
sailing for the Right. In Canberra this week DAVID 
O'REILLY spoke to the Prime Minister's chief ‘number 
cruncher’, Senater Graham Richardsen, about the 
power plays that ge on behind Canberra's clesed deers. 

Parliamer ouse. Senator Any special privileges would 
Richardson oa his staff of have opened himself — and Mr 
two were shifted just up and co oe Ee ae 
N — tables Despite the telephone-booth 
4 and shortcomings, metre for 
into a space ae itso oo 
just three and a half by would ny 
ormer ree years than probably 
sik sion and cam tev most other offices in 
adviser to the Prime Minister Australia. 
knew when he moved into the In room M168 recently Sena- 
building three years ago as a tor Richardson talked frankly 
new senator he had to * to The Weekend Australian 
the about the business conducted 
Mn P. there — his own role in the 

Government, the “mythology” 







“It's the largest group in 
Caucus by quite some distance 

“The truth is. however. that 

will continue. The faction 
doesn't expect to win every- 
thing. It never has.” 

years as principle adviser. 
Despite the conventional 

ferent roles and influence on 
the decision making, 

but there 


55 oF 

Fie i 


important to him. He sees a lot 
of K so that’s impor- 
tant. Now, having said all that 
Peter (Barron) saw Hawkey 
more than anyone. More than 
anyone in the country. More 







port to Mr Hawke in the trig- 

influence is that we (the 
Right) were the ones that were 

on the tram at the start, right? 
Rag! been there all the 

have when they sit around the 

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hard to look back on our three 

years and say we haven't done 

properly and well and create 
enough wealth for 

to enjoy themselves and im- 
prove their standard of living 
over time. 

“That's what we set out to do 
and in the end I've always be- 
lieved the (Labor) movement, 
like the people, judge you on 

“If you deliver the 
then they will thank you for it. 
If you don't they will kick you. 

“Now, we've had three years 
of delivering the goods and. by 
all objective evidence avatia- 
bie, the percentage 
in the polls of Hawke is enor- 
mous. It’s enormous. So I just 

don't believe the propaganda 
that the labour movement has | 

decided we are not a true 
Labor government. 

“There is no objective evi- 
dence for that. 

“It may well be that some 
people in the party don't like 
it. It certainly is that case that 
some people in the party dort 
like it. ‘ 

“And it's probably che case 
that all the people in the party 
worry about some aspects of it. 

“But. overall, you would have 
to say we've done all right and 
the reforms we've brought in 
were appropriate ... we led 
on tax reform — we were all 
out there leading. 

“Look, on what are we sup- 

posed to lead? All I can say to 
these pecpic is what are the is · 
sues that people are crying out 
for leadership on? 

“The only thing you ever 
hear talked about is uranium 
and people just aren't crying 
out out there for us to lead on 

/But isn't it extra- 
ordinary for you and 
Mr Keating to stand 
at opposite ends of 
that ship for six 
months? / 



sf E 

Srkeeesge5. 3 
+ get 

/But you can see what 
I'm getting at? Does 

Mr Keating lose people 
he could otherwise ke’ 
on-side because his 

handling of them is 
abrasive? / 

and Hawke could do with 

point that filling his role as 
factional boss. numbers man 
and tactical “sweeper” for Mr 
Hawke could be a problem. 
“You make a decision on 

“I have never taken the 
chairmanship of Caucus — 
mittees or any of that sort of. 
stuff. . . I've sat in rooms and 

taken one for myself. 

“I won't overestimate myself. 
Obviously there would be 
some who would like to think 
I'd stay in this job forever... 

| some because they think I doa 
job and others who are 
rivals for a ministerial ballot. 

“But I don’t worry about 
anything like that. It's not a’ 
determining factor in any. 
thing I do. 

“I will make up my mind to 
run for the ministry after talk-. 
ing it over with my family and 
friends and for my own rea- 


“It will have nought to do 
with whether or not 1 — 
thinks I should stay ng 
what I'm doing or — 
else. . . rather, just because 
either want to do it or I don't.”. 

cso: 4200/1221 

28 July 1986 



Sydney THE AUSTRALIAN in English 23 Jun 86 p 13 

[Article by Paul Austin] 

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28 July 1986 



Sydney THE AUSTRALIAN in English 27 Jun 86 p 13 

"The New Right Is Working Overtime Against 

[Commentary by Alex Carey, honorary visiting fellow, the school of Psychology, 

University of New South Wales: 

Unions" ] 

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28 July 1986 _ 


Sydney THE AUSTRALIAN in English 23 Jun 86 p 2 

[Article by defence editor Peter Young] 

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28 July 1986 



Sydney THE AUSTRALIAN in English 25 Jun 86 p 13 

"The Pros Aren't All that Impressed"] 

["Defence" column by Peter Young: 


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CSO: 4200/1221 


28 July 1986 



Melbourne THE AGE in English 21 Jun 86 p l 

[Article by Robert Garran] 

[Text ] 






The spokesman for the Treasur- 
er said the blowout would put 
even more pressure on next year's 
budget. The Government already 
faces a severe headache in trying 
to keep the 1986-87 budget deficit 
under the $5.5 billion target set by 
the economic trilogy promise. — 

The Opposition Leader, Mr 
Howard, said the figures were fur-. 

mammoth budget task the Go- 
vernment is facing,” he said. “It is 
another example of the Govern- 
ment misleading the public.” 
The Finance Department state- 
ment said spending had been 
higher than expected largely be- 
cause assumptions underlying the 
had not been met, parti- 
cuarly in the area of exchange 
rates, unemployment benefits and 
interest rates. This had added 
more than $600 million to 
. The spending jump was caused 

@ The fall in the dollar making 
imports by Government more 
@The Government having to 
spend more than expected on un- 
employment benefits. 
@ High interest rates forcing the 
Government to pay more for its 
borrowings. ' 

The statement said Govern- 
ment decisions — chiefly the deci- 

‘sions to compensate oil producers 

for the financial year would come 
in close to the 12.6 per cent esti- 
mated at budget time. 

This means the budget 
ts almost entirely due to over-runs 
in Government spending. 

National Mutual Royal Bank, Dr 
John Marsden, said last night that 
he and most other private econo- 

‘ic growth during the six months to 
March, it was highly unlikely eco- 

CSO: 4200/1221 


nomic. growth would pick up 
enough to meet Government ex- 
pectations of three to 3.5 per cent 
growth tor 1986-87. 

.. He- said slower economic 

have to pay out more in unem-‘ 
ployment benefits, adding further. 
pressure to the difficult budget: 
task the Government is facing. 

The Government's ‘target for 
spending cuts earlier this year 
was $1.4 billion, but events since 
will have pushed this target high- | 
er. In his address to the nation last 
week the Prime Minister, Mr 
Hawke, said the Government had 
identified $1 billion in cuts, and 
Senator Walsh said later than $200 
million. more had been found 
Cuts to the states at last Friday's 
Premiers’ conference have added 
about another $450 milfion to the 

In his address to the nation Mr 

the welfare sector will not bear 
the brunt of the cuts. 

oa «] 
28 July 1986 * 


Sydney THE AUSTRALIAN in English 21-22 Jun 86 p 21 
["Exclusive" article by Paul Keating, Federal Treasurer: "Saving Australia"] 

[Text ] 

AS the Prime Minister the ability of government to 
assist those in the community ° 
explained in his address to mest in need Laying the 
the nation last week, the Adjusting the ———— . 
most pressing economic economy to reduce its unsus- 
— 1 tainable balance-of-payments foundations 
nge facing Australia deficit requires us to continue 
today is that forced upon us the program we have followed 
by international circum- in government to date of SS the come tune we have 
addressing the fundamental, redressed the chronic disrup- 
oom, issues in economic tion to the profit and wage 
In a nutshell, the prices we, policy shares that was a legacy of the 
are paid for our exports have For instance, while we have Fraser government. The profit 
fallen dramatically with the understood there was a share of GDP has been res- 
result that as a nation we are: t for some public- tored to its level of the late 
spending much more sbroad sector stimulus to the econ- 1970s. Agreed wage 
we are earning. We must omy to overcome the recession restraint has reduced real unit 
face up to this fact of life. We that gripped Australia when labour costs sharply. It is this 
have no we first came to office, we also shift in the economic funda- 
It will involve some tough have recognised that public- mentals that has underwrit- 
decisions and some difficult sector deficits in this country ten the creation of more than 
adjustments as we strive to were unsustainably 600,000 new jobs under the 
broaden and deepen our ex- In our first in Hawke Government. 
But the end result will be re- fiscal imbalance ~ a omnes qronts Ser granted. 
g. We are em tive Commonwealth deficit of » you have to 
upon a process which will see a around § per cent of gross think back to the period of late 
fundamental re-balancing of domestic product (GDP). In 1982, when unemployment had 
emerge with a more sophisti- sively reduced the Common- corporate profits had 
cated , wealth deficit to less than half smashed and bankruptcies 
better able to fulfil the legiti- of that figure. To were rife, to understand the 
mate aspirations of ordinary the A .R. that enormity of this achievement. 
Australians for economic achievement it is worthwhile 8 
growth and jobs to understand that during the recovery has been 
But it is only through same period the United States’ our accord with the ACTU 
the foundations = deficit has remained es ee 
ture economic we at about 5 per cent of undamental changes. 
to maintain and enhance GDP. ” accord has succeeded in over- 
the living standards which coming Australia's traditional 
Australians Equally, chronic failure to sustain a 

growth beyond 
which we can hope to increase > © a ome 


employment. Moreover, it has 
contributed to a dramatic 
decline in the level of indus- 
trial disputes to a 17-year low, 
and a consequent benefit to. 

More recently, the area ef 

form package is to even out 
the playing field and allow all 
individuals and economic ac- 
tivities an equal go. It is only 
in this way that we can ensure 
that the most productive and 
efficient industries are nur- 


to changed international cir- 
cumstances, it is even more 
essential than before that 
Australia's financia] resources 
be used in the most efficient 
and effective manner possible. 
Tax reform assists that aim. 

Yet another area where the 
Government has sought to 

the efficiency of the economic 
system in order to lift its po- 
tential for and job 
creation. yet again, while 

it was an area dabbied in by 
our predecessors. vested inter- 
est groups had prevented the 
coalition from making any 
substantial changes. 

our chief weapon in turning 

Australia’s imports of con- 
sumption goods have fallen, 
imports of capital goods have 
risen. Such a response Is typl- 
cal of a country gearing up to 
take advantage of new market 
opportunities — both at home 
and abroad — generated by a 
currency depreciation. 

Similarly, recent figures 
show that in volume terms 
(that is, ignoring price 
changes) there has been a 14 
per cent increase in 
Australia's exports from the 
March quarter 1985 to the 
March quarter 1986, compared 
with an increase of only | per 
cent in the volume of imports 
over the same period. Again, 
this is firm evidence of the 
depreciation working to turn 
around the current account 

ments have overshad- | 
owed by the collapse in inter- 
national commodity prices. 
This is a fact of life for which 
no one in Australia is to blame 
but which we can ignore only , 
at our peril. 

This fall in export prices 
means that the economy has 
moved to a position where we 
are spending a good deal more 
abroad than we are earning. 
That gap — our current ac- 
count deficit — is made 
up by borrowing to finance 
current living standards. But 
clearly we cannot go on run- , 
ning a current account deficit | 
of $14 billion indefinitely | 

munity, particularly exporters, 
such as our farmers and min- 
ers, plus other companies that ' 
deal in internationally traded 

count deficit we will also be 
directly attacking one of its 
major symptoms: the build-up 
in recent years of Australia's 
external debt. 

We recognise that while ear- 
lier this financial year there 

therefore, assisting in cutting 



strained the States will impact 
more adversely on their capl- 
tal spending rather than their 

But more to the point, it 
ought to be remembered that 
the government borrowing 
program given by the Com- 
monwealth to the States is, in 
fact, often used for recurrent 
(or consumption) purposes. 


— already and reduced 
from the claim — 
should be as poss- 





In g this course we 
have re the option of 
seeking to correct the balance- 

3s AE : — 

rE ae i ce eal 

ati Hl Cal “i ae: HT HH 

ik Hit: BLL : hie en Ee 

[pestle ied: ! 
eae Ht mite i cael 
TN Han ei al 

csO: 4200/1221 




28 July 1986 



Melbourne THE AGE in English 20 Jun 86 p 11 


{Text ] 

N recent weeks, textile, footwear and clothing 

manufacturers, and some Government 
backbenchers, have begun campaigning for higher 
protection against imports. They have argued that 
at a time when unemployment remains high and we 
are importing more than is good for us, Australia 
Ought to be shoring up, not tearing down the wail of 
tariffs and other trade barriers which shield so 
many of our manufacturers. Similarity dubious 
advice’ regularly flows from left-wing metal 
manufacturing unions, and the issue of industry 
policy and protection is tipped to be among the most 
volatile at the ALP national conference next month. 
The debate will undoubtedly focus on that most 
emotive of issi:es, employment, and many will 
maintain that less protection means fewer jobs and 
destruction of, vital industries. 

It is important that the primitive economic 
thinking of the protection lobby ts rejected and that 
the Government continues to open the door, albeit 
gradually, to imports. The equating of jobs and,’ 
implicitly, living standards with protection against 
{mports is simplistic and dangerous. There are good 
reasons why Australia should be removing trade 
barriers. They include the need to move away from 
straight import substitution to fostering industries 
which can compete on export markets. Those who 
doubted the need for such change — which this 
newspaper has been proposing for years — need 

CSO: 4200/1221 


“Hiding Behind Trade Barriers"] 

the growth of import competing industries, 
penalised other sectors and individuals who have 
had to pay the higher price of protected goods, and 
badly distorted the effect of market forces. 

The Economic Pianning Advisory Council this 
‘month estimated that the effective rate of 
assistance to the textile industry had grown from 47 
| per cent to 54 per cent between 1977-78 and 1982-83. 
‘For clothing and footwear, the rate had jumped 
from 141 per cent to 220 per cent over the same 



28 July 1986 


Sydney THE AUSTRALIAN in English 25 Jun 86 p 12 
[Editorial: "Burke's Remedy for Our Economic Crisis"] 


THE dramatic economic measures more consistent with the resources 
a be A I my eT ny - 
Australia, Mr Burke, y are a y. 
welcome sign ae a hee one As Mr Hawke's recent statement to 
government in Australia has grasped 
the nature of the economic 
facing the nation and is prepared to do 

priority for all levels of government. 

It is to argue with Mr 

Burke's assessment of the budgetary Burke's 

crisis which he, the other premiers government He has 
and the Prime Minister face. decided to shed 3000 government jobs 
In his accompanying statement Mr over a full year. Moreover, he has 
Burke puts the crisis in stark terms demonstrated a commitment to 
“In the public sector both here and abolishing some of the inefficient work 
across Australia the challenge of practices which have grown up in 
structural change is to wind back easier times but which are 
expectations and demands to a level inappropriate today. Thus, he has 



ut a {ETT 

cso: 4200/1221 




28 July 1986 



Sydney THE AUSTRALIAN in English 25 Jun 86 p 1 

{Article by Douglas Davis] 

{Text ] 

yt pee fa aa 
i] He ie i qi fi ee i 
i HH Hy J— tate) 

si if in MM— 
i a 
i tl Ds i lian i 
Bh ee | Hel 


CSU: 4200/1221 


28 July 1986 


HKO30731 Manila THE MANILA EVENING POST in English 1 Jul 86 pp 1, 3 

["Exclusive to THE MANILA EVENING POST"--"Forum™ by Blas F. Ople, 
Constitutional Commission member: "The PCGG: A Modern Quandary of Means and 

[Text] It is when moral certainty waxes strongest and piety is at its most 
self-righteous that we are warned to be on guard: that is the time when the 
distinction between ends and means is most likely to blur; the point when the 
ends will justify the means. 

This is what I thought when I listened to the chairman of the Presidential 
Good Government Commission [PCGG], Hon Jovito Salonga, testify before the 
Committee on Amendments and Transitory Provisions of the Constitutional 
Commission. Reading from a prepared text, he fairly spewed fire and brimstone 
about the Marcos crime, and sounded as though the critics of the PCGG were fit 
for immediate burning. Towards the preroration, the PCGG had started to 
sprout wings as both the avenging angel and the angel of mercy. 

But all that was by way of laying the basis for his argument: the resolution 
filed by the opposition ending the sequestration powers of the PCGG and 
reverting (vesting is more accurate, says Mr Salonga) these to the courts was 
misconceived and ill-founded. These powers ere not extraordinary and need not 
be inconsistent with a new Constitution. The immunities that shield PCGG 
people form civil suits and legislative, judicial, and administrative 
inquiries conserve the energies that otherwise would be lost to the search for 
hidden wealth and the retribution towards the guilty. 

He said any emasculation of these powers through a transitory provision would 
send the wrong signals to cooperating governments abroad that President 
Aquino's ardor for reforms was declining. It could be discomfitting for 
illustrious lawyers that had been engaged to help the PCGG press its crusade 
in the United States and Europe. If the powers got vested in the courts, 
since there were so many of them throughout the country, the uniform standard 
worked out by the PCGG in dealing with ill-gotten wealth cases could be 


The CPGG had been extremely circumspect, moreover, in the use of its powers, 
always seeking to attain a quantum of proof equivalent to a prima facie 
finding or a probable cause, before issuing orders to sequester. It does not 
disregard due process. It has not sent a single person to jail; it does not 
violate the liberty of abode and travel guaranteed in the bill of rights; it 
does not proceed against political opponents as such. 

Its immunities do not preclude judicial review of its acts, as witness the 
cases brought against the commission before the Supreme Court. The high court 
has so far sustained the PCGG's acts by the constitutional test. The PCGG's 
orders of sequestration and freezing of assets are not final; at the proper 
time they will be brought to the Tanod-Bayan and the Sandiganbayan, whose own 
decisions can be reviewed by the Supreme Court. These orders are in the 
nature of precautions owed the state so that if proven in court to belong to 
Marcos, his family, his cronies, nominees, and agents they will be forfeited 
in favor of the government. 

Neither is the PCGG interested in acquiring the powers of management over 
sequestered firms, says Mr Salonga. He points out that in San Miguel Corp., 
having acquired the majority shares, the government has magnanimously allowed 
the Sorianos to stay on as the management. 

Mr Salonga, who came with Commissioner Raul Daza, impressed the commission 
with his sincerity and ardor together with the more impressionable crowd of 
students that witnessed the hearing. He was much less successful in 
reconciling his means with his ends. He failed to persuade the Con Com 
members that the powers of sequestration were not extraordinary in character, 
that these can be fully consistent with the return of full constitutional 
government. His examples of analogous powers in the United States and 
Switzerland were revealed, under questioning, to be exceptional and applied 
only to foreign governments or leaders as a departure from the policy applied 
to their cwn nations. His generalization about customs laws conferring 
seizure powers, as a matter of course, as the basis of the powers of 
sequestration fell flat. 

It now appears that Mr Salonga, at the very moment he was testifying before a 
committee of the Constitutional Commission, was aware of a new memorandum of 
President Aquino vesting more powers in the PCGG. Specifically, this was the 
power to vote all sequestered shares in an estimated 180 companies, including 
the flagship corporations of the economy such as San Miguel and the United 
Coconut Bank. The determination of true ownership by the courts, stated by 
Mr Salonga as a strong legitimizing point to the powers of temporary disposi- 
tion of assets by the PCGG, is now reduced to the level of a formal argument. 
This has made court intervention, for all purposes, academic, and superfluous. 

Efficiency and civil liberties are seldom complementary. Tomas de Torquemada 
hung up a record of investigative efficiency when he burned 2,000 of his 
countrymen at the stakes for heresy. Granted that the mission of the PCGG is 
far nobler and more salutary than that of its predecessor in 16th century 


Spain, the problem of moral certainty and self-righteous piety is how to 
reconcile the means with the ends. 

I can only sympathize with the good people of the PCGG for having to endure 
this endless dilemma. 

CSO: 4200/1195 


28 July 1986 


HKO31030 Manila THE MANILA CHRONICLE in English 1 Jul 86 p 6 

["Analysis" column by Amando Doronila: "Next 6 Months Crucial to Aquino 
Survival" ] 

[Text] The next 6 months will be crucial to the survival of the coalition 
government of President Aquino. The president's timetable is to establish the 
legal foundation of her democratic system around the end of the year. There 
is, within this time frame, a hectic, though subtle, race between her and 
forces determined to unhinge her government. 

At stake in this race is her government's legal legitimacy--which is its main 
flaw. If this legitimacy is not established within the timetable, she will be 
in for a lot of problems not only from the loyalists but more so from members 
of her coalition. 

Legitimation is the key to understanding the president's apparent tentative- 
ness in dealing with those who are trying to destabilize her government. Lack 
of legitimacy doomed the Marcos government and paved the way for the military 
defections after the 22 February revolt. Mrs Aquino is well aware of this. 
She knows that she has de facto legitimacy, whose source is the people power 
that toppled Mr Marcos. But she is also aware that if she does not institu- 
tionalize her claim to office through the Constitution, the revolution and 
what it stood for would be lost. 

And yet, the government is under powerful pressure to perform miracles within 
a short time. 

She is expected to secure significant foreign aid to restart the engines of 
economic recovery, restore peace in the countryside through a policy of 
attraction with the Communist-led insurgents, pacify the warlords, hold a 
referendum to ratify the new constitution and immediately after that call 
local and parliamentary elections to put democratic institutions in place. 

These demands on a cabinet whose members are fundamentally split over approach 
to these prcblems are unforgiving and cannot wait for time. On any of these 
issues, the government can stumble. For example, the handling of the cease- 
fire negotiations with the insurgents could easily flare up into a cabinet 


crisis. The cabinet is ideologically split over it and the loyalists have not 
missed the opportunity to try to fan anti-Communist hysteria over the 
government's campaign to buy time for internal tranquility so she can launch 
her rural-based economic recovery program. 

Mrs Aquino apparently is holding her punches in dealing with the loyalists and 
dissident members of her cabinet, notably her defense minister, Mr Enrile, 
until she has established her constitutional legitimacy. 

Her detractors are using this legal defect to challenge her authority, and 
correcting this defect is vitally important to her for several reasons. Legal 
legitimacy will rob the loyalists of an issue around which they could mobilize 
camp followers. But more importantly, legal legitimacy will strengthen Mrs 
Aquino's hands in aligning the armed forces behind her government. 

The armed forces are traditionally oriented towards the concept of loyalty to 
a constitutional mandated chief of state. Once the new constitution confirms 
her mandate, there would be fewer doubts within the armed forces about the 
focus of their loyalty. One cannot discount the existence within the armed 
forces of Marcos loyalists who are ready to use her lack of constitutional 
mandate to stir up internal military dissension. 

It would seem that what is holding back Mrs Aquino from having a showdown with 
Mr Enrile, despite provocations from him, is that she is waiting for her 
constitutional foundation to be in place. When this happens, her legal flanks 
will be amply protected, and anyone who challenges her authority could easily 
be identified and isolated as an enemy of the state. 

It would be too naive to think that Mr Enrile and the loyalists are not aware 
of this. Given that assumption, one begins to see the light why Mr Enrile is 
keeping his options open in highlighting his policy disputes with the 
president or why the loyalists are stepping up their campaign to unsettle the 

The international community, on which this government is extremely dependent 
for economic recovery resources, is very sensitive to reports of disturbances 
in this country in their assessment of availability of assistance. The 
government's capacity to turn the economy around and create jobs is tied to 
foreign assistance. 

In the face of these conflicting pressures, the government has to hold--that 
is, it is trying to avoid a cabinet crisis until the constitution is in place. 
But will events permit her? 

CSO: 4200/1195 

28 July 1986 


HKO30119 Quezon City BUSINESS DAY in English 2 Jul 86 p 24 
[Article by Gerry N. Zaragoza] 

[Text] The Office of the Solicitor General [OSG] started yesterday producing 
evidence to substantiate graft charges against former President Ferdinand 
Marcos and 28 of his relatives, subordinates, and close associates in 
connection with the alleged ill-gotten wealth. 

OSG submitted to the Presidential Commission on Good Government [PCGG] a batch 
of documents. Among these are the income tax returns of Marcos for 1960, 
1961, and 1966, a report of Marcos’ salaries as president and Mrs Imelda 
Marcos’ salaries as minister of human settlements, a sworn statement of Jose 
Y. Campos detailing the assets and properties he had held on behalf of Marcos, 
and a sworn statement by PCGG's New York representative listing 11 buildings 
allegedly acquired by Marcos in New York. 

Solicitor General Sedfrey Ordonez last April 7 filed the graft charges against 
Marcos and the 28 others for allegedly violating the anti-graft and corrupt 
practices act by illegally acquiring wealth valued at no less than $5 billion. 

The acquisition of assets, Ordonez said, had resulted in their “unjust 
enrichment and the acquisition and accumulation of unexplained wealth." 

After PCGG decided to take up the charges filed by the OSG, it required 
Ordonez to substantiate the charges first by the end of May. The deadline was 
later moved to the end of June after OSG sought an extension. 

Presenting the income tax returns and authorized salaries of Marcos, OSG tried 
to show that based on his income, the former president could not have acquired 
the vast assets he is now believed to be holding. 

For 1960, documents show that Marcos had a gross income of P33,917.93 and a 
net income of P9,975. The amount of tax he paid was P178.52. 

For 1961, the former president declared a gross income of P118,777.23 and a 
net income of P76,853.20. He paid an income tax of P23,072.0/7. 


Attached to his income tax return for 1966 was a balance sheet as of December 
31, 1961 which showed that Marcos had assets valued at P40,000 and capital of 

Marcos’ income tax return for 1966 shows he had gross income of P266,907.23 
and a net income of P249,075.15. The amount of tax he paid was P70,171. 

OSG also submitted to PCGG a report by Budget Minister Alberto Romulo showing 
that from the time Marcos became president in early 1966 up to last February's 
revolution, Marcos’ authorized salaries would amount to only P1.57 million. 

On the other hand, the same report said that Mrs Marcos as human settlements 
minister from June 1976 up to last February was entitled to authorized 
salaries of P718,750. 

In Campos’ sworn statement, the former associate of Marcos disclosed that he 
had held in trust 28 corporations on behalf of Marcos, including the 
Performance Investment Corp., the Mid-Pasig Land Development Corp., Anchor 
Estate Inc., Independent Realty Corp., and the Chemfields Inc. 

In his sworn statement, PCGG's New York executive director Bonifacio Gillego 
said based on documents turned over to the Philippine government by the U.S. 
State Department and those left in Malacanang when Marcos and his family fled 
to Hawaii, the former president and his cronies acquired assets and 
properties, including real estate, cash and bank accounts. 

Gillego added that among them were 11 buildings in New York, including the 
Crown Building and the Herald Center. 

CSO: 4200/1195 


28 July 1986 


HKO50222 Quezon City BUSINESS DAY in English 4 Jul 86 p 12 
[Article by Gerry N. Zaragoza] 

[Text] The Vasquez Commission yesterday doused cold water on the possible 
return of former President Ferdinand Marcos to the country. 

The Supreme Court-created commission denied a request to arrange for the 
return of the former president to testify on charges of collusion, pressure, 
and repression of evidence in the Aquino assassination trial. 

The three-man commission said for them to ask the Aquino government to allow 
Marcos to return to testify would be preempting the national leadership to 
decide the issue of his return. 

"The matter of allowing the former president to return to the Philippines for 
any purpose whatsoever under the prevailing circumstances has not been 
resolved with certitude the finality by the national leadership," the 
commission noted in a two-page resolution. 

The ruling of the commission headed by retired Supreme Court Justice Conrado 
M. Vasquez, was in answer to an earlier motion by lawyer Antonio Coronel. 

Coronel asked the commission to make representations with the national 
leadership to allow Marcos to come back from Hawaii so that he could testify 
and refute allegations implicating him in an alleged plot to whitewash the 
Aquino case. 

Coronel is the counsel for former Armed Forces Chief of Staff Gen Fabian Ver, 
who was charged as an accessory in the assassination of former Senator Benigno 
S. Aquino Jr. Ver was acquitted along with his 25 co-accused at a 
Sandiganbayan trial last year. 

Ver's counsel expressed his intent to present Marcos as witness to refute 
allegation of Deputy Tanodbayan Manuel Herrera, head of the five-man special 
panel that prosecuted the Aquino case. 


Herrera testified before the commission that the former president instructed 
the prosecutors and the judges to conduct a sham trial that will lead to the 
acquittal of all the accused. 

Before the commission ruled on Coronel's motion, the lawyers of petitioners 
seeking a mistrial ruling from the high court over the Aquino case expressed 
opposition to Marcos’ return. 

Lawyers Lupino Lazaro and Arturo de Castro cautioned the commission against 
interfering in the issue of Marcos’ return. They said it is a “highly and 
purely political question." 

In its resolution, the commission which was tasked by the Supreme Court to 
inquire into the collusion charges, did not determine whether it was 
absolutely necessary for Marcos to testify before its inquiry. 

But the commission said other witnesses may be presented to refute Herrera's 
allegation. In which case, the commission added, it would be "presumptuous 
and inofficious" to rule in favor of arranging for Marcos' return. 

Making representations with the national leadership for Marcos’ return would 
mean assuming it had already decided the “question of policy to allow Marcos 
to come back," the commission said. 

Meanwhile, at yesterday's hearing of the commission, witness Rebecca Quijano's 
failure to appear drew moans of disappointments from observers and newsmen who 
came to hear her testimony. 

"We have been expecting her since Monday," 

an equally disappointed Vasquez 

Quijano, who had earned the name of “crying lady" was set to testify on the 
so-called note-passing incident and the alleged pressures to prevent her from 
testifying at the Aquino trial. 

But her counsel, Clarence Guerrero, told the commission that she has been ill 
and her condition has not improved since early this week. 

Quijano's testimony was reset for next Monday. But petitioner's lawyer 

de Castro said if she fails to testify by then, the petitioners would dispense 
with her and terminate presentation of evidence. 

This means it will be the turn of respondents to present counter-evidence. 

CSO: 4200/1195 


28 July 1986 


HKO21011 Manila MANILA BULLETIN in English 1 Jul 86 pp 1, 12 
[Article by Rey G. Panaligan] 

[Text] About 10,000 elective and appointive members of sangguniang bayan 
[town boards], sangguniang panglungsod [city boards], and sangguniang 
panglalawigan [provincial boards], and some 294,000 barangay captains and 
councilmen can now be replaced either by designations or appointments, Justice 
Minister Neptali A. Gonzales ruled yesterday. 

The power of appointment or designation lies with Local Government Minister 
Aquilino Pimentel Jr. as alter ego of President Aquino, Gonzales said. 

Under the Local Government Code (Batas Pambansa Blg. 337), the terms of office 
of local government officials commenced on the first Monday of March 1980, and 
ended on March 28, 1986. 

The period was extended to June 30, 1986 by the Omnibus Election Code of 1985 
(BP 881). 

Gonzales said that when President Aquino took over, she issved Proclamation 

No 3 which provides that "all elective and appointive officials and employes 
under the 1973 Constitution shall continue in office until otherwise provided 
by proclamation or executive order or upon the designation or appointment and 
qualification of their successors, if such appointment is made within a period 
of 1 year from February 15, 1986." 

The elective and appointive local government officials assumed office under 
the 1973 Constitution and are covered by the provision of Proclamation No 3, 
Gonzales said. 

"Thus," he said, "the local officials can be replaced either by designation or 

Even barangay officials are covered by Proclamation No 3, Gonzales added. 

The power of the Ministry of Local Government [MLG] to replace elective or 
appointive officials had been upheld by the Supreme Court, Gonzales said. 


There are 1,523 towns, 60 cities, 74 provinces, and two subprovinces in the 

Municipal and city governments have an average of six members of the 
sanggunian. Provinces have four each. 

There are 42,000 barangays with seven officials each [words indistinct] to 
members of the council. 

Barangay secretaries and treasurers are appointed by their respective 

Only members of the sanggunian in cities, towns, and provinces get regular 

Local Government Minister Aquilino Q. Pimentel, Jr. directed Deputy Minister 
Ciriaco Alfelor yesterday to investigate immediately the alleged P200,000 
bribery by an Ilocos Sur officer-in-charge [OIC] and report his findings 
within 72 hours. 

The report said the bribe money was allegedly given to “some influential 
people in the MIG in consideration for the appointment of OIC in Candon, 
Ilocos Sur." 

Deputy Minister Douglas Ra. Cagas, who was mentioned in the report, said the 
investigation ordered earlier by the MLG was designed to get to the truth no 
matter who gets hurt. 

Cagas noted that the report had quoted a letter from one Eduardo Ma. 
Guirnaldo, another aspirant for the questioned OIC post, alleging that the 
designation of OIC Antonio Abaya was issued reportedly because of monetary 

In a related development, the MIG clarified published reports that it has 
appointed two OIC's for Naic, Cavite. 

Cagas said he never appointed or designated Dr. Cesar Unas as OIC of that 
town. It was Eduardo Echauz who was appointed and there could be no 
appointment of two OIC's since that would create problems and tension among 
local residents, he added. 

Cagas said Echauz's appointment was decided on the basis of endorsements 
received from local and national leaders. 

Meanwhile, Pimentel exhorted newly designated OIC's to initiate and implement 
income generating community projects even as he assured them of material 



He reported that the 76 provinces and subprovinces, 60 cities, and 1,530 
municipalities registered a total income of P8.2 billion last fiscal year, of 
which P8.1 billion was spent for various projects and activities. 

"There was not much in terms of savings--only P121 million--last year, but 
somehow local governments have shown substantial income," he said. 

According to him, more income can be expected under the new government and 
more projects undertaken with more prudent and proper use of local funds and 

CSO: 4200/1195 


JPRS* spac86~126 
28 July 1986 


HKO31058 Manila THE MANILA CHRONICLE in English 2 Jul 86 p 4 

["Analysis" column by Amando Doronila: "The Military Exercises Extra-Legal 
Veto Power" ] 

[Text] Whether we like it or not, the military today exercises extraconstitu- 
tional veto power over civilian authority. Never in the post-war history of 
this country has the military been so powerful as a pressure group as it is 
today, and I am not excluding the Marcos period. 

Not only is the defense minister, Mr Enrile, challenging the key policy 
positions of the Aquino government of which he is a part, certain factions 
within the military, notably the Reformed [as published] Armed Forces Movement 
(RAM), have been issuing critical statements about the way the government is 
handling the insurgency problem, the human rights issue, and reforms within 
the military establishment itself, instead of keeping their views to 

The president had her way in releasing most of the political detainees and in 
pushing her campaign to seek a cease-fire with the Communist insurgents, but 
she had to overcome strong resistance from the military. Even after her 
cabinet had decided to go ahead with the peace talks, she continues to be on 
guard against rejecting entirely the military point of view on the cease-fire. 

She has adopted the position of the armed forces chief of staff, General 
Ramos, that there should be no pull back of troops, to the barracks during 
talks with the insurgents. She is the commander-in-chief of the armed forces, 
and theoretically, they should follow her orders, but she has not exercised 
the prerogative to order Mr Enrile and the RAM to shut up. 

These incidents illustrate the erosion of civilian authority in relation to 
the military since the declaration of martial law in 1972. Although former 
President Marcos had always claimed that even under martial law civilian 
authority was supreme over the military, his dependence on the AFP [Armed 
Forces of the Philippines] enforce his political decisions and to coerce the 
population constrained him from imposing discipline. 


He politicized the military by giving it jobs normally done by the civil 
officials. During the early days of martial law he permitted military 
officers to perform functions of elected officials and congressmen. As a 
trade-off for military support, Mr Marcos closed his eyes to military abuses 
and corruption, thus abdicating complete control. 

The democratic opening made by the Aquino government is only part of the 
explanation why the military is so outspoken and sometimes so threatening in 
its relationship with civilian authority. The more important explanation is 
that the balance of power between the presidency and the military has been 
disturbed by several factors. 

One significant factor is the Enrile-Ramos rebellion last February which acted 
as the catalyst of the popular revolution. Their role in precipitating 
military defections from the former president has made them believe that the 
military had won the right to wield veto power against president policy they 
do not agree with. 

In a truly democratic order, a military veto is unacceptable. But the 
political reality is that the military is exercising possibly as much 
influence and power as a parliament or the judiciary. With the legislature 
disbanded, there is no parliamentary check against the executive. 

The Central Bank governor, Mr Fernandez, is said to have remarked that the 
cabinet now functions as parliament, pending a new constitution. As a 
consequence, according to him, we must not interpret the squabbling within the 
cabinet as a sign that the government cannot get its act together, since the 
cabinet is serving as the forum of democratic debate. Fair enough, but there 
is actually no legal institution that is performing an adversarial role except 
the military. Some of its leaders are trying, with implicit threats of a 
coup, to influence decision on matters of security. 

In other words, what I am saying is that in the absence of strong democratic 
institutions which are still being put in place, we will continue to have a 
military that is not completely subordinate to the civilian leadership. The 
tradition of civilian supremacy has been rendered meaningless by the change of 
balance of power over the past 14 years. 

Even if the new constitution will reiterate this concept of civilian 
supremacy, it will take time before the military will again be put back to 
its subordinate position. It will require also a strong leadership to 
rehabilitate the authority of civilians over the military. 

CSO: 4200/1195 


28 July 1986 


HKO30727 Quezon City BUSINESS DAY in English 2 Jul 86 p 2 

[Text] Technical smuggling goes on unabated and in recent months has actually 
escalated, threatening the viability of domestic industries, particularly 
those that will be affected by the government program to deregulate importa- 
tion by the end of this year, sources said. 

At the same time, sources told BUSINESS DAY yesterday that the Bureau of 
Customs has “remained graft-ridden" despite efforts of Commissioner Wigberto 
Tanada to clean up the agency. "All that has been done is to change officials 
but the underlings continue their merry way," an importer said. 

The continued technical smuggling, sources said, has not only adversely 
affected domestic producers, it has also robbed the government of substantial 
revenue. “Instead of paying under the table, we want to pay the government 
the taxes due it. But unless we pay under the table, some of our imports will 
be delayed," sources said. 

An importer singled out a broker operating within the customs bureau who has 
reportedly cornered the bulk of selected imports coming into the country. It 
was reported that this broker, by virtue of his connections developed over a 
long period, is able to act as an intermediary in "smoothing out" valuation 

"We pay from 20 percent to 25 percent of the import cost to. + ple just 
so they would not make it difficult for us," sources explained, ac ag that 
they have kept mum on the matter all these years because “our future shipments 
might be affected." 

Sources said importers have already informed Trade and Industry Minister Jose 
S. Concepcion, Jr. of the anomalous activities in the customs bureau. 
Concepcion asked these importers to submit evidence to help him and Tanada 
clean up the bureau. 

In their meeting yesterday, Concepcion said he intends to meet with 60 big 
importers of spare parts within the next 2 weeks to discuss ways to stop 
technical smuggling. Concepcion said these big importers account for about 
70 percent of the country's total imports of spare parts. 


Concepcion called the meeting yesterday even as he turned down the request of 
spare parts importers to remove from the Board of Investments (BOI) the power 
to review applications to import spare parts. 

Spare parts importers noted that one of the reasons why prices of spare parts 
are high is government red tape. They cited that other than the BOI there is 
the bank examiner, the Central Bank, the customs bureau, and the Philippine 
Chamber of Commerce and Industry (PCCI) that checks on their imports. 

Concepcion however insisted on the need for BOI regulations, noting that he 
wants to know who is importing the spare parts, the quantities imported and 
the prices. He said he is “very, very tired" of hearing reports about 
misdeclarations, undervaluations, and other forms of technical smuggling. 

The extent of technical smuggling in the spare parts trade can be gauged from 
the fact that imports of spare parts reached some $173 million in 1982 but 
then went down to $39 million in 1984. The drop, sources said, was due to 
technical smuggling. 

Spare parts imports yesterday also said the government decision to lower the 
sales tax on spare parts is not expected to translate into any real net gains 
for jeepney drivers and operators. They said there is a need to streamline 
government regulations that tend to add to the cost of their operations. 

In particular, they pointed to the government's continued insistence on 
protecting a diesel engine manufacturing program that is no longer operating. 
They said deregulating diesel engine imports of 150 horsepower and below could 
result in as much as a 50 percent reduction in prices. 

CSO: 4200/1195 


28 July 1986 . 


HK300832 Quezon City BUSINESS DAY in English 27 Jun 86 p 2 
[Article by Daniel C. Yu] 

[Text] The government has finally succumbed to increasing pressure from the 
International Monetary Fund (IMF) and the World Bank and has agreed to remove 
all quantitative restrictions on imports before the last quarter of this year. 

With already some 580 items deregulated in two batches in the last few months, 
the Monetary Board of the Central Bank is expected to approve today the 
deregulation of an additional 222 products. 

Among the items to be deregulated are food, jewelry, ceramics, plastics, toys, 
raw materials, and some intermediate goods. In addition, another batch of 
items currently paying high tariff rates will be deregulated during this phase 
of the import liberalization program. 

The last batch of 280 items, consisting of the most sensitive imports which 
are likely to cause the most severe impact on domestic industries, will be 
liberalized by the last quarter this year, sources in industry said. 

Businessmen interviewed by BUSINESS DAY yesterday greeted the news with 
consternation, warning that the government's decision to comply with the IMF 
and World Bank dictate could spell the end of many domestic industries. 

"We will witness the collapse of many industries and the effect will be almost 
immediate, perhaps within 6 months to 1 year," Ceferino L. Follosco, vice- 
president of the Philippine Chamber of Commerce and Industry (PCCI), said 

"The government does not seem to appreciate the sincerity with which business 
had tried to liberalize as many items as possible at this time. The collapse 
of domestic industries will certainly be felt immediately," Raul T. 
Concepcion, chairman of Concepcion Industries Inc., added. 

The government will submit to the IMF by the middle of next month a final 
timetable for the implementation of the liberalization program. This will 


be just before the government starts talks with Fund officials on the 
country's debts. 

The import liberalization program, strongly opposed by business and industry 
during the last 3 crisis-ridden years was supported by at least two cabinet 
ministers, Economic Planning Minister Solita Monsod and Finance Minister 
Jaime Ongpin, which explains why the program was quickly implemented. 

Trade and Industry Minister Jose S. Concepcion Jr., who was earlier batting 
for a staggered implementation of the program, said that for the last batch, 
consisting of the most sensitive items, the IMF has agreed to a temporary 
increase in existing tariffs. 

He said the IMF has agreed that tariff levels could be adjusted upward by as 
much as 20 percent but the effective tariff protection on landed cost should 
not exceed 30 percent. 

He said the government is now conferring with the private sector regarding the 
levels of tariff adjustments for these sensitive imports prior to their 
deregulation later this year. With the deregulation, importers can bring in 
as much of the items as possible so long as they pay the higher tariffs. 

The temporary upward adjustment of tariff levels however will have to be 
phased out over a 5-year period, Concepcion said. Such an arrangement would 
hopefully allow local industries to adjust to foreign competition. 

Concepcion's brother Raul however described the "supposed concession" of the 
government as likely to create an even bigger problem since any adjustment 
would directly undermine the rationale of the existing tariff structure. 

"All these products are interdependent, such that adjustments in the tariff of 
a raw material will affect the intermediate goods and the final products 
within a product line," he explained. 

Raul Concepcion said the adjustments in tariff will create distortions within 
the tariff system, resulting in other industries lobbying for increased 
protection and throwing off the entire structure that can become a major 
government problem later. 

Other businessmen interviewed noted that the continued “blatant smuggling, 
both physical and technical" will exert very strong pressures that could force 
the closure of many domestic companies. 

"They (the government) could not control smuggling and how they are 
liberalizing imports," one businessman said regarding the government plan. 
"We will just have to close shop, lay off workers and just be traders." 

Minister Concepcion said the government has already created a task force which 
will go after smugglers and those who bring in imports without paying the 


proper taxes. "We will really go after these people to, once and for all, 
stop smuggling," he said. 

Task force chairman Lilia B. de Lima, who met yesterday with the group which 
will come up with the implementing guidelines, in a separate talk, said the 
guidelines will come out next week and will be implemented the following week 
as soon as Concepcion approves then. 

With the giving in by the Aquino government to the IMF, some businessmen doubt 
that the government can negotiate any real favorable terms from the Fund or 
the World Bank. 

"We are no better off today compared to where we were a year ago," one 
businessman noted. "The fact is the country is not moving at all 

CSO: 4200/1195 


28 July 1986 


HK300836 Manila THE MANILA TIMES in English 27 Jun 86 p 20 

[Text] Trade and Industry Minister Jose S. Concepcion, Jr. yesterday said 
that the government is ready to retaliate against countries that will control 
imports from the Philippines. 

Concepcion, who just arrived from the United States yesterday told the press 
the government is negotiating with the International Monetary Fund (IMF) for 
2-year deferrment of the import liberalization program covering over 600 

He also said the government will impose an automatic import freeze once 
imports go beyond normal levels. 

The trade minister said that the Bureau of Domestic Trade has been assigned 
the duty to monitor imports so that dumping can be immediately checked. 

Concepcion also said the government is asking the United States for more 
access to American market for such products as sugar, garments, and 

He said U.S. officials have expressed willingness to grant the Philippines 
more access to U.S. market. 

During his 10-day visit in the United States, Concepcion had a round of 
discussions concerning trade between the U.S. and the Philippines. He said he 
had discussed with Under-Secretary of State Michael Armacost the problems 
facing the Philippines this year and next. 

He pointed out that the Philippines is capable of supplying the requirements 
of the U.S. Defense Department for electronic equipment and accessories. 

Concepcion said the U.S. Government's budget for electronic supply is about 
$17 billion, which goes only to Israel and Egypt. 

He also said U.S. total yearly imports are in the range of $350 billion, the 
Philippines’ share in the U.S. import is only one-half of 1 percent, 
Concepcion pointed out. 


Concepcion also said he proposed to the U.S. Government to increase its sugar 
imports from the Philippines up to 25 percent of the U.S. total sugar imports. 
The present U.S. sugar quota given to the Philippines is only at 13.5 percent 
of the total sugar imports of United States. 

Concepcion also urged the local shoe and ceramic industries to be export- 
oriented. He said the U.S. shoe imports amount to $6 billion a year. Of this 
amount, only about $10 is allotted to the Philippines. The U.S. also imports 
yearly some $5 billion worth of ceramics. The Philippines’ share in the U.S. 
imports of ceramics is only $8 million. [Paragraph as received] 

With the USRP bilateral textile agreement due to expire August this year, 
Concepcion said the government should get ready with the renegotiation of this 
agreement. He said he would try to get a better deal out of this agreement. 

Concepcion is optimistic about the doubling of the Philippines’ share in the 
U.S. imports for textile and garments, despite the Jenkins Bill. 

He said the government should not be over-dependent on sugar exports, sug- 
gesting that the government should start cutting down on the sugar exports by 
10 percent every year so as to give way to other export crops. 

In import liberalization, Concepcion said the government will work out a 
formula that would increase import tariff on some products by 20 percent to 25 
percent in order to protect local industries. 

He said he is set to discuss with U.S. Secretary of State George Shultz in 
detail the proposal for the Philippines to gain greater access to U.S. market, 
import controls and other critical issues this week. Shultz arrived last 

June 24. He is here on an official visit to the Philippines. 

Trade and Industry Minister Jose S. Concepcion, Jr. yesterday announced that 
the government has agreed to liberalize up to 1,000 items within the year as 
required by the International Monetary Fund. 

Concepcion said the government is also set to lift import controls on 220 
items next week. He added that all quantitative controls on all imports would 
be lifted next week. 

In place of the quantitative restrictions, Concepcion said the government has 
agreed with the IMF to allow a 20 percent tariff rate increase above existing 
rates to protect local industries from foreign competition. 

He said a uniform preferential rate of 30 percent of the effective landed cost 
would be adopted. However, he said the tariff protection would be phased out 
after 5 years as agreed upon with the IMF. 

CSO: 4200/1195 

28 July 1986 


HKO20053 Quezon City BUSINESS DAY in English 1 Jul 86 pp 2, 3 
[Article by Daniel C. Yu] 

[Text] Recent government pronouncements indicate that the Aquino administra- 
tion is not likely to deviate too much from the economic programs of the 
previous dispensation--much to the disappointment of most businessmen. 

This has deepened the frustration of several business leaders, who, just over 
3 months ago, joined in the general jubilation over the toppling of the Marcos 
dictatorship, believing that the change in government would likewise lead to 
changes in economic programs and bring about the long-awaited recovery. 

Today, businessmen are fast realizing that the new government--like the 
previous regime--could not just turn its back on the country's creditors as 
well as the conditions they have set forth. The difference however is that 
today's economic policy-makers--the majority of them at least--seem to be 
sincerely convinced that some of the prescriptions of the International 
Monetary Fund (IMF) and the World Bank are just what the doctor ordered. 

One of the more controversial IMF-World Bank prescriptions, the trade 
liberalization program, which businessmen, time and again, had asked the 
government to restudy, is due to be completely implemented by the last quarter 
of this year. A first batch of some 500 items was already liberalized last 
May in compliance with the so-called policy reforms outlined by the Fund. 

The new government has also put in place a package of tax reforms meant to 
shift the tax burden away from indirect taxes, which are indiscriminate, to 
direct taxes. It meanwhile continues to implement a much-protested turnover 
tax scheme. 

There is debate within the cabinet over a proposed plan for the selective 
repudiation of some of the country's foreign debts. However of late, there is 
increasing indication that such a plan, aimed at softening the pressure on 
foreign exchange demand, will not go beyond rhetorics. 

The euphoria following the "people-powered" February revolution has ebbed and 
businessmen are realizing that the economy is no nearer today to solving the 


problems of trade, investments, labor, and a host of other things. Some 
businessmen, in fact, believe that some problems have taken a turn for the 

The Philippine Chamber of Commerce and Industry (PCCI) for example recently 
noted that a paper prepared by a group of economic professors from the 
University of the Philippines [UP] which will reportedly serve as the basis 
for a new Philippine 5-year plan, is “anti-big business" (see BUSINESS DAY, 
June 27 issue). This observation, coming as it is from the biggest grouping 
of businessmen and industrialists in the country, has discouraged some 
entrepreneurs from undertaking any new investment. 

Analysts see similarities between the conditions today and those prevailing 
during two previous Philippine crises, in 1962 and 1970, where as a result of 
IMF prescriptions for correcting instability within the economy, domestic 
industries ended up deeper in difficulties. 

It was in 1962 that the IMF called for a policy for decontrol for the 
Philippines to support export-oriented development. In 1970, as a result of 
the country's balance of payments (BOP) problem and as a precondition for the 
release of IMF credit, the peso was floated vis-a-vis the dollar. In both 
occasions, domestic industries suffered and had to undergo severe adjustments. 

The concern over the similarities in conditions is not without basis. In his 
book “Debt Shock," Darrell Delamaide, a financial writer and the European 
bureau chief for INSTITUTIONAL INVESTOR, noted: "The Philippines benefitted 
from a surge in United States aid and IMF credits after it removed import 
controls in 1962. But the effect of lifting the restrictions was a dramatic 
increase in imports of consumer goods like cars, television sets, and 
electrical appliances." 

Delamaide said imports rose 68 percent in the period 1963 to 1967, while 
exports grew only 7 percent, aggravating the Philippine trade deficit. "The 
money came from those foreign credits, so the country's indebtedness also 
rose," he added. 

In the case of the 1970 crisis, when the peso was floated vis-a-vis the 
dollar, Gonzalo M. Jurado, formerly of the UP School of Economics, in his 
paper "Foreign Trade and External Debt," described the situation as follows: 
"The floating of the peso vis-a-vis the U.S. dollar in 1970 was a repetition 
of the drama of 1962. Though the undermining of the equilibrium was caused by 
the failure of the export sector to grow rapidly, by the extravagant spending 
in the presidential election of 1969, and by the large amounts of foreign 
exchange that had to be shipped out to service loans previously incurred, the 
blame however was laid on local industries, the fault being that they were 

It should be emphasized that the reforms instituted in 1962 were claimed to be 
in preparation for a more outwardlooking policy; to encourage exports. But by 
1970, it was evident that this policy had failed. 

This same reason is now being given as the rationale for an export-oriented 
development strategy for the Philippines which intends to generate enough 
foreign exchange to pay the country's debt. If domestic industries suffer in 
the process, they just have to adjust. 

The penchant to blame development problems on the inability of domestic 
industries to grow has raised serious doubts on the real intent of 
IMF-prescribed adjustment programs and their impact on development countries 
like the Philippines. 

Despite the IMF's insistence on export-led growth as the proper course for 
developing countries, the Philippine experience with such a development 
strategy has actually resulted in very little success. 

The IMF has often cited the experiences of so-called newly industrializing 
countries as examples of the positive impact of such a strategy but it never 
mentioned that these very countries provided all the support and protection to 
their domestic industries during the 1960's when the fund was asking the 
Philippines to open up its market. 

There is serious doubt today on whether export-oriented development is really 
the right course for the country to take at a time when there is an oversupply 
of exportable goods in the world, increased competition in the export market 
and continued protectionism in the developed countries where Philippine 
exports are principally sold. 

There is also an equally serious doubt on the wisdom of opening up the local 
market at this time and exposing domestic-oriented companies, which underwent 
severe adjustments during the last 3 years, to foreign competition. 

The Philippines’ export record is not exactly something to crow about and, in 
fact, since the government first adopted an export-oriented policy, the 
country's overall net terms of trade, the measure of the price paid for 
Philippine exports, has deteriorated yearly. For example, from a 1974 terms 
of trade index of 114.5, the index has fallen continuously to only 59.8 in 

In the case of imports, on the other hand, the importation level has generally 
exceeded export receipts and the propensity to import has not been diminished 
by adjustments in the exchange rate. 

If local business was made to adjust in 1962 and then again in 1970 and 
managed to barely survive, many businessmen are wondering whether Philippine 
business, just recuperating from a 3-year crisis, could take yet another round 
of major adjustments. 

More than this, business leaders are wondering if there ever was a real 
industrial development policy for the country that supported local 


entrepreneurs, protected indigenous industries and transformed them into 
world-class ventures. 

If industries were concentrating on the domestic market during the 1970's, 
part of the reason was the environment that the government had created. 
Regarding the expansion of firms in so-called overcrowded industries, for 
instance, the Board of Investments (BOI) had stated that it “discourage(s) 
unnecessary investments in industrial areas where existing capacities are 
deemed to be in excess of the local demand for a product for purposes of 
conserving foreign exchange to be used for the importation of machinery and 
equipment." This policy was scrapped only in 1981. 

Though the conditions today may be similar to those in 1962 and 1970, the 
problems are bigger now in view of the debt crisis the country is in. After 
going through the economic crisis, Philippine business and industry may have 
just about reached the end of the rope. A new round of severe adjustments may 
finally cause them to lose their grip. 

CSO: 4200/1195 




HKO20347 Quezon City BUSINESS DAY in English 1 Jul 86 p 13 

[Article by Ramon R. Isberto] 

[Text] An all-new 15-member board of directors of United Coconut Planters 
Bank [UCPB] was elected last night after a stormy stockholders’ meeting that 

saw the dramatic resignation of Defense Minister Juan Ponce Enrile from the 
UCPB board and from the whole coconut industry. 

Armed with a voting right over 94.4 percent of UCPB's 747 million voting 
shares, the Presidential Commission on Good Government [PCGG] and its 
15-member slate was voted into the board over bitter protest of several 
thousand delegates from the Philippine Coconut Products Federation (Cocofd)}. 

As of press time, the new board was meeting to elect the bank's new set of 

The new board members are Ramon Sy, Diosdado Salvador, Oscar Santos (chairman 
of the Philippine Coconut Authority), Charles Avila, Manvel Concordia, Juan B. 
Carlos, Enrique Herbasa, Teodoro Locsin, Jr. (information minister), Victor 
Barrios, (head of PISO [expansion not given] bank and chief financial analyst 
of the PCGG), Filemon Fernandez, Simeon Datumalong, Antonio Gatuslao, Antonio 
Picazo, and Sunday Lavin. 

The election. pushed through despite angry protests from Cocofed representa- 
tives who questioned the PCGG's right to sequester shares issued in the name 
of coconut farmers and to exercise the voting rights of those shares. 

Enrile, who chaired the meeting, had to bang his gavel repeatedly throughout 
the 2-hour meeting which started 3:21 pm. 

In an order dated June 26 the PCGG sequestered about 388 million shares or 
51.8 percent of UCPB common stock issued to 1.4 million coconut farmers. 

Last June 6, the commission sequestered a 43.5 percent 
to former UCPB President Eduardo Cojuangco, Jr. 


Cocofed's Davao City chapter nominated a 15-man slate headed by Enrile and 
Cocofed President Maria Clara Lobregat. Cojuangco'’s personal lawyer, Gabriel 
Villareal, also presented six nominees that included Enrile and UCPB 
President Danilo Ursua. 

Enrile and Ursua declined the n° ’*ation. 

UCPB chairman for the past 11 years, Enrile said he had decided to “completely 
and irrevocably" sever the connections with the bank and the entire coconut 

The controversial defense chief said that this was necessary to give the PCGG 
a free hand in investigating allegations of anomalies in UCPB and the network 
of other companies built out of the P9.7-billion coconut levey fund. 

Over boos and catcalls, PCGG Commissioner Ramon Daza said the sequestration of 
UCPB shares did not mean that the government was taking over ownership of 
those shares. 

He emphasized that the shares actually owned by farmers would be revalidated 
and that the PCGG wanted only to pinpoint the shares owned by Cojuangco and 
his nominees. 

PCGG Commissioner Ramon Daza said the commission had received reports and 
affidavits that Lobregat had been buying shares back from coconut farmers 
since 1982. According to reports, up to 80 percent of the shares issued in 
the name of coconut farmers may have been bought back this way, he said. 
Lotregat denied the allegation. 

Daza added that Cojuangco has admitted to POGG commissioners during the 
latter's recent trip to the United States that he "controlled" the 33.13 
million shares of San Miguel Corp. stock sequestered by the PCGG. 

Other coconut farmers in yesterday's meeting meantime questioned the position 
of the Cocofed. An owner of a 7-hectare farm in Sorsogon claimed that this 
was the first time UCPB had notified and called coconut farmers to a stock- 
holders’ meeting. "The question is why," he said. “Is it because of the 
presence of the PCGG? And that they are now under pressure to disclose the 
real state of affairs in the bank?" 

CSO: 4200/1195 


28 July 1986 


HKO30729 Quezon City BUSINESS DAY in English 2 Jul 86 p 2 
[Article by Carol E. Espiritu] 

[Text] The scrapping of export taxes on coconut products which took effect 
yesterday would mean a revenue loss of about P300 million for the government 
this year. 

According to a recent estimate made by the National Tax Research Center 
(NTRC), the export value of coconut products in 1986 would come to about 
$611.01 million which, it said, would have meant duty collections totalling 
P633.45 million if export taxes were retained. 

Since the scrapping of export taxes took effect July 1, revenue loss would 
thus be about P300 million, representing potential earnings for the second 
half of 1986. 

Based on NIRC projections, copra exports in 1986 are expected to be worth $48 
million, which, with the previous 10 percent duty rate, would have meant 
P98.40 million in duty collections. For coconut oil, estimated to post a 
total export value of $358.03 million, duty collection would have totaled 
P366.95 million, based on the former 5 percent duty rate. 

Nesiccated coconut exports, projected to reach $85.55 million, would have 
contributed P80.11 million to government revenues at the previous 4 percent 
duty rate. Copra meal/cake, on the other hand, expected to earn $199.38 
million this year, would have given P97.99 million at the old 4 percent duty 

Although the scrapping of export taxes on coconut products is expected to ease 
the financial pressure on exporters who are facing severe downswings in prices 
in the world market, it would prevent the Philippine Coconut Authority (PCA) 
from undertaking projects to benefit coconut farmers. Such projects include 
the national coconut replantiny, program (NCRP), the intercropping project and 
various research and development programs. 


This means that the PCA will have to seek alternative funding sources or ask 
the government to reimpose the export taxes. The PCA receives a budget of P90 
million from the government. 

One alternative is to resume levy collections, but this is likely to be 
controversial considering that the poor export performance of coconut products 
has already depressed conditions in coconut farms. 

The export tax, originally a stabilization tax, was aimed at generating 
revenues for development projects and siphoning off excess money from 
exporters arising from changes in the peso-dollar exchange rate. 

On July 1, 1973, the stabilization tax which ranged from 4 percent to 10 
percent was incorporated into the Tariff and Customs Code as an export duty 
and pegged at 8 percent for copra, 4 percent for coconut oil, desiccated 
coconut and copra meal/cake. In addition to the tax, duty was likewise 
imposed at 30 percent for copra and 20 percent for coconut oil, desiccated 
coconut and copra meal/cake. 

However, Presidential Decree No 1476 issued on June 11, 1978, revised the tax 
rates for copra to 7.5 percent in 1979 to 1980, and to 9 percent in 1981. 

But this decree was in effect barely 5 months when coconut prices suddenly 
dropped in the world market, prompting the suspension of the export taxes and 
premium duties on coconut products. The suspension was implemented by 
Executive Order [E0] No 593 of May 17, 1980. 

In January 1982, the export duty on copra was reimposed at 7 percent, but in 
September that year, copra exports were suspended altogether. 

Improved world prices in late 1983 however prompted the lifting of the 
suspension of the duties and taxes based on FOB values. Taxes were then 
revised to 3 percent for copra, 5 percent for coconut oil, and 4 percent for 
copra meal/cake. 

These were again revised by EO No 920 in November 1984. Duty on copra was set 
at 7.5 percent; for coconut oil, it was reduced from 5 percent to 1 percent; 
and for desiccated coconut and copra meal/cake, it was scrapped. The 
objective then was to slap a differential duty to discourage raw material 

On March 19 this year, EO No 9, issued by President Aquino, lifted the copra 
ban and reduced the additional duty on copra from 7.5 percent to 2.5 percent. 

In 1977, total revenue from coconut exports totaled P245 million; in 1978, 
P263.4 million; in 1979, P309 million; in 1980, P190 million; in 1982, P11.98 
million (after the suspension of taxes); and in 1984, P88.85 million (after 
the lowering of duties). 

CSO: 4200/1195 


28 July 1986 


HKO30733 Quezon City BUSINESS DAY in English 2 Jul 86 p 14 

[Text] The Philippine Coconut Authority (PCA) has asked President Aquino to 
order the sequestration of all assets of the Philippine Coconut Producers 
Association (Cocofed) and is now initiating moves to organize coconut farmers 
following plans to withdraw recognition to Cocofed. 

PCA Chairman Oscar Santos has submitted two draft executive orders to 
President Aquino, one ordering the sequestration of Cocofed assets and 
withdrawing from it government support and another authorizing the PCA to 
organize sectors involved in the coconut industry. 

In his note to Executive Secretary Joker Arroyo, Santos said the sequestration 
move was needed to preserve and conserve the assets, investments, and records 
of Cocofed. On the other hand, Santos said the withdrawai of government 
recognition to Cocofed was aimed at broadening its membership base and control 
its leadership "for and by true coconut farmers and workers." 

Instead, Santos said the Cocofed should cease trying to represent coconut 
farmers and instead give way to a new association of legitimate coconut 

The withdrawal of government recognition, Santos said does not mean the end of 
Cocofed. “It may still remain as an association of coconut planters but being 
unrecognized, its power and privileges under the law would be effectively 
clipped,” Santos said. 

Among the Cocofed assets eyed for sequestration is the P40 million Tahanang 
Maharlika (Coconut Palace) and the P50 million donation of Cocofed to set up 
Lungeod ng Kabataan (Children's Hospital) which used levy funds. 

Present funding of Cocofed, based on both increased copra production and PCA 
allocation is about P75 million annually. However, since the funds are 
generated from taxes from farmers, Santos said that the government were using 
public funds in subsidizing Cocofed although it is beyond normal government 
auditing jurisdiction. 


The draft executive order also cited that Cocofed leadership has not served 
the interest of farmers, adding that membership record of Cocofed confirmed 
only about 9 percent of coconut farmers as active members. 

Upon sequestration by the Presidential Commission on Good Government (PCGG) 
the draft order also sought to authorize the PCA to adminster Cocofed, its 
subsidiaries and owned and controlled entities. The PCA would also be 
empowered to merge, create, or abolish unites or entities and transfer 
functions from one unit to another. 

At the same time Santos told a press conference that his first priority in the 
first meeting of new board officials of the United Coconut Planters Bank 
(UCPB) would be to immediately seek for a divestment of assets of the UCPB-- 
administered Coconut Industry Investment Fund (CIIF). The liquefied sum, he 
said would be used to fund urgent projects. 

The CIIF investments, which funded oil mills, copra and other agricultural 
trading companies, the United Coconut Chemicals Inc. (Unichem), among others, 
total P2.7 billion. 

PCA officials however said that a divestment of these assets will bring a 
liquefied amount of at least P3 billion. CIIF mills, namely, Granex 
Manufacturing Corp., Legaspi Oil Co., San Pablo Manufacturing Corp., and 
Southern Luzon Coconut Mills which were infused P681 million from the CIIF is 
expected to bring at least Pl.2 billion considering huge investments made in 
the course of its operations. 

Santos said the sell-out of the mills would be done by public bidding adding 
that although multinational companies would not be disqualified, the 
government will make sure that a concentration of purchases to a single entity 
is avoided. "A sell-out is the most effective way of dismantling the 
monopoly,” he said. 

There are some sectors in the coconut industry however who maintain the 
position that the levy funds, including the CIIF were farmers money which 
should thes be returned to them. 

Santos said that Commission [as published] on Audit Teofisto Guingona who 
declared the levy funds as public money has agreed to treat the collections as 
"special funds" to allow it to be used for programs to benefit the industry. 

There are some sectors in the industry however who think that farmers who 
contribed to the levy deserved to get back their just shares. Coconut planter 
Manuel Sarabia from Iloilo however said that it would be difficult to 
distribute the dividend to 1.4 million coconut farmers. 

"This is now water under the bridge, and the important thing is that the 
entire amount is used to improve the livelihood of coconut farmers," he said. 

CSO: 4200/1195 


28 July 1986 



HKO30026 Quezon City BUSINESS DAY in English 2 Jul 86 p 13 

[Article by Ramon R. Isberto] 

[Text] The fight for the United Coconut Planters Bank [UCPB] has just begun. 

Officials of the Presidential Commission on Good Government [PCGG] and the 
Philippine Coconut Producers Federation (Cocofed) traded sharp verbal attacks 
yesterday, which showed the row over the PCGG's sequestration of 94.4 percent 
of the UCPB voting shares isn't about to die down and that huge lawsuits may 
yet follow. 

Commissioner Raul Daza told newsmen yesterday that the five-man commission 
tasked with recovering ill-gotten wealth "deplored" the "disruptive behavior" 
of Cocofed officials led by Maria Clara Lobregat, who, he said, may have 
misused Cocofed funds to assemble a highly partisan crowd during the 
stockholders’ meeting. 

He charged that Cocofed officials had "clearly acted from purely selfish 
interests" in rejecting a compromise proposed by Defense Minister Juan Ponce 
Enrile that would have allowed five Cocofed representatives to sit on the new 
15-man UCPB board of directors. 

Lobregat led a walkout by the Cocofed delegation that packed the ballroom of 
the Makati Sports Club last Monday. 

In an interview with BUSINESS DAY, Lobregat said the walkout was "the only 
honorable thing for us to do." 

"They should have heard the farmers," she said. 

Lobregat stressed that the PCGG should have allowed the coconut farmers to 
cast their votes in the election of the board of directors. 

Coconut farmers represented by Cocofed are listed as owning 51.8 percent of 
UCPB common shares. The PCGG prvempted the use of the voting rights of those 
shares by sequestering the block of shares. 


Despite assurances from Commissioners Daza and Ramon Diaz that sequestration 
did not mean the government was taking ownership of the shares, Cocofed 
provincial delegations bitterly attacked the PCGG for acting “dictatorially" 
and booed the two commissioners and coconut planters who spoke up in their 

Daza charged that the Cocofed leadership had packed the stockholders’ meeting 
with an audience hostile to the PCGG. "Mrs Lobregat carted in her supporters 
in buses and jeepneys," he said. 

He added that Cocofed had sent telegrams to selected provincial chapters to 
come to Manila as early as Thursday, promising to pick up the tab or reimburse 
expenses. The Cocofed delegations were billeted at the Tropical Palace in 
Paranaque (see BUSINESS DAY yesterday). 

On Friday, a caucus of the Cocofed leadership decided to insist on the 
election of its entire 15-man slate, Daza claimed. 

"The moment of truth came when Minister Enrile generously offered to 
relinquish to Mrs Lobregat and her group his option of naming five directors," 
Daza said. He expressed disappointment over Cocofed's rejection of the offer, 
saying Enrile's proposal would increase Cocofed's representation in the board 
from four directors in the past to five. 

“Why should we go along with (Enrile's proposal)?" Lobregat said in the 
interview. "We are the owners of 51 percent of the bank. We are the 
majority. How can they give us only five seats?" 

She said Cocofed had been content with four seats in the past because “the 
previous board...consisted of people who really love the coconut industry." 

Domingo Espina, Cocofed vice-president for the Visayas, urged the new UCPB 
board to resign. “How can they rightfully sit on the board when they have not 
been elected by the stockholders?" he asked. 

Asked if Cocofed is considering raising the matter to the courts, Lobregat 
said, "We'll take this up with our lawyers." 

"We do not know what will happen next," she said. "They can even sequester 
Cocofed...Maybe we will just wait and put this all together in one suit." 

PCGG officials said the matter of Cocofed has “not been even discussed in the 
commission's meetings yet." 

Daza is, however, taking to task the Cocofed leadership for another matter. 
He warned Lobregat and other federation officials that since Monday's meeting 
was that of the bank, they should not use the federation's funds for the 
farmers’ attendance. "If this is the case, Mrs Lobregat should be held 
personally accountable for the misuse of Cocofed funds," he said. 


He added the PCGG had received reports alleging that Lobregat had urged "mass 
withdrawals from the UCPB." "If true, Lobregat's statement is highly 
irresponsible," he said. 

Lobregat flatly denied the allegation. Saying she is only a "small planter, a 
small voice," the Cocofed president charged that the PCGG should be held 
morally and legally responsible if the bank should run into trouble. She 
emphasized that UCPB had been built through the efforts of the coconut 

The matter of the coconut farmers’ ownership of Cocobank lies at the heart of 
the dispute. Cocofed leaders insist that the coconut farmers own over half of 
the bank. The PCGG, on the other hand, has cited reports that as much as 80 
percent of the shares issued in the name of the farmers have been bought back 
by former UCPB president and Marcos crony Eduardo Cojuangco Jr. through 
Cocofed officials. 

CSO: 4200/1195 


28 July 1986 


HKO30143 Manila MANILA BULLETIN in English 2 Jul 86 pp 1, 12 
[Article by R. Panaligan] 

[Text] Owners of 24 corporations denounced yesterday the sequestration orders 
issued by the Presidential Commission on Good Government (PCGG) as violative 
of the Freedom Constitution adopted by the Aquino government. 

In a petition filed by former Ambassador Robert S. Benedicto and owners of 24 
corporations, the Supreme Court was told that the PCGG's sequestration orders 
are contrary to the rule of law and due process. 

The petition asked the Supreme Court tc issue a restraining order that would: 
1. Stop the implementation of the sequestration orders. 

2. Bar the PCGG from searching and seizing documents of firms affected by the 
sequestration order. 

3. Stop PCGG's takeover of businesses against whom sequestration orders are 

4. Return to firms and business all documents, papers, and other things 
illegally searched and seized. 

5. Furnish all sequestered firms the documents and all records of proceedings 
prior to the issuance of the sequestration orders. 

Aside from Benedicto, those who filed the petition were the owners of Belgor 
Investments Corp., Far East Managers and Investors, Northern Lines, Negros 
Stevedoring, Radio Phils. Network, Phils. Daily Express, Express Commercial 
Printers, Universal Molasses, Universal Equity, Integral Fractors, New Riviera 
Hotel Dev't., Visayan Maritime Academy, Agro Industrial and Commerical 
Security Service, Ireland Bulk Carriers, Coron Bulk Carriers, Ecija Bulk 
Carriers, Fuga Bulk Carriers, Agrid Ford, Banahaw Broadcasting, 
Intercontinental Broadcasting, Malibu Agro Business, Molave Bulk Carriers, 
Peninsula Tourist Shipping, and Strachan and MacMurray. 


Named respondents in the petition were the PCGG chairman and commissioners and 
their agents and representatives implementing the sequestration orders. 

The petition was the third filed before the Supreme Court questioning the 
legality and constitutionality of the PCGG's sequestration orders. 

The first two cases were filed by Roman Cruz Jr., former chairman of the 
Philippine Airlines, and the owners of the Tourist Duty-Free Shops (TDFS). 

The Benedicto petition claimed that the executive orders creating the PCGG are 
void and unconsitutional. 

It said Executive Orders 1 and 2 are bills of attainder, general warrants, 
expost facto laws, confiscatory, violative of the rule of law and due process, 
{words indistinct] exclusively the power to convict without judicial 

Citing that the sequestration orders are contrary to law and due process, the 
Benedicto petition said: 

1. PCGG's conclusion is already mandated and pre-ordained. 

2. PCGG's is charged with the duty of looking for evidence to support its 
mandated findings. 

3. PCGG issues general search and seizure orders conducting fishing 
expeditions, disregarding all human rights, including the right against self 
incrimination, in its efforts to find evidence to support its conclusion. 

4. PCGG makes its own rules. 
5. PCGG rules on inclusion or exclusion of evidence. 
6. PCGG evaluates its own evidence. 

The petition claimed that Executive Orders 1 and 2 that created the PCGG 
violated the Freedom Constitution where the Bill of Rights is enshrined. 

It said that the Bill of Rights provides that no expost facto law or bill of 
attainder should be enacted. 

It said the creation of the PCGG is a violation of the Bill of Rights because 
it is, in effect a bill of attainder. 

Benedicto and owners of the 24 firms told the Supreme Court that they are 
willing to file a bond to answer for any damage that the PCGG may sustain in 
the high courts issuance of an injunction. 

CSO: 4200/1195 


28 July 1986 


HKO21541 Quezon City BUSINESS DAY in English 2 Jul 86 p 2 
["Economic Indicator" column: "CB Lendings Increase 152 Percent™] 

[Text] Total loans granted by the Central Bank [CB] to the national 
government, banking institutions, and non-banks with quasi-banking functions 
more than doubled in the first quarter compared to the amount extended by the 
CB to the same institutions in the same period last year. 

Statistics taken from the CB showed that total lendings expanded by a hefty 
151.76 percent from P21,907.8 million last year to P55,154.1 million. 

The heaviest borrower was the banking sector composed of specialized govern- 
ment banks, thrift banks, rural banks, and commercial banks. This group 
availed of 60.11 percent of P33,150.8 million of the total loans for the first 
3 months. The banking sector's borrowings went up 69.09 percent from 
P19,605.8 million last year. 

Of the different banking institutions, commercial banks were the top 
borrowers, accounting for P18,470.5 million, up from P8,494.3 million in 1985. 

Specialized government banks, consisting of the Development Bank of the 
Philippines, Land Bank of the Philippines, and Philippine Amanah Bank borrowed 
P14,542.5 million from January to March this year, up 33.75 percent from last 
year's P10,872.7 million. 

Meanwhile, loans extended to the national government, totaling P21,940.8 
million or 39.78 percent of the total, ballooned 884.29 percent from P2,229.1 
million last year. This despite CB Governor Jose B. Fernandez, Jr.'s plan, 
announced upon his reappointment as CB head, to lerd more to the private 

Of the total loans granted to the government in the period, P10,822.0 million 
was for budgetary purposes while P11,047.3 million was earmarked for non- 
budgetary purposes. 


Loans Granted by the Central Bank 
as of March 1986 and 1985 
(in million pesos) 

Government Locals 
National Naticnal Semi- 
Grand Government Government Government 
Total Total Budgetary Others Entities 
1986 January 8,682.7 3,045.1 1,500.0 1,490.9 54.2 
February 25,698.2 6,015.2 -- 6,005.2 10.0 
March 20,773.2 12,880.5 9,322.0 3,551.2 7.3 
January 7,498.7 1,038.1 — 1,030.8 7.3 
February 7,356.7 984.0 -- 773.0 211.0 
March 7,052.4 207.0 -- -- 207.0 
April 14,492.8 11,541.6 8,440.0 2,943.4 198.2 
May 8,399.9 1,218.2 -~ 1,070.6 147.6 
June 6,729.7 3,620.0 -- 3,539.6 80.4 
July 4,922.0 589.4 -- 530.0 59.4 
August 16,035.0 2,531.6 -- 1,127.3 1,404.3 
September 9,660.6 4,119.0 2,101.0 955.1 1,062.9 
October 8,292.4 3,109.9 -- 2,596.9 531.0 
November 9,264.8 2,056.6 -- »678.7 377.9 
December 12,569.6 4,690.9 — 4,249.2 441.7 
Splzd. Banks 
Gov't. Thrift Rural Commercial 
Total Banks Banks Banks Banks NBOBF# 
1986 January 5,636.1 1,357.2 0.7 32.0 4,246.2 1.5 
February 19,622.4 9,720.8 28.5 29.7 9,843.4 60.6 
March 7,892.3 3,464.5 6.0 40.9 4,380.9 0.4 
1985 January 6,423.9 3,280.5 94.9 32.9 3,015.6 36.7 
February 6,351.1 3,556.4 0.1 43.3 2,751.3 21.6 
March 6,830.8 4,035.8 13.3 54.3 2,727.4 14.6 
April 2,917.9 1,030.4 2.8 58.4 1,826.3 33.3 
May 7,173.9 1,647.8 5.6 60.1 5,460.4 7.8 
June 3,108.2 2,513.5 0.9 49.2 544.6 1.5 
July 4,328.4 1,336.2 13.0 71.6 2,907.6 4.2 
August 13,496.0 8,607.8 10.9 80.2 4,797.1 7.4 
September 5,540.2 1,993.5 1.0 75.8 3,469.9 1.4 
October 5,177.6 1,412.2 2.5 67.7 3,695.2 4.9 
November 7,204.8 2,989.8 0.9 18.5 4,195.6 3.4 
December 7,874.4 3,785.2 1.3 52.0 4,035.9 4.3 

# Non-Banks with Quasi-Banking Functions 
Source: Central Bank 

CSO: 4200/1195 


28 July 1986 


HKO40519 Quezon City BUSINESS DAY in English 3 Jul 86 p 2 
["Economic Indicator" column: "Peso Falls vs Dollar") 

[Text] The peso's value vis-a-vis the U.S. dollar in the first half of the 
year averaged P20.326407 per dollar, down 8.64 percent from the P18.709842 per 
dollar average during the comparative period in 1985, exchange rates data 
gathered from the Central Bank and compiled by BUSINESS DAY showed. 

Other currencies that form part of the Philippine international reserves such 
as the Austrian schilling, Belgian franc, Canadian dollar, French franc, Hong 
Kong dollar, Japanese yen, Netherlands guilder, Singapore dollars, Swiss 
franc, United Kingdom pound, and West German deutsche mark also performed well 
against the peso. 

Average Exchange Rate of the Peso 

January - June 1985 and 1986 
(in pesos per unit of foreign currency) 

Currency January February March April 

U.S. dollar x 19.050304 20.631000 20.720389 20. 504523 
Australian dollar xx 13.333413 14.449456 14.669139 14.811082 
Austrian schilling x 1.111530 1.264319 1.303406 1.283350 
Bahrain dinar xx 50.525891 54.731281 54.972894 54.821859 
Belgian franc x .381143 - 433613 -445367 -441259 
Canadian dollar x 13.542796 14.693700 14. 790667 14.774386 
Chinese renminbi xxx 5.935599 6.416796 6.438139 6.377151 
Danish kroner 2.130770 2.411438 2.477694 2.431586 
French franc x 2.546013 2.897731 2.972483 2.848218 
Hong Kong dollar x 2.440548 2.644881 2.653789 2.631532 
Indonesian rupiah -016857 -018350 -018439 -018305 
Iraq dinar 16.649057 18.019231 17.677778 17.922945 

{Continued on following page] 



Italian lire 
Japanese yen 
Kuwait dinar 
Malaysian dollar 
Netherlands guilder 
New Zealand dollar 
Norwegian kroner 
Saudi Arabian riyal 
Singapore dollar 
Spanish peseta 
Swedish kroner 
Swiss franc 

Taiwan dollar 
Thailand baht 

United Kingdom pound 

West German D-mark 


U.S. dollar 
Australian dollar 
Austrian schilling 
Bahrain dinar 
Belgian franc 
Canadian dollar 
Chinese renminbi 
Danish kroner 
French franc 

Hong Kong dollar 
Indonesian rupiah 
Iraq dinar 

Italian lire 
Japanese yen 
Kuwait dinar 
Malaysian dollar 
Netherlands guilder 
New Zealand dollar 
Norwegian kroner 
Saudi Arabian riyal 
Singapore dollar 
Spanish peseta 
Swedish kroner 
Swiss franc 


- 123748 

- 725361 



- 122845 
- 144400 

[Continued on following page] 



- 112406 
- 139669 
- 528100 

- 782450 


- 448505 
- 109130 

- 122325 
69. 760280 
- 142585 



- 116033 
- 136661 
- 533144 
- 789300 
30 .433106 



- 114318 
70. 363273 
- 136995 


- 134905 

- 782300 

January to 
June 1985 

18. 709842 
13. 308783 
- 840867 
- 293347 
- 009336 
- 105405 


January to 
Currency May June Average June 1985 
Taiwan dollar - 536165 - 542740 - 525450 - 476632 
Thailand baht . 786990 - 788740 - 775857 -686305 
United Kingdom pound x 31.184950 30. 961885 30.011330 22.238050 
West German D-mark x 9.209815 9.181070 8.877232 5.889284 

x Currencies that form part of the Philippines international reserves 
xx Other acceptable currencies 
xxx Beijing exchange rate--Reuters 
Source: Central Bank 
Compiled by: Business Day Data Bank 

CSO: 4200/1195 


28 July 1986 



BK210458 (Clandestine) Voice of Democratic Kampuchea in Cambodian 2330 GMT 
19 Jun 86 

[Station Commentary: “Our National Army and People in Siem Reap Province Suc- 
cessfully wiberated and Controlled the Vietnamese Defense Network Around the 
Angkor Wat Area”) 

{Text] At around midnight on 10 June, our National Army in cooperation with 
fraternal Cambodian soldiers launched a successful 4-pronged attack against the 
Vietnamese defense network in the Angkor Wat area. The first prong attacked 
the Vietnamese enemy's radar station on Bakheng Hill; the second prong attacked 
the Vietnamese battalion position at Trapeang Ses Vallage; the third prong 
attacked the defense line north of Angkor Wat; and the fourth prong attacked 
the 497th Command Post west of Angkor Wat. We totally liberated and took con- 
trol of the Vietnamese position network in this Angkor Wat region and freed 25 
villages in this area. We also killed or wounded 87 Vietnamese enemies. Among 
those killed were a division commander and two regiment commanders. We 
destroyed 120 assorted weapons, 1 radar station, 1 radar, 1 large telegraph 
set, 2 lS-watt telegraph sets, 1 ammunition depot containing 8 metric tons of 
ammunition, 1 rice storehouse containing 400 sacks of rice, 6 trucks, and a 
large quantity of ammunition and war material. We seized 25 assorted weapons 
and some ammunition and war material. 

This is another heavy attack launched by our National Army and people against 
the Vietnamese aggressors in this rainy season. Angkor Wat is one of the 
tightly defended regions of the Vietnamese enemies. They have stationed a 
large number of troops armed with modern weapons and radar station for the 
defense of this Angkor Wat region. They use this Angkor Wat region for propa- 
ganda purposes to fool the world into believing that they are in full control 
of Cambodia. They often invite foreign journalists and tourists to visit this 
region for this propaganda purpose. Earlier, the Vietnamese enemies posted 
their joint command headquarters for supervising their war of aggression in 
Siem Reap Town. 

However, despite this tight defense, our soldiers anu people in Siem Reap 
Province--the outstanding sons and daughters of the land of Angkor--have suc- 
cessively attacked the Vietnamese enemies in the areas around the Angkor temple 
and throughout Siem Reap Province. They have implemented our five attack tac- 
tics in a lively way by coordinating our three forces effectively. In 


particular, they attacked and dismantled the Vietnamese enemies’ village and 
commune administration, dispersed Cambodian soldiers, cut off large and small 
transport routes of the Vietnamese enemies, and destroyed their manpower and 
war material on a regular basis both in the dry and rainy seasons, thus 
turning the Angkor Wat region and all of Siem Reap Provii:» into a place of 
permanent insecurity. Our National Army and people have ;cintly attacked Siem 
Reap Town three times now. We destroyed a lot of Vietnamese manpower and war 
material. We even killed a number of the Soviet advisors in Siem Reap Town. 
Due to our activities, the Vietnamese enemies were compelled to withdraw their 
joint command headquarters from Siem Reap Province. However, the Vietnamese 
enemies still maintain a large number of troops to defend Siem Reap Town and 
the Angkor Wat region so as to make this region look calm for their deceitful 
propaganda purposes. But, our National Army and people in Siem Reap Province 
have been able to successively attack the Vietnamese enemies more vigorously 
in this region. Due to this, the Vietnamese enemies in this region have been 
living in great panic. 

The attack launched by our National Army and Cambodian soldiers against the 
Vietnamese defense line at Angkor Wat on 10 June clearly shows that the Viet- 
namese enemies could not depict the Angkor Wat region as a calm place to serve 
their deceitful propaganda. 

Our National Army and people throughout the country are very happy over the 
brilliant victories won by our National Army and fraternal Cambodian soldiers 
in Siem Reap Province in attacking the defense Line of Angkor Wat region. Our 
National Army and people throughout the country wish our national soldiers, 
people, and fraternal Cambodian soldiers in Siem Reap Province greater vic- 
tories in their struggle against the Vietnamese aggressors and race extermin- 
ators. We also call on them to further coordinate our three forces to attack 
the Vietnamese aggressors more vigorously as they are doing in this Angkor Wat 
region in order to contribute to liberating our beautiful land of the Angkor 
and our entire Cambodian fatherland from the Vietnamese aggressors. 

CSO: 4212/88 

28 July 1986 


BK270120 Bangkok BANGKOK POST in English 27 Jun 86 p 4 
[Article by Jacques Bakaert ] 

([Text] Unity among the three Khmer resistance factions has improved consider- 
ably during recent months, according to Col Kruoch Yoeum, deputy chief of staff 
of the National Sihanoukist Army's [ANS] Second Brigade. 

The colonel returned recently from a six-month mission inside Kampuchea where 
he commanded ANS troops in the March 28 battle of Battambang, which was the 
first genuine and significant joint operation by the resistance. 

Born in 1940 in Battambang Province, Col Kruoch belongs to a generation of 
younger and capable officers who are being promoted through their battle experi- 

On December 20 last year, Col Kruoch led a 900-strong force from his border base 
and through the Vietnamese frontlines in three groups. "We had no major prob- 
lems," he said yesterday. “We only encountered mines, but saw no barrage, and 
managed to avoid the enemy for more than 150 kilometres." 

After 21 days, the ANS unit reached its objective, a forest area in Battambang 
Province, where a mobile ANS HQ was established. 

The base was attacked in early May when Vietnamese troops launched a mopping-up 
operation using MI-8 helicopters, ground troops and 109mv and 130mm guns. Col 
Yoeum claimed it failed because the narrow corridors left by the floods were 
heavily mined by the nationalists. 

"We brought leaflets to distribute to villagers and pictures of Samdech Norodom 
Sihanouk to gain the confidence of the people,” he said. The ANS soldiers also 
carried medicine to treat civilians. 

ANS forces, like otherc operating inside Kampuchea, usually buy their food on 
the spot. Thai currency can be used in cities like Sisophon or Thmar Puok, 
where the going rate is 500 riels for 100 baht. It can also be exchanged in 
Battambang, but the rate is only 400 riels. 


A 100-kilogramme bag of rice can cost 1,300 riels, and during the battle of 
Battambang, ANS troops managed to get about 100 extra bags from Vietnamese ware- 

Col Yoeum said the main problem remains the resupply of ammunitions. Soldiers 
leave border bases with 300 rounds per weapon and can sometimes buy more ammuni- 
tion from Heng Samrin forces. 

Relations between the armed forces of the People's Republic of Kampuchea and 
the resistance are normally correct, said the colonel. "We have an agreement 
not to shoot at each other." Contacts between ANS and PRKAF are usually made 
through civilians. 

Col Yoeum and his deputy, Major Hen Yut, gave some new details about the battle 
of Battambang. The operation was planned on March 26 on a Khmer Rouge initia- 
tive. The attack itself took place two days later, from midnight until 5 a.m. 
It involved troops from the National Army of Democratic Kampuchea [NADK], ANS 
and the Khmer People’s National Liberation Front. 

During the assault, the NADK used Chinese 107mm rockets against Vietnamese posi- 
tions, and the colonel said his men were surprised by the lack of strong Viet- 
namese resistance. 

"The enemy seemed disorganised, and quickly retreated into town,” said Major 

Hen Yut. Vietnamese villagers living near the city also fled. 

The airfield, at which there were no aircraft, the newly-built hospital, oil and 
ammunition depots and warehouses were attacked. Two Soviet medical officers 
were killed in the hospital, the colonel claimed. 

Col Yoeum said he was struck by the lack of medical facilities in the province. 
He said the pagodas are allowed two monks each and each monk has to pay a tax 
of 3,000 riels a year. But many temples are closed or used for non-religious 
purposes. Wat Sangke is an ammunition depot, Wat Pou Veal is a Vietnamese mili- 
tary camp and Wat Kandal is the command post of the 704th Vietnamese propaganda 
unit. The three pagodas are in Sroc District, Sangke, Battambang Province. 

ANS sources said routes five and six had become extremely dangerous for the 
Vietnamese troops. Almost one third of their logistic supplies are now flown 
in and the rest comes in heavily-armed convoys of 50 to 100 trucks. 

Expressing confidence that his men could hold their ground, he said the closer 
cooperation between the factions made it now possible to engage in supporting 
or diversionary attacks during mopping-up operations. 

The fact the resistance is now more active in many areas of Kampuchea has 
created another problem for the Vietnamese. “In order to launch big operations, 
the Vietnamese Army is now forced to bring back troops from sensitive areas, 
which gives us new opportunities." 

Prince Norodom Rannarit said 24 ANS medical personnel were now getting special 
training in China. The first batch of five surgeons should return to the 

battlefield soon. After the battle of Battambang, wounded ANS soldiers were 
treated by Khmer Rouge doctors in a field hospital some 30 kilometres east of 
the city. The nationalists believe it is important to send medical teams along 
with theirtroops, to boost morale and give the men confidence. 

CSO: 4212/88 




BK300326 (Clandestine) Voice of Democratic Kampuchea in Cambodian 2330 GMT 
29 Jun 86 

(Station Commentary: "The Effort of the International Conference on Kampuchea 
Ad Hoc Committee Is an Important Contribution to the Political Settlement of 
the Cambodian Problem") 

([Text] On 23 June, the ad hoc committee of the International Conference on 
Kampuchea [ICK] of the United Nations issued a statement in New York supporting 
the CGDK's 8-point proposal for a political settlement of the Cambodian prob- 
lem. The statement said: This 8-point peace proposal is a development that 
can make an important contribution to a comprehensive and lasting political 
settlement of the Cambodian problem, and is enjoying broad support in the 

Also on 23 June, a delegation of the ICK ad hoc committee headed by Massamba 
Sarre, chairman of the committee, met and had talks with the ASEAN foreign 
ministers in Manila, the Philippines. The two sides unanimously held that with- 
drawing Vietnamese troops from Cambodia and allowing the Cambodian people to 
enjoy the right to decide their own destiny and to choose their own government 
is also the most important factor for the settlement of the Cambodian problem. 

The firm and consistent support of the ICK ad hoc committee, as well as the 
support of the ASEAN countries and international community, for the CGDK's 8- 
point proposal constitutes a powerful encouragement for the entire Cambodian 
people and all Cambodian patriotic resistance forces fighting the Vietnamese 
directly on the battlefield. It is also pressure on the Vietnamese enemy 
aggressors, who refuse to accept this 8-point peace proposal, driving them into 
greater impasse and utter isolation in the international arena. 

For the past more than 7 years, although the whole international community, 
including the United Nations, the ICK ad hoc committee, and the ASEAN countries, 
has been actively trying to find a political solution to the Cambodian problem, 
the issue has remained unsolved. This is because the Vietnamese authorities 
have stubbornly refused to withdraw all their aggressive troops from Cat.bodia 
and respect the Cambodian people's right to self-determination in accordance 
with the seven UN General Assembly resolutions and the earnest call of the 
international community. On the contrary, they continue to invade and occupy 


Cambodia, to massacre the Cambodian people most brutally and savagely both 
inside the country and in the refugee camps on Thai territory, and to violate 
Thai border regions, causing the situation along the border to remain con- 
stantly tense. Therefore, security and stability in Southeast Asia continue 
to be constantly threatened and the danger that the Vietnamese war of aggres- 
sion in Cambodia might spread to the rest of the region continues to be ever- 

Therefore, Vietnam's war of aggression in Cambodia threatens not only the 
existence of the Cambodian nation and people alone, but also peace, stability, 
and the interests of countries in the region and the world as well. For this 
reason, the international community, especially the countries in the region 

and countries having interests in the region, is seeking by all means and 
methods to settle the Cambodian problem politically by trying to completely end 
Vietnam's military presence in Cambodia. However, the Hanoi enemy aggressors 
have rejected all proposals and efforts of the international community, espe- 
cially those of the United Nations and ASEAN countries, to settle the Cambodian 
problem politically. Recently again, when the CGDK put forward the 8-point 
proposal for a political settlement of the Cambodian problem with so many con- 
cessions to the Hanoi authorities, the latter continued stubbornly to reject 
this reasonable proposal. 

This shows the obduracy of the Hanoi authorities who have no sincerity in 
settling the Cambodian problem politically and want to occupy Cambodia forever. 
In the face of this Vietnamese stubbornness, the international community 
clearly sees the necessity to carry on its efforts, especially to continue sup- 
porting the CGDK's 8-point proposal and bring pressure to bear on Vietnam to 
accept this proposal and agree to hold negotiations for a political settlement 
of the Cambodian problem by immediately and unconditionally withdrawing all 
Vietnamese troops from Cambodia, for only after Vietnam withdraws all its 
troops from Cambodia can the Cambodian problem be settled, can the Cambodian 
people enjoy the right to self-determination, and can peace and stability be 
restored in Cambodia and Southeast Asia. 

The Cambodian people and the DK National Army are confident that the ICK ad hoc 
committee, whose mission is to find a solution for the Cambodian problem 
according to the UN resolutions and the ICK declaration, will continue making 
efforts and conducting activities in the international arena together with all 
peace- and justice-loving countries the world over, bringing greater pressure 
to bear on the Hanoi authorities to accept the CGDK's 8-point peace proposal 
and, in addition to the struggle of the Cambodian people and DK National Army 
now vigorously fighting the Vietnamese directly on the battlefield, forcing 
the Hanoi authorities to withdraw all their troops immediately and uncondi- 
tionally from Cambodia, allowing the Cambodian people to decide their own 
destiny without any outside interference or pressure. 

CSO: 4212/88 


28 July 1986 



BK300456 (Clandestine) Voice of Democratic Kampuchea in Cambodian 2330 GMT 
29 Jun 86 

("News Commentary": "Three Hundred Vietnamese Soldiers Positioned at Anlung 
Thmar on the Sisophon Battlefield South of Route 5 Abandon Their Base and Flee 
Home" ] 

[Text] On 21 June 300 Vietnamese soldiers positioned in Anlung Thmar base on 
the Sisophon battlefield south of Route 5 fled en masse back to Vietnam. On 
the way back home, they begged our people for rice and food and told our peo- 
ple that on the South Sisophon battlefield at present many Vietnamese soldiers 
are being killed or wounded daily by the attacks, raids, and constant shellings 
of our DK National Army. As for their living conditions on the western Cam- 
bodian battlefield, they generally suffer from all kinds of shortages. They 
lack food, medicine, and ammunition because the supply lines linking them to 
the interior have been cut repeatedly by guerrillas and Vietnamese transporta- 
tion convoys have been regularly ambushed. Moreover, during the current rainy 
season malaria and typhoid fever are plaguing more than half of each Vietnamese 
garrison. Vietnamese soldiers are dying like flies in these conditions. They 
asked our people for information about the roads to take in their trek back to 
Vietnam to avoid being caught or shot dead by their cruel commanders. They 
said that they refused to stay and fight under such miserable conditions 
because they would inevitably be killed one way or another. They said that 
Vietnamese soldiers on the South Sisophon battlefield as well as on all other 
battlefields in western Cambodia have lost all their fighting spirit. All are 
looking for an opportunity to flee to Vietnam. The problem for them is that 
they do not know the way. 

This revelation by the Vietnamese soldiers reflects the demoralization, despair, 
and weariness of the Vietnamese aggressor troops in western Cambodia as well 

as on the Cambodian battlefield as a whole. Moreover, it also clearly reflects 
the general situation of the Vietnamese enemy on the Cambodian battlefield 

which is increasingly difficult and conp’«tely contrary to the Hanoi author- 
ities’ boast that their troops are the mis' ers of the battlefield and are in 
complete control of Cambodia. 

CSO: 4212/88 


28 July 1986 



BKO20325 (Clandestine) Voice of Democratic Kampuchea in Cambodian 2330 GMT 
1 Jul 86 

[Station Commentary: "The World People Have Seen Clearly the Cruelly and 
Truculently Aggressive and Expansionist Face of the Hanoi Authorities"] 

[Text] During their recent meeting, the ASEAN foreign ministers and their eco- 
nomic partners jointly condemned the Vietnamese aggression against Cambodia, 
voiced their support for the CGDK's 8-point proposal, and demanded that Viet- 
nam reconsider this proposal. The Hanoi Vietnamese enemies were very enraged 
by this. Both the Vietnamese press and radio have kept denouncing and 
rejecting this correct call by the ASEAN nations and their economic partners 

in a most truculent and arrogant manner. The Vietnamese propaganda apparatus 
even said that it is unreasonable for the ASEAN countries to demand the with- 
drawal of Vietnamese troops from Cambodia and that the situation in Cambodia 

is irreversible. 

This is truly an arrogant and truculent statement uttered by the Hanoi Viet- 
namese aggressors. Despite the fact that they have committed an unpardonable 
and unacceptable act in sending hundreds of thousands of troops to invade and 
occupy Cambodia in gross violation of the UN Charter and international law, 
the Vietnamese aggressors dare condemn others as being unreasonable in 
demanding the withdrawal of their aggressor troops from Cambodia and calling 
for respect for the Cambodian people's right to self-determination in accor- 
dance with UN resolutions. So it means that their aggression and occupation 
of Cambodia and their crimes in massacring the Cambodian people in a most cruel 
and barbarous manner are reasonable acts. This is the aggressive and expan- 
sionist logic of the Hanoi Vietnamese enemies. 

The 6 ASEAN countries and their i7 economic partners-~-totaling 23 countries-- 
as weil as the world community have all supported and praised the CGDK's 8- 
point proposal as an appropriate and broad plan for a political settlement of 
the Cambodian problem because this proposal sets forth measures to achieve an 
all-round settlement of the Cambodian problem and is quite concessionary to the 
Vietnamese as it takes into account the interests of both the Cambodian and 
Vietnamese people. However, the Hanoi authorities have denounced these coun- 
tries. Immediately after this 8-point proposal was made public and supported 
actively by the world community, the Hanoi authorities rejected it without 


having considered this proposal thoroughly. They condemned the ASEAN countries 
and their economic partners immediately after these countries called on them 
to reconsider their rejection. 

All these acts by the Hanoi authorities clearly show that they are unwilling 
to solve the Cambodian problem through political means. On the contrary, they 
have stubbornly carried on their war of occupation against Cambodia, setting 
up an Indochinese federation, and continuing their strategy of aggression and 
expansion against Southeast Asia. However, these acts have enabled the whole 
world to see more clearly that the Vietnamese enemies' diplomatic moves con- 
cerning their desire to hold negotiations on the Cambodian and Southeast Asian 
problems is just a deceitful maneuver aimed at diverting world public opinion, 
easing the world's anger, and luring the people in this region and elsewhere 
around the world to stop pressuring Vietnam to withdraw its troops from Cam- 

Such obstinate and truculent acts by the Vietnamese enemy aggressors will only 
enrage the countries in this region and the entire world community even more. 
They will certainly oppose the Vietnamese enemies even more vigorously. The 
Vietnamese enemies will certainly become more extremely isolated in the inter- 
national arena. At the same time, the world community will certainly continue 
to put stronger pressure on Vietnamese authorities in order to force them to 
reconsider and accept the CGDK's 8-point proposal and agree to negotiate to 
solve the Cambodian problem through political means by withdrawing all their 
troops unconditionally from Cambodia, thus allowing the Cambodian people to 
decide their own destiny without any outside interference. 

CSO: 4212/88 



28 Tayo 87869126 

ly 1986 



BKO20150 (Clandestine) Voice of the National Army of Democratic Kampuchea in 
Cambodian 2315 GMT 1 Jul 86 

[Roundup of June battle results] 

[Text] 1. Koh Kong-Kompong Som battlefield: We killed 97 and wounded 84 Viet- 
namese enemy soldiers for a total of 181 casualties. 

2. Leach-Peam Ta battlefield: 215 killed and 268 wounded. Total: 483 casu- 

3. Samlot battlefield: 71 killed and 73 wounded. Total: 144 casualties. 
4. Pailin battlefield: 255 killed and 306 wounded. Total: 561 casualties. 

5. South Sisophon battlefield: 213 killed and 164 wounded. Total: 377 casu- 

6. North Sicophon battlefield: 54 killed and 70 wounded. Total: 124 casu- 

7. Battlefields around Battambang Town: 50 killed and 63 wounded. Total: 
113 casualties. 

8. Siem Reap-Route 6 battlefield: 100 killed and 149 wounded. Total: 249 

9. Preah Vihear battlefield: 24 killed and 16 wounded. Total 40 casualties. 

10. Kompong Thom-Kompong Cham battlefield: 113 killed and 130 wounded. 
Total: 243 casualties. 

ll. Moung-Pursat battlefield: 92 killed and 89 wounded. Total: 181 casu- 

12. Kompong Chhnang battlefield: 64 killed and 53 wounded. Total: 117 casu- 


13. Tonle Sap battlefield: 15 killed and 17 wounded. Total: 32 casualties. 

14. Northwest Phnom Penh battlefield: 52 killed and 66 wounded. Total: 118 

15. North Phnom Penh battlefield: 10 killed and 15 wounded. Total 25 casu- 

16. Northeast and eastern battlefield: 19 killed and 25 wounded. Total: 44 

17. Southwest battlefield: 191 killed and 250 wounded. Total: 441 casualties. 

In sum, in June we killed 1,735 Le Duan Vietnamese soldiers and wounded 1,838 
others for a total of 3,573 casualties [all figures as heard]. 

CSO: 4212/88 


28 July 1986 



BK040240 [Editorial Report] (Clandestine) Voice of the National Army of 
Democratic Kampuchea broadcast the following battle reports during the reporting 
period 27 June-3 July: 

According to VONADK at 2315 GMT on 27 June, DK forces dismantled the Vietnamese 
village and commune administrative networks in Stoeng Trang District on 23 June, 
in Sisophon District on 14 June, Santuk District on 21 June, and in Moung Dis- 
trict on 20 June; ambushed a Vietnamese truck convoy in Battambang Province on 
19 June; attacked a Vietnamese company position in Cheung Prey District on 

19 June; and conducted guerrilla activities on Kompong Cham, South Sisophon, 
Kompong Thom, Moung-Pursat, Battambang, Pailin, and Route 4 battlefields 
between 13 and 23 June. They killed 69 Vietnamese soldiers; wounded 62 others; 
dismantled 4 commune and 5 village administrative networks; destroyed 2 com- 
mune office buildings, 7 weapons, 7 trucks, 1 C-25 radio, and 5 barracks; 
seized some weapons and war material; and liberated 3 villages on South 
Sisophon battlefield and 14 villages on Moung-Pursat battlefield. 

VONADK at 2315 GMT on 29 June reports that DK forces attacked Sandan District 
seat in Kompong Thom province on 24 June; attacked and dispersed commune and 
village administrations in Cheung Prey District on 25 June, in Sandan District 
on 25 June, and in Udong District on 22 June; and conducted various other 
actions on the Leach, Northwest Phnom Penh, Western Leach, Peam Ta, Pailin, and 
South Sisophon battlefields, killing 37 and wounding 42 Vietnamese soldiers; 
destroying 1 district seat; dispersing | commune and 16 village administrations; 
destroying 52 guns, 2 trucks, 1 commune office building, 1 garment warehouse, 

l rice storehouse, 6 barracks, and some ammunition and war material; and lib- 
erating 5 villages in Cheung Prey District. 

VONADK at 2315 GMT on 30 June reports that DK forces attacked the Vietnamese com- 
mune and village administrative networks in Sangke District on 21 and 25 June, 
in Samraong Tong District on 25 June, and in Kong Pisei District on 15 June; 
ambushed Vietnamese trucks on Route 4 on 21 and 23 June; attacked a Vietnamese 
company unit on South Sisophon battlefield on 24 June; and conducted various 
other activities on the Western Leach, East Battambang, Northwest Phnom Penh, 
Kompong Speu, Route 4, South Sisophon, Pailin, and Koh Kong Leu battlefields 
from 15 to 25 June, killing or wounding 142 Vietnamese soldiers; destroying 2 


commune and 4 village administrative networks, 9 weapons, 1 commune office 
building, 3 trucks, and 3 barracks; seizing 3 weapons and some war materials; 
and liberating 9 villages on East Battambang battlefield. 

According to VONADK at 2315 GMT on 1 July, DK forces attacked the Vietnamese 
administrative networks in communes and villages on Tonle Sap battlefield on 
23 June, on Northwest Phnom Penh battlefield on 24 June, on Moung-Pursat bat- 
tlefield on 27 June, on Kompong Chhnang battlefield on 16 June, on Kampot bat- 
tlefield on 24 June, on Kompong Som battlefield on 20 June, and on South 
Battambang battlefield on 26 June; ambushed a Vietnamese truck in Toek Phos 
District on the Kompong Chhnang battlefield on 25 June, a Vietnamese truck 
along Route 19 on Ratanakiri battlefield on 15 June, a Vietnamese platoon unit 
on Chhep battlefield on 26 June, a Vietnamese battalion moving from Svay Cheat 
to Boeng Sinuon on the Chhep battlefield on 24 June, 2 Vietnamese platoon units 
in Sangke District on Battambang battlefield on 27 June, and a group of Viet- 
namese soldiers west of Sung On Samlot battlefield on 21 June; and conducted 
other actions on Moung-Pursat, Samlot, Koh Kong Leu, South Sisophon, Chheap, 
Ratanakiri, Kampot, Battambang, and Kompong Chhnang battlefields between 

19 and 27 June, including the results of their activities on all battlefields 
in June, killing 1,801 and wounding 1,894 Vietnamese soldiers; destroying 4 
commune and 10 village administrations, 27 assorted weapons, | commune office 
building, 1 rice milling machine, 3 trucks, 1 boat, 8 barracks, | guard post, 
and some ammunition and war material; seizing 3 guns; and liberating 2 vil- 
lages on Tonle Sap battlefield and 2 villages on the Moung-Pursat battlefield. 

VONADK at 2315 GMT on 2 July reports that DK forces attacked Thpong District 
seat on Northwest Phnom Penh battlefield on 27 June; raided Vietnamese admin- 
istrative networks at villages and communes in Baray District on Kompong Thom 
battlefield on 12 June, in Kompong Leng District on Tonle Sap battlefield on 
13 and 20 June, on North Battambang battlefield on 26 June, on East Battambang 
battlefield on 26 and 29 June, and on West Battambang battlefield on 27 June; 
ambushed and dispersed a Vietnamese regiment unit in the vicinity of Stoeng 
Sangke and Stoeng Chas riverbanks on Battambang battlefield on 24 and 25 June, 
a Vietnamese company unit moving from Sdau to Svay Chek on Pailin battlefield 
on 28 June, and a group of Vietnamese soldiers north of Hill 492 on Koh Kong 
Leu battlefield on 29 June; and conducted other activities on Northwest Phnom 
Penh, Koh Kong Leu, North Sisophon, and Tonle Sap battlefields between 19 and 
29 June, killing or wounding 112 Vietnamese soldiers; destroying 3 commune and 
12 village administrative networks, 38 assorted guns, 1 truck, 3 war material 
warehouses, 4 barracks, 1 guard post, and some ammunition and war material; 
seizing 19 guns; and liberating 11 villages on Kompong Thom battlefield, 5 
villages on Tonle Sap battlefield, 4 villages on North Battambang battlefield, 
and 2 villages on West Battambang battlefield. 

VONADK at 2315 GMT on 3 July reports that DK forces attacked the Vietnamese 
administrations at a commune and village on West Battambang battlefield on 

29 June and on Kampot battlefield on 25 June and conducted various other 
activities on Samlot, Kampot, ance %:'t" Sisophon battlefields between 20 and 
30 June, killing or wounding 55 Viewi:=*se soldiers; destroying the Vietnamese 
administrations at a commune and a vil’«z», 17 guns, 1 truck, and some ammuni- 
tion and war material; and liberating « villages on West Battambang battlefield. 

CSO: 4212/88 


28 July 1986 



BKO60702 (Clandestine) Voice of Democratic Kampuchea in Cambodian 2330 GHT 
5 Jul 8¢£ 

[Station Commentary: “Our National Army and People in Kompong Thom Province 
Are Uniting in Fighting Actively Against the Vietnamese Enemy Aggressors Using 
the 5-Point Fighting Method") 

[Text] Kompong Thom Province is a strategic area. It is a key point through 
which the Vietnamese supply weapons and food to the Vietnamese soldiers in 
western and northern Cambodia. It is also an area rich in paddy, rice, and 
fish. Like other provinces around the Tonle Sap Lake, Kompong Thom is a prov- 
ince to which the Vietnamese have paid great attention for its defense on the 
one hand to supply war material to their forces in western and northern Cam- 
bodia, and on the other, to plunder our people's resources to feed their 
troops in those areas. However, our National Army and people in Kompong Thom 
Province have valiantly cooperated in fighting the Vietnamese enemy aggressors 
and transformed the entire province into a hot battlefield to prevent the Viet- 
namese from supplying their forces and plundering our people's resources at 

In the past dry season, our National Army has cooperated with our people and 
Cambodian soldiers and compatriots in sweeping and dismantling Vietnamese 
administrative authorities in communes and villages time and time again through- 
out the entire province. The Vietnamese have been in a constant state of con- 
fusion and panic. Kompong Thom Town in particular has been attacked many times 
by our National Army and people who scored resounding victories. In the cur- 
rent rainy season, despite difficulties caused by floods, our heroic National 
Army and people in Kompong Thom Province still continue to attack the Viet- 
namese relentlessly using our new 5-point fighting method. We are not allowing 
the Vietnamese any breathing space. News of attacks to dismantle commune and 
village administrative networks and to destroy Vietnamese positions and reports 
on ambushes and attacks to thwart various Vietnamese operations are heard 
almost daily. 

On 25 May, our National Army ambushed the Vietnamese between Thnaot and Bos 
Cheng villages along Route 12, killing or wounding five enemy soldiers. On 

26 May, our National Army attacked and dismantled Vietnamese administrative net- 
works in Chey Commune in Kompong Svay District, liberating three villages. On 


27 June, our National Army attacked a Vietnamese platoon position in Pou Vil- 
lage in Santuk District, killing or wounding 10 enemy soldiers. On 1 June, 

our National Army attacked and dismantled Vietnamese commune administrative 
networks in Chamna, Dang Anteak, and Kompong Svay in Kompong Svay District and 
liberated three villages. Also on | June, our National Army attacked and dis- 
mantled Vietnamese administrative authorities in Prasat, Bek Chan, Trayang 
Toch, Boeng Veng, and Kradas villages in Santuk District. On 4 June, our 
National Army attacked and dismantled Vietnamese commune authorities in Kompong 
Thmar in Baray District, liberated four villages, and killed or wounded nine 
enemy soldiers. On 8 June, our National Army exploded mines between Kul Thnaot 
and Arak villages, killing or wounding eight Vietnamese soldiers. On 12 June, 
our National Army cooperated with Cambodian soldiers in attacking and 
destroying a Vietnamese position in Kompong Thmar in Baray District; 10 Viet- 
namese soldiers were killed or wounded in the battle. On 12 June, we attacked 
and dismantled Vietnamese administrative authorities in Prek Dam, Balang, and 
Chranieng villages in Balang Commune in Baray District. On 14 June, our 
National Army ambushed a Vietnamese regiment at Bos Thlan on the Kompong Thom 
battlefield, killing or wounding 35 enemy soldiers. On 16 June, we routed an 
attack by a Vietnamese battalion along the Chinit River, killing 10 and wounding 
12 enemy soldiers. On 18 June, our National Army smashed a Vietnamese battalion 
which attacked us at the junction of Route 21 in Baray District, killing or 
wounding 12 enemy soldiers. On 25 June, we attacked and dismantled Vietnamese 
administrative network in Krabei Riel Commune in Baray District, killing or 
wounding a number of Vietnamese soldiers, seizing 15 weapons, and liberating 

ll villages. 

So, this rainy season, as in the past dry season, our National Army and people 
in Kompong Thom Province have carried out their tasks very well. They continue 
to cause confusion by attacking the Vietnamese relentlessly. This clearly shows 
that our National Army ard people in Kompong Thom Province, like our National 
Army and people throughout the country, will not allow any part of our Cambo- 
dian territory to be used as base to serve the Vietnamese war of aggression in 
Cambodia. The reason for this fine achievement by our National Army is the 
good implementation of the S-point fighting method and unity and cooperation 
among the three forces. This 5-point fighting method and unity and coopera- 
tion of the three forces are very effective. The Vietnamese cannot resist 
this. It will create more confusion among the Vietnamese. 

Based on this good experience, our National Army will continue to implement 

the 5-point fighting method coupled with the unity and cooperation of the 

three forces more actively and enthusiastically to confuse the Vietnamese enemy 
aggressors even more until they can no longer stay in Cambodia. 

CSO: 4212/88 


28 July 1986 



BKO70444 (Clandestine) Voice of Democratic Kampuchea in Cambodian 2330 GMT 
6 Jul 86 

[Station Commentary: "The Hanoi Vietnamese Enemy Aggressors Stubbornly Per- 
sist in Occupying Cambodia Forever") 

[Text] On 3 July, Rafiudin Ahmed, deputy UN secretary general, who has just 
returned from talks with Vietnamese Foreign Minister Nguyen Co Thach in Hanoi, 
said during 4 meeting with Thai Deputy Prime Minister and Foreign Minister 
Sitthi Sawetsila that Vietnam has not changed its attitude on the Cambodian 
issue and has not shown any flexibility toward the CGDK's 8-point proposal. 
Vietnam still insists that people accept its conditions, namely the demand 
that Democratic Kampuchean forces--which are the major forces fighting the 
Vietnamese aggressors on the battlefield and dealing serious blows to the 
Vietnamese--be eliminated. This is a maneuver of the Hanoi Vietnamese 
aggressors in an attempt to discard Democratic Kampuchea, which is a pin 
sticking across the Vietnamese throat for the past more than 7 years and pre- 
venting the Vietnamese from annexing Cambodia. 

With the backing of their Soviec masters, the Vietnamese have, for the past 

more than 7 years, been doing their best to try to get rid of this iron pin 

from their throat through military means to completely annex Cambodia. However, 
the Vietnamese have failed in their criminal goal through military means. The 
more they try the more the iron pin penetrates deeper and deeper in the Viet- 
namese throat. This is why the Vietnamese have resorted to political means by 
imposing this or that condition and demanding that the international community 
assist them in getting rid of and eliminating the Democratic Kampuchean iron 
pin, as they have failed to do so through military means. 

This has shown the world even more clearly the real stubborn and insolent nature 
of the Vietnamese aggressor clique. People realize that the Vietnamese have no 
desire of resolving the Cambodian issue politically despite their constant prop- 
aganda of wanting peace and holding talks to resolve Cambodian and regional 
issues. The only goal of the Vietnamese is to occupy Cambodia forever, to annex 
and include it into their rotten Indochinese federation and use it as a stepping 
stone toward committing further aggression and expansion in Southeast Asia. 

That is why when the international comminity supports the CGDK's 8-point pro- 
posal to resolve the Cambodian issue politically and demands that the Hanoi 


Vietnamese consider and accept the proposal, the Vietnamese have ludicrously 
rejected it. They insist that their unreasonable conditions are met instead. 

However, the world clearly realized that the Vietnamese are brutal aggressors 
and expansionists who have barbarously flaunted international law and the UN 
Charter. Therefore, the Vietnamese have no right to impose any conditions on 
the Cambodian people or the international community. They should uncondi- 
tionally and immediately withdraw all their aggressor forces from Cambodia. 

As long as the Vietnamese clique stubbornly refuses to unconditionally with- 
draw its forces from Cambodia, people will continue to pressure the Vietnamese 
to contribute to the Cambodian people's struggle in forcing the Vietnamese t 
accept the CGDK's 8-point proposal to resolve the Cambodian issue politically 
by withdrawing all their forces immediately and unconditionally from Cambodia. 

CSO: 4212/88 


JPRS=SEA=86« 126 
28 July 1986 



BK080430 (Clandestine) Voice of Democratic Kaupuchea in Cambodian 2330 GMT 
7 Jul 86 

[Station commentary: "This Rainy Season, Our National Army's Activities To 
Attack and Dismantle the Vietnamese Enemy Village and Commune Administrative 
Authorities Are Vigorous and Systematic Throughout the Country"] 

[Text] This rainy season, the activities of our National Army to attack and 
dismantle Vietnamese commune and village authorities are being carried out 
throughout the country. In the five provinces around the Tonle Sap-~an area 
with rich resources and a large population and a strategic area in military 
terms in western Cambodia--our National Army is still attacking and dismantling 
Vietnamese commune and village authorities time and time again further unset- 
tling the already shaken Vietnamese administrative authorities. 

In Sangke District, Battambang Province, we have attacked and dismantled Viet- 
namese village and commune authorities from Reach Don Kev to Bak Rotes Village, 
liberating 12 villages; we did this in Vat Samdech, Prasat Sangke, and Svay Sar 
and another 5 villages in Ta Pon Commune; in Krakaoh and Chea communes in Moung 
District, liberating 12 villages; in Kop Commune in Sisophon District, liber- 
ating 3 villages; in Phnum Toch Commune in Mongkolborei District, liberating 

9 villages; in Tang Krasau, Chey, and Krava communes in Kompong Thom Province, 
liberating 8 villages; and in Baray Commune, Baray District, liberating 5 vil- 
lases. \e attacked the Sandan District seat and dismantled Vietnamese adminis- 
trative networks in 12 villages in this district; we did this in Peam Chhkaok 
Commune along the Tonle Sap River below Kompong Chhnang Town, liberating 2 vil- 
lages; in Baribo District, Kompong Chhnang; in Sereisamakki and Kulen villages 
along the Tonle Sap River in Kriel Commune, Kompong Leng District; and so on. 

On the battlefield northwest of Phnom Penh, our National Army continues to 
attack and dismantle Vietnamese administrative networks in villages and com- 
munes. We did this in Trapeang Chuo and Ta Khoam villages in Veal Pon Commune, 
Thpong District; in Peang Lvea Commune; in Andoag Chros Village in Trach Tong 
Commune, Udong District; and in Amleang Commune; and so on. 

In other provinces, particularly in Kompong Chem, Kompong Speu, Kampot, and 

Takeo, these activities against the Vietnamese enemy are still being vigcrously 
carried out. In Kratie, Stung Treng, Mondolkiri, and Ratanakiri provinces, our 



National Army continues to attack and dismantle Vietnamese administrative 
authorities in communes and villages. , 

In sum, by this rainy season, our activities to dismantle Vietnamese commune 
and village administrative authorities have been vigorously and systematically 
carried out throughout the country. This is a good development of our struggle. 
This progress is generally steady and firm. These activities to attack and 
dismantle Vietnamese village and commune administrative authorities are very 
important because they destroy the basic roots of the Vietnamese war of aggres- 
sion in Cambodia in every field, political, military, and economic. This will 
bring the Vietnamese down in every field. As for us, we have been making 

steady progress in every field. Can the Vietnamese enemy aggressors resist 
these numerous attacks by our forces? 

At the end of the eighth dry season, the Vietnamese pulled back a large number 

of their troops to resist us in the interior of the country, particularly 

around Battambang Town, Phnom Penh, and on the first group of battlefield in 
general. However, the Vietnamese could not resist us. In the future, if the 
Vietnamese continue to withdraw more troops from the border, they will leave 

gaps along the border. And if they pull back and deploy their forces in vil- 

lages and communes to resist our puerrillas, they will become weaker. And this 
would make it easy for us to attack the Vietnamese. Therefore, the Vietnamese 

are in an unsettled situation; wherever they turn, the Vietnamese face con- 

flicts. These are between massing and deploying troops and between pulling 
troops from the border to defend the interior and leaving them at the border 
and leaving gaps in the interior. These conflicts will widen further; the Viet- 
namese cannot resolve them. The direction of the Vietnamese is toward further 

loss of initiative until they cannot stay in Cambodia. 
Our National Army will continue to attack and dismantle the Vietnamese village 
and commune administrative networks and implement our new 5-point fighting 
method to weaken and bleed the Vietnamese enemy aggressors further on the Cam- 
bodian battlefield until they can no longer stand it and agree to resolve the 
Cambodian issue politically as proposed by the CGDK's 8-point plan. 

CSO: 4212/88 


28 July 19g6 °° 



BK090402 (Clandestine) Voice of Demecratic Kampuchea in Cambodian 2330 GMT 
8 Jul 86 

[Station Commentary: "Hoping That the Nonaligned Summit Conference in Harare 
Will Consolidate the Nonaligned Movement's Fundamental Principles"] 

[Text] The nonaligned countries will hold their eighth summit conference in 
Harare, Zimbabwe, at the beginning of September. Many genuinely nonaligned 
countries, including Democratic Kampuchea, hope that this conference will con- 
solidate the movement's fundamental principles and rectify a number of its 
unjust acts. During the sixth summit conference, in Havana in 1979, Cuba--an 
ally of the Soviet and Vietnamese aggressors--committed a perversely erroneous 
act in gross violation of the nonaligned principles. That year, the Hanoi 
authorities, whose country is a member of the Nonaligned Movement, sent hun- 
dreds of thousands of troops to invade and occupy Democratic Kampuchea-~- 
‘another member of the Nonaligned Movement~-arrogantly and truculently violating 
the Nonaligned Movement's fundamental principles. At that time, Cuba-~an ally 
of Vietnam--uttered no condemnation of the Hanoi Vietnamese aggressors for this 
aggressive act. On the contrary, Cuba was in collusion with Vietnam and used 
its power as the host country to expel Democratic Kampuchea-~-a victim of the 
Vietnamese authorities’ gross and barbarous aggression--from its seat. Cuba 
did this in a gross violation of the nonaligned principles, particularly the 
principle of consensus, and against the will of the majority of genuinely non- 
aligned countries. This gross act by Cuba so enraged all the genuinely non- 
aligned countries that some of them withdrew from the movement. 

During the seventh summit conference, in New Delhi in 1983, India which is also 
an ally of the Soviet Union and Vietnam colluded with its allies and used an 
unreasonable pretext to prevent the Democratic Kampuchean delegation from 
attending the summit and even left th. Democratic Kampuchean seat vacant. Since 
then, the influence of the Nonaligned Movement has been in serious decline 
because Vietnam, Cuba, and India and their handful of allies have kept tram- 
pling upon and destroying the sacred principles of the movement and diverted 

the movement toward serving the Soviet international expansionists' global 
military goals. This is a regrettable act which runs totally counter to the 
aspirations and goals of the founders of our movement. 

Now that the eighth summit conference is drawing near, many nonaligned coun- 
tries who are unhappy with the perverse acts committed by Cuba, India, and 


Vietnam have called on this summit conference to strengthen the nonaligned prin- 
ciples so that the movement will be able to play its role of defending world 
peace and the norms governing international relations, thus preventing a hand- 
ful of countries--Vietnam, Cuba, India, and their allies--from diverting the 
movement to serve the Soviet Union's aggressive and expansionist policy. This 
is in order to restore the influence and prestige of the Nonaligned Movement. 

The genuinely nonaligned countries have also called on the Nonaligned Movement 
to place the Cambodian problem, the Afghanistan problem, and various other 
important international issues on the agenda of this summit and to give jus- 
tice to the victim, that is, to restore Democratic Kampuchea's seat which was 
unjustly withdrawn by Cuba in 1979. 

As for Democratic Kampuchea, which is one of the most loyal original members 
of the Nonaligned Movement and which has strictly abided by the principles of 
the movement, it sincerely hopes that the eighth summit conference to be held 
in Harare will strengthen and maintain the sacred principles of the Nonaligned 
Movement for defending the interests of all member-countries. No one should 
be allowed to divert the movement toward serving the interests and ideals of 
any bloc. Democratic Kampuchea hopes that Zimbabwe--the host country and a 
genuinely nonaligned country-~will join with the many other genuinely non- 
aligned countries in working for justice for Democratic Kampuchea and do any- 
thing possible to quickly restore Democratic Kampuchea's seat in this movement. 

CSO: 4212/88 


28 July 1986 



BK090245 (Clandestine) Voice of the National Army of Democratic Kampuchea in 
Cambodian 2315 GMT 8 Jul 86 

{25 June message from Lazar Mojsov, vice president of the presidency of the 
Socialist Federal Republic of Yugoslavia, to Khieu Samphan, vice president of 
Democratic Kampuchea in charge of foreign affairs] 

(Text] Your Excellency: 

I am very happy to receive a congratulatory message from you on my electiwn as 
the vice president of tne SFRY presidency. I thank you for the message. I 
would like to extend best wishes to the friendly Cambodian people and express 
my conviction in the fruitful relations of our two nonaligned countries. 

I would like also to reiterate Yugoslavia's firm and total support for the Cam- 
bodian people's just cause for national liberation and the efforts to seek a 
peaceful and political solution to the serious problem of your country. 

[Signed] Lazar Mojsov 
Vice President of the Presidency 
The Socialist Federal Republic of Yugoslavia 

CSO: 4212/88 


28 July 1986 


VONADK: SOLDIERS MUTINY--On 18 June, a unit of Cambodian soldiers in Kompong 
Thom Town mutinied, destroying 3 ammunition and weapons warehouses of the Viet- 
namese enemy at Thommayut monastery, and killing 4 and wounding 16 Vietnamese 
soldiers. They burned down a Vietnamese weapons depot containing 150 assorted 
weapons and 2 ammunition depots containing 30 metric tons of ammunition, which 
was burning and exploding throughout the night and until the morning of 20 June. 
This is the patriotic and nationalist spirit of Cambodian soldiers and com- 
patriots in Kompong Thom Town. It is a new event of Cambodian soldiers and 
compatriots in Kompong Thom Town after other major events of 8 June and 15 and 
16 May. Other Cambodian soldiers in Kompong Thom Town and throughout the coun- 
try, please follow the example of Cambodian soldiers in Kompong Thom Town who 
have freed themselves, destroyed many Vietnamese weapon and ammunition depots, 
and killed Vietnamese soldiers. [Text] [(Clandestine) Voice of the National 
Army of Democratic Kampuchea in Cambodian 2315 GMT 27 Jun 86 BK]/12766 

VONADK: SRV CONVOY AMBUSHED--West Battambang battlefield: On 19 June, our 
national Army ambushed a Vietnamese ammunition convoy leaving Battambang for 
Pailin east of (Anhchey). The 7-truck convoy was destroyed on the spot. We 
killed 26 Vietnamese soldiers on the trucks and wounded 12 others and destroyed 
all the ammunition in the trucks. [Excerpt] [(Clandestine) Voice of the 
National Army of Democratic Kampuchea in Cambodian 2315 GMT 27 Jun 86 BK]/12766 

VONADK: SANDAN DISTRICT CAPITAL HIT--The Kompong Thom battlefield: On the 
night of 24 June our national Army attacked the Vietnamese aggressors in Sandan 
District capital from three directions. The first prong hit the Sandan District 
administrative seat; the second hit the Vietnamese enemy's material warehouse 

on the bank of the Sen River; and the third hit the residence of the Sandan Dis- 
trict chief. After 20 minutes of fighting, we killed 6 and wounded 10 Viet- 
namese soldiers, 1 textile warehouse with 300 rolls of cloth, 1 rice storehouse 
with 110 sacks of rice, 6 barracks, and some material. We seized 2 AK's, 1 

map, and some war material. [Excerpt] [(Clandestine) Voice of the National 
Army of Democratic Kampuchea in Cambodian 2315 GMT 29 Jun 86 BK]/12766 

CSO: 4212/88 


28 July 1986 



AU310600 Moscow PROBLEMY MIRA I SOTSIALIZMA in Russian No 5 May 1986 
(Signed to press 8 Apr 86) pp 66-69 

[Interview given to the journal PROBLEMY MIRA I SOTSIALIZMA by Nguyen Co 
Thach, candidate member of the Central Committee Politburo of the Communist 
Party of Vietnam [CPV], minister of foreign affairs of the Socialist 
Republic of Vietnam: "On the Course of Peace, on the Good-Neighborliness"— 
date and place not given; passages between slantlines, comprising the 
editorial introductory note, published in boldface] 

[Text] /The course of history more and more insistently demands the 
development of constructive and creative interaction of states and peoples 
on the scale of the entire planet. This idea strikingly resounded once 
again recently ir. the CPSU Central Committee's Political Report to the 
27th CPSU Congress and was supported in their statements by many foreign 
guests of the congress. The urgent need for the just and peaceful 
settlement of hotbeds of tension in Southeast Asia and for developing 
good-neighborly and mutually beneficial relations between the states of 
the region was noted in several statements. "The world needs peace; every 
region in every continent or ocean needs it," Comrade Le Duan, general 
secretary of the Central Committee of the Communist Party of Vietnam, 

has pointed out. "...The time has come for Southeast Asia to develop a 
dialogue between the states and countries of Indochina and ASEAN member- 
countries to solve the existing problems between them. Vietnam consistently 
struggles for this in close unity with Laos and Kampuchea. Southeast 
Asia should be turned into a zone of peace, stability, friendship, and 
cooperation.” (Footnote 1) (NHAN DAN, 27 February 1986) 

/The journal's editors have asked Comrade Nguyen Co Thach, minister of 
foreign affairs of the Socialist Republic of Vietnam, (SRV) to reveal the 
essence of Vietnam's foreign policy at the present historical stage and 
its interconnection with the policies of other countries of Indochina./ 

[Journal] Comrade Minister, the conversation obviously should begin by 
addressing the basic principles of the SRV's foreign policy course. 

[Nguyen Co Thach] The international activity of our party and state 
reflects the profound need of the entire Vietnamese people to live and 
work in peace, build the socialist society, and defend their freedom and 

independence and the achievements of the revolution. We work out our 
foreign policy on the basis of the Marxist-Leninist teaching which Comrade 
Ho Chi Minh developed in relation to our conditions, and by combining 
in this policy the principles of socialist patriotism and internationalism. 

Every unbiased person who is acquainted with the difficult and truly 
dramatic history of our country even only in general terms, will understand 
the sincerity of the Vietnamese people's peace-loving aspirations. In 

the course of many centuries foreign conquerors tried more than once to 
enslave our homeland and annex its territory, and every time the freedom 
loving Vietnamese people were forced to interrupt their peaceful work and 
take up arms for their struggle. As far as our side was concerned, these 
were just defensive wars for our right to continue to be masters on our 
land and to independently determine our own fate. 

In the middle of the last century Indochina became an object of the 
pretensions of big capitalist states. The French were masters here for 
nearly a century. During World War II they were replaced by the Japanese. 
The rout of Hitlerite fascism and Japanese militarism created the conditions 
for the victory of Vietnam's August Revolution in 1945. The people's 

power began to implement democratic transformations. The possibility 

was created for living in peacé and security and following the path of 
socioeconomic progress. However, this development of events did not suit 
the calculations of the forces of world imperialism and reaction. All 
four postwar decades have been a period of heavy trials for us. 

The Democratic Republic of Vietnam had been only just proclaimed when 
the French invaded the country with their expeditionary corps to restore 
their own power. After the rout of the French interventionists and the 
signing of the Geneva agreements on Indochina in 1954, the United States 
launched an attempt to occupy the country. Following a policy of neo- 
colonialism, it unleashed an aggressive war in Indochina. The American 
Army threw an encrmous military force against our peoples, using five times 
more bombs and shells than in World War II. The U.S. aggression brought 
uncounted sufferings to Vietnam and took a toll of a multitude of victims 
among the country's peaceful inhabitants. As is known, this time, too, 
we held out and won. Our motherland was again independent and united. 

But even after the expulsion of American occupiers we have been unable to 
take full advantage of the fruits of the long-awaited peace. In the second 
half of the 70's the Pol Pot terrorist clique that had captured power 

in neighboring Cambodia and was encouraged from abroad, embarked on a 
course of confrontation with Vietnam. In 1979 China carried out an armed 
aggression against us and since then it has continued combat operations 

on the Vietnamese-Chinese border to this day. 

I think that these and many other circumstances explain completely and 
unequivocally what our people want: peace and again peace, and normal 
conditions for the country's rebirth and for building a happy life. 


[Journal] What tasks is Vietnam setting for itself as a participant in 
the movement of peace-loving forces of the planet? 

[Nguyen Co Thach] We indissolubly link the struggle for peace with the 
struggle for national independence, democracy, and socialism. The stronger 
the positions of world socialism, the international communist and workers 
movement, and the national liberation forces are, the greater is the 
confidence that the attempts of the imperialist circles to start armed 
conflicts anywhere, including in Southeast Asia, will be thwarted. 

The successes achieved by Vietnam's revolution as well as the entire 
social progress of the 20th century would have been impossible without 

the Great October Revolution that started the transition from capitalism 
to socialism. Unlike imperialism, which tries to stop the march of history 
with force and bring back the past, socialism, acting of its own free will, 
has never linked its fucure with military solutions of international 
problems, that is, solutions that would be oriented toward the past. 

Thanks to joint actions of the socialist states and all peace-loving 
forces, mankind has not experienced a world war for 4 decades now. This 
fact raises hopes that it will continue to be possible to solve the 
existing disagreements between states and social systems with political 

However, it is impossible to overlook the fact that we face an enormous 
danger, the threat of a nuclear war that could annihilate all life on 
earth. The international situation has grown more tense than ever before 
as a result of the policy if the bellicose right-wing capitalist circles 
headed by U.S. imperialism. They strive to upset the military-strategic 
balance that has come about between the USSR and the United States, to 
extend the arms race to outer space, and to impose their own will on 
sovereign states by grossly interfering in their interal affairs. 

Averting a nuclear catastrophe is the most urgent task of mankind. The 
people of Vietnam also see this as their task, and they march in the front 
ranks of the struggle against imperialism and for peace on the planet. 
This is why we ardertly support the initiative of Comrade M.S. Gorbachev, 
general secretary of the CPSU Central Committee, of 15 January this year 
for a complete liquidation of nuclear weapons by the year 2000. In his 
greetings address to the 27th CPSU Congress Le Duan, general secretary 
of the Central Committee of the CPV, emphasized that the "implementation 
of that program would make it possible for mankind to enter the 2ist 
century with the hope to live in a world that would not be threatened 

by lethal weapons, a world where wars would cease to be the means for 
solving disputes in relations between countries." (Footnote 2) (Ibid) 

[Journal] In their revolutionary struggle and their striving to achieve 
freedom and independence, the people of Vietnam have always enjoyed the 
support of the Soviet Union and other socialist countries. How can these 

relations be characterized at the present time? 


[Nguyen Co Thach] Yes, our people have always had the support of the 
Soviet Union, other fraternal countries, and all honest people of the 
planet. This support is also extremely valuable now when Vietnam has not 
yet healed its wounds but the northern aggressors, in compact with 
imperialism and reaction, are inflicting painful blows on Vietnam and two 
other countries of Indochina. They stop at nothing and they carry out 
refined subversive actions in all spheres, that is, in the political, 
economic, and military spheres. 

The further deepening of cooperation with fraternal countries is a factor 
of immense importance for implementing the program of building new life 
in Vietnam. These international relations are built on the principles of 
sovereignty, equality, friendship, fraternal cooperation, and mutual 

Thanks to the SRV's membership in CEMA, which it joined in 1978, and as 

a result of the conclusion of the friendship and cooperation treaties with 
several socialist states, Vietnam has broadened and deepened its relations 
with the fraternal countries. The decisions of the Moscow economic 
conference at the highest level (in July 1984) on accelerating the process 
of gradually leveling the economic development of CEMA member-countries, 
and first and foremost, the SRV, the Republic of Cuba, and the Mongolian 
People's Republic with the level of the European states of the community, 
are of fundamentally great importance for us. 

The Soviet-Vietnamese reiations in the economic sphere play a special role 
at the contemporary stage and have a favorable effect on the development 
of a majority of key branches of the republic's national economy. In 

the current 5-year plan period the USSR is assisting the SRV in building 
and in planning and designing approximately 100 projects. We also inten- 
sively cooperate with other countries of the community. The machine- 
building, timber and wood processing, light, and food industries and 
agriculture are being strengthened with their assistance. All this makes 
it possible to carry out three revolutions, that is, in social relations, 
science and technology, and ideology and culture. 

The visit of Le Duan, general secretary of the CPV Central Committee, to 
Moscow in June 1985 was an event of great importance. The joint declaration 
of the SRV and the USSR adopted on that occasion notes that the "sides 

will continue to tirelessly strengthen the ties of close friendship 

and solidarity between the CPSU and the CPV. This is the principled and 
immutable line of the CPSU and the CPV and the Soviet Union and Vietnam, 
which reflects the will and aspirations of the peoples of the two countries.’ 
(Footnote 3) (PRAVDA, 30 June 1985) 

[Journal] The comprehensive alliance between Vietnam, Laos, and Cambodia 
is becoming increasingly close. What are the urgent tasks that are being 
solved by the community of the three countries of Kampuchea? 


[Nguyen Co Thach] Our peoples have much in common. Their joint struggle 
against enemies, their rejoicing over the independence and freedom won by 
them, and the misfortunes and sufferings experienced by them have continued 
to unite them through centuries. They are now linked together by their 
striving to defend the revolutionary achievements to and advance along 

the road of socioeconomic progress. 

As was noted at history's first conference of the highest party and state 
leaders of the SRV, the Lao People's Democratic Republic, and the People's 
Republic of Kampuchea [PRK] held in 1983, the special relations and 
solidarity between our peoples are the result of the development of 
revolution in the three countries and represent a decisive factor in the 
task of defeating their enemies and achieving independence and freedom. 

The fundamental principles of mutual relations between the three states 

of Indochina have been formulated in their jointly adopted documents and 
they are strictly respected. They provide for the development of solidarity, 
cooperation, and mutual assistance in the tasks of national construction 
and deferse on the basis of Marxism-Leninism and socialist internationalism. 
All problems concerning the relations between our states are solved by 
negotiations in the spirit of respect for independence, sovereignty, and 
territorial integrity, noninterference in each other's internal affairs, 
mutual understanding, and respect for the legitimate interests of each 
individual country and of the community as a whole. The governments of 
Indochina's states have committed themselves to waging the struggle against 
all enemy intrigues to split them and to constantly educating their peoples 
in the spirit of traditional friendship and of understanding of the special 
relations among then. 

This approach corresponds not only to the interests of our nations, but 
also to the purport of the international agreements on Indochina and the 
principles of the UN Charter and the Nonaligned Movement. The implementa- 
tion of this approach convincingly refutes the cock-and-bull stories that 
are being spread by reactionary propaganda about Vietnam's intention to 
"enslave" Laos and Cambodia by setting up the so-called "Indochina 
Federation.” Our adversaries need this kind of invention to break up 
Indochina'’s solidarity and interfere in the internal affairs of the region's 
states. But our peoples know how to distinguish between truth and lies 
and they recognize the benefits of our countries’ alliance for each of 
them on the basis of their own experience and naturally cooperate in every 
way possible to strengthen it. 

[Journal] Im recent years the three countries of Indochina have taken a 
number of foreign policy initiatives. What response have these initiatives 
evoked among the ASEAN member-states and in this connection, what are the 
prospects for strengthening peace and stability in Southeast Asia and for 
solving the so-called Cambodia problem? 

[Nguyen Co Thach] I recall once again that in the last few decades a 

bitter struggle between the forces of national independence and socialism, 
on the one hand, and the forces of imperialism, colonialism, neocolonialisn, 


and international reaction, on the other, has developed precisely in our 
region. The victory of the freedom-loving peoples of Indochina has 
changed the political situation in Southeast Asia. Following the ¢ailure 
of the U.S. intervention, the possibility was created for living in peace 
with neighbors, something which was attested to by the statements of ASEAN 
member-countries in the 70's. However, in 1979, when the Chinese forces 
attacked Vietnam, an illusion was created among the right-wing circles of 
bourgeois states that the revolutionary process in the countries of 
Indochina could allegedly be reversed, and they entered into a bloc with 
the aggressor. This policy has utterly failed. The peoples wf Indochina 
are growing stronger and stronger and the situation in Cambodia has 
assumed a truly irreversible nature. 

Our position concerning the nature of relations between the three countries 
of Indochina and ASEAN is well known. We are convinced that these two 
groups of states should settle all their differences through negotiations 
in the spirit of good-neighborliness, coexist in peace and friendship, 
cooperate among themselves, and not allow other countries to interfere 

in their affairs, sow discord among them, or use the territory of one of 
them against any other of the countries involved. 

Certain changes for the better between the aforementioned groups of states 
are taking place. Beginning in 1985, following the statement by the 
conference of the ministers of foreign affairs of the three countries of 
Indochina on the possibility of a withdrawal of all Vietnamese forces 
from Cambodia by 1990, a dialogue has opened between Indonesia and 
Vietnam, which act as representatives of ASEAN and the three states of 
Indochina, respectively. We are convinced that real possibilities exist 
for solving the existing problems by political means and for achieving 
peace and stability in Southeast Asia in general and in Cambodia in parti- 
cular. In the opinion shared by a majority of the countries and movements 
of the region, achieving a mutually acceptable agreement on three issues 
is the key to solving these problems. 

The first issue is the guestion of the withdrawal of Vietnamese forces 

from Cambodia. The Vietnamese forces are there under the treaty concluded 
by the PRK and SRV governments. As the forces of the Kampuchean People's 
Revolutionary Armed Forces grow stronger, the numerical strength of the 
Vietnamese units in the PRK is being reduced. This is a continuous process 
taking place every year. The forces of the emigres, that is, the so-called 
"coalition government,” the core of which is formed by Pol Pot's followers, 
have lost support in the country and can only hold on with foreign assis- 
tance. If it were not for this assistance, the PRK could defend itself 
with its own army. 

However, the interference of imperialism and reaction in Cambodia's affairs 
continues. Nevertheless, the success of the revolutionary forces is 
undeniably manifesting itself more and more distinctly. Consequently, 

a situation may gradually come about when all Vietnamese forces will be 
withdrawn from the PRK and the republic will be able to safeguard its 
sovereignty with its own forces. 


However, there is another possibility for a quicker solution of the problen, 
and that is: termination of foreign assistance to Pol Pot's followers. 

In this case the sides concerned could agree within a shorter time 
precisely about a political settlement of the existing differences. The 
three countries of Indochina prefer the second alternative but also 

reserve for themselves the initiative to carry out the first one. 

Second, what is involved is the achievement of an accord between the PRK 
and the opposition forces. Vietnam positively appraises the PRK's statement 
on its readiness to open negotiations with various Khmer opposition groups 
or with individuals of the same orientation under the condition that the 
Pol Pot clique, which has carried out a policy of genocide, be excluded 
from negotiations. This is an internal affair of Cambodia and should 

be solved by the Cambodians themselves. If such a solution is found, 

then the sides concerned will be able to consider the questions concerning 
a new constitution and also the ways in which they should act to strengthen 
Cambodia's independence and sovereignty. 

Third, the establishmment of a zone of peace, friendship, and cooperation 
depends to a great extent--in addition to the aforementioned circumstances-- 
also on the successes of the aforesaid negotiations between Indochina 

and ASEAN. In our opinion, it would be expedient to also hold an inater- 
national conference on the problems of peace and stability in Southeast 
Asia in which all states of that region and the permanent members of the 

UN Security Council would participate. 

Vietnam, Laos, and Cambodia sincerely strive to establish good-neighborly 
relations with all countries regardless of their political systems. This 
immutable position was also ccnfirmed at the 12th conference of the ; 
ministers of foreign affairs of the three states in January this year. 

Just as in the past, now, too, the peoples of Indochina consider it 
necessary to restore the relations of friendship with the Chinese people. 
Although the situation on the Vietnamese-Chinese border continues to be 
poisoned by the hegemonist and expansionist plans of international reaction, 
the SRV is making tireless efforts for a peaceful settlement of the 
existing problems and has more than once proposed to China to open nego- 
tiations on normalizing bilateral relations. Vietnam is doing everything 
in its power to create favorable conditions for the success of negotiations. 
Our proposals for a ceasefire on the border duringthe national holidays 

and for the repatriation of Chinese prisoners attest to the SRV's goodwill 
and sincere intentions. 

The Indochina states also want to establish good-neighborly relations with 
Thailand and are ready to do everything in their power for this purpose. 

All of them together and, accordingly, each of them separately advocate 

the negotiations and the conclusion of a treaty [dogovor] with Thailand 

on the principles of peaceful coexistence, mutual renunciation of aggression, 
noninterference in internal affairs, respect for each other's sovereignty 
and territorial integrity within the presently existing borders, and 
renunciation of making one's own territory available for any activities 
directed against other states. 


We are also ready to maintain relations with the United States on the basis 
of equal rights and mutual advantage. In particular, we propose to the 
United States to start high-level negotiations aimed at achieving a 
fundamental solution of the problem of that country's citizens missing in 
action during the war and on other issues of mutual interest. In our 
opinion, this will also contribute to the process of restoring peace and 
stability in Southeast Asia. 

[Journal] The imperialist powers continue to pursue a policy of isolation 
against the three Indochina countries. Under these conditions, how do you 
assess the possibility for expanding their international relations? 

[Nguyen Co Thach] I want to say that imperialism applied the policy of 
isolation in relation to all socialist countries long ago aid has continued 
to apply it to this day. Capitalism has received the birth of the new 
social formation as a "mistake" of history which should be "corrected." 
Flouting laws and morals, international reaction has embarked on a course 
of armed interventions, economic blockades, subversive activities, 
sanctions and "penalties," and renunciation of any kind of cooperation. 
However, nothing could prevent the assertion of the new system and its 
historical right to life. 

For many years the Soviet Union remained alone, encircled by imperialist 
powers. After World War II this blockade was broken and socialism grew 
into a world system. The international relations of the Indochina states 
have developed and continue to develop in the same direction. During the 
war waged by the United States against the Democratic Republic of Vietnam 
we were recognized by no more than 10 states, but now the SRV maintains 
diplomatic relations with over 100 countries and the PRK maintains them 
with 35 countries. Since 1977 the SRV has been a member of the United 
Nations. Vietnam is an active member of the Nonaligned Movement. 

We have loyal friends and reliable allies. The imperialist venture with 
the economic blockade of the SRV has completely failed. 

Vietnam confidently advances along its path. We are on the side of those 
who struggle against imperialism, colonialism, neocolonialism, apartheid, 
racism, end Zionism. We are with those who advocate peace, national 
independence, democracy, and socialism. Analyzing the past, we confidently 
look to the future and believe that this struggle will be triumphant. 

CSO: 1807/319 END 


— oD 


IB AvuGUST \98&