Arizona Republic from Phoenix, Arizona on April 5, 1969 · Page 2
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Arizona Republic from Phoenix, Arizona · Page 2

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Saturday, April 5, 1969
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t Hie Arizona Republic KtKUciLIL KtPUBLIC n ,!TY MAIL Phoenix, Sat., April 5,1969 Dollar outflow eased Fed cut restrictions on investments Washington Post Service WASHINGTON—President Nixon and the Federal Reserve Board yesterday eased restrictions on the outflow of American capital going abroad in a move that has political and international as well as economic implications. The President said in a statement that he had approved a Commerce Department recommendation that gives companies more freedom to plan larger investments abroad. The President also signed an executive order reducing the effective rate of the interest equalization tax, which applies to Americans buying foreign securities and foreign companies borrowing from American banks. But he said he would ask the Congress to extend the tax for 18 months after its scheduled expiration in July. At the same time, the Fed announced that it has revised credit restraints on banks and other financial institutions to allow them to finance U.S. exports with more flexibility. The President's statement said that "these are prudent and limited steps that recognize the realities of our present balance of payments situation." Former President Lyndon Johnson, in January 1968, imposed a series of new controls and tightened earlier restrictions in an attempt to staunch the outflow. President Nixon's statement stressed "fundamental economics," as he did in his fiscal message to Congress March 26. The President said that "the problem of regaining equilibrium in the U.S. balance of payments cannot be solved with expedients th$i postpone the problem to another year. We", shall stop treating symptoms and start treating causes, and we shall find our solutions in the framework of freer trade and payments." JJndersecretary of the Treasury Paul Volcker told newsmen that the three measures announced yesterday could cause a "theoretical" increase of $800 million in the outflow. But Volcker emphasized that the administration does not expect this because conditions in the domestic economy, including high interest rates and tight money, make foreign investment and loans commercially unattractive. Volcker declined to predict what the overall balance of payments would be in 1969. He said the trends are "divergent" and no clear evidence of improvement has yet been seen. Volcker said, however, that "we are under no delusions that we are in a satisfactory condition." He pointed out that last year's surplus was more dependent on capital inflows, rather than trade surplus, than the administration wants it to be. Secretary of Commerce Maurice Stans, in a statement accompanying his department's announcement, was more specific. He said that "we must expect a deficit in our overall balance of payments in 1969 unless there is a reversal of last year's sharp deterioration in the trade balance." Politically, easing the capital restrictions partially fulfilled one of Nixon's campaign promises. He pledged to remove such controls as soon as possible. The President said yesterday, "I have begun, gradually and purposefully, to dismantle direct controls." He indicated that further easing would come at an unspecified later date. The administration has been under increasing pressure from businessmen and some congressmen to lift the restrictions. Rep. John Tunney, D-Calif., has two resolutions before the House urging the administration to lift the controls completely. Egyptian., Israeli guns Big 4 show 11-day Suez calm a g r «*ment on Mideast Associated Press Breaking an 11-day calm, the<guns of Egypt and Israel barked across the Suez Canal yesterday. Two hundred miles away Christian pilgrims assembled in Old Jerusalem for Eastertide and Jews throughout Israel observed the Passover. Artillery, tank guns, mortars and small arms were used in two hours of exchanges, chiefly in the southern end of the canal. U.N. observers arranged a cease- fire. Israel reported no casualties! and said its answering firer silenced the Egyptian gun>. An Egyptian communique issued in Cairo claimed Israeli casualties were great, with one£ helicopter shot down near El Shatt and a tank and six observation posts destroyed. It added that an Israeli rocket position and eight tanks were disabled. n . The communique listed Egyptian losses as three men wounded and a tanker in the Gulf of Suez damaged. Each side blamed the other for;starting the first fighting since March 24 along the 103-tnile waterway — closed by the war of June 1967. Tfce Israelis said Egyptian troijps began the exchange at 10:30 a.m. with small-arms fire; directed at Israeli soldiers on the east bank. Thirty minutes later, an Israeli army spokesman asserted, "The Egyptians opened artillery and mortar fire in the Port Taufiq-Port Suez region. Our forces returned the fire. "Later the Egyptians extended artillery, mortar and light-arms fire to Dwad Suwar. Our forces returned to silence the Egyptian guns." In the Egyptian version: "The Israelis opened with artillery fire south of Suez and Egyptian troops answered with all kinds of weapons." The heaviest concentration of the Israeli firing was in the Port Suez area, Cairo said. "Egyptian forces were answering violently," the communique added. "Our forces managed to silence most of the enemy's positions." Egyptians and Israelis fought across the canal seven days in March and the Israelis put their manpower losses in those fights at 6 killed and 26 wounded. Egypt's armed forces chief of staff, Gen. Abdel Moneim Riad, 50, was killed by an Israeli artillery shell in an exchange March 9. The Israelis claim that Egypt's biggest oil field, the Morgan in the Red Sea, was isolated by large- scale destruction in the Port Suez refinery. Canada premier's plan for reducing troops hit New York Times Service OTTAWA — Prime Minister Piejre Elliott Trudeau's plans for-a "phased reduction" of Canadian forces in the Atlantic-"Alliance was condemned on iwo political fronts yesterday.. It was also hailed by many persons, including members of Academic circles, who saw in the announcement the be- ginfcings of a policy to take Canada out of European affairs entirely. The Conservatives who want Canadian forces in NATO maintained at present strength accused the prime minister of "weaseling." T&e left-wing New Democrat? who want complete withdrawal at once said -on tfcejother hand that the prime minister had taken a decision so .-meaningless as to be "scandalous." "jlfr. Trudeau hasn't explained why we should withdraw an uncertain number of troops at an uncertain time," David Lewis, deputy leader of the New Democratic Party, commented In a news conference. The prime minister announced Thursday night a de- Vision to maintain Canada as one of the 15 members of the alliance, and to begin a "planned and phased reduction" of air and ground units now stationed on NATO's behalf in Germany. Trudeau refused to say how fast the "reduction" would be carried out, and when asked at a news conference if the Canadian forces might be withdrawn altogether, he replied: "Maybe, maybe not." Members of Trudeau's Liberal Party also reflected the division in the cabinet on the issue. However, widespread public reaction has not developed largely because of the Easter holiday. Parliament recessed for an 11-day spring holiday just 24 hours before the prime minister chose to make his long- awaited announcement. Good Friday is a general holiday across Canada. The Toronto Globe and Mail, one of the few Canadian newspapers with a Good Friday edition, took Trudeau to task for choosing to present "his trifle" before the television cameras rather than in Parliament where opposition critics might have forced more explanations out of him. A Associated Press UNITED NATIONS-A diplomatic source said yesterday that the Big Four U.N. ambassadors showed "more agreement than disagreement" at their first meeting on how to settle the Arab- Israeli conflict. He said two proposals on the subject were put on the table at the private session Thursday in the French ambassador's New York apartment, a Soviet proposal dating from Dec. 30 and a U.S. proposal dating from March 24. Both call for a settlement by the parties with U.N. help. The session bought together Armand Berard of France, Lord Caradon of Britain, Jacob A. Malik of the Soviet Union and Charles W. Yost of the United States. A communique afterward said they considered "how they can contribute to a peaceful political settlement in the Middle East," using the Security Council's 1967 resolution on that subject, and "started defining areas of agreement." It said the next meeting would be Tuesday. Caradon, queried by reporters after calling on Secretary-General U Thant yesterday, made known that Tuesday's meeting would be at the Soviet U.N. mission in New York, where Malik lives. The 1967 resolution calls for a settlement of the Arab- Israeli war of June 5-10, 1967, to include Israeli withdrawal from occupied Arab territory, secure boundaries, Arab acknowledgement of Israeli sovereignty, freedom of navigation through international waterways in the Middle East and a just solution for Arab refugees from Israel. FIRE KILLS FOUR TOKYO (UPI) - Four persons were killed yesterday in a fire that broke out in the high pressure oxygen treatment room at Tokyo University Hospital. Two other persons in the room managed to escape. The Arizona Republic Published every morning by Phoenix Newspapers, Inc. (120 East Van Buren) P.O. Box 1950 Phoenix, Ariz. 85001 271-8000 Subscription Prices Carriers or Dealers in Arizona Republic (Morn. & Sun.) 70c week Republic (Morning) 45c wk. (Circulation mail rates appear in the Classified section of each edition.) Second class postage paid at Phoenix, Ariz. Saturday, April 5,1969 Vol. 79, No. 324 Atlantic maneuvers Russ admiral denies fleet due in Pacific Three Soviet divisions added to Czech security contingent New York Times Service MOSCOW — Adm. Sergei G. Gorshkov, head of the Soviet navy, yesterday denied that Russian warships sighted in the Atlantic were heading to the Pacific for a show of force against Communist China. In an interview printed in Izvestia, the government newspaper, Gorshkov said such reports in the Western press were "unfounded political speculation — a propaganda canard of bourgeois journalists." He verified that a group of Soviet warships was now in Atlantic waters, but he insisted they were there on conventional maneuvers, testing different naval armaments — rockets, artillery and torpedoes. He said the activity was being carried out away from trade routes and far from the territorial waters of neighboring states in strict conformity with international law. It is unusual for Soviet military leaders to discuss Western speculation about their forces, but observers here believe the widespread publicity given the movements of these ships led to the authorization of Gorsh- kov's statements, thereby preventing China from claiming that the Soviet Un- ion was stepping up military provocations against her. About two weeks ago, reports began appearing in the Western press of "an armada" of 20 warships, including most of the larger ships of the Soviet northern fleet, moving out of Soviet waters into the open seas. There was immediate speculation, particularly in Britain, that the ships were on their way to Vladivostok, headquarters of the Soviet Pacific Fleet, for a show of force against China. Gorshkov, noting the use of the word "armada" in the West, said that in comparison with the overall strength of the Soviet navy, "I would not call this unit especially large, to say nothing about its being an armada." Most of Gorshkov's remarks were devoted to an attack on the North Atlantic Treaty Organization. He claimed the interest shown in the West about Soviet ship movements was due to the fact that "NATO naval leaders evidently cannot yet reconcile themselves to the loss of the former monopoly of dominating the sea. However, irrespective of their desire, they will have to take into consideration the hard facts of present-day correlation of forces on the seas." Associated Press PRAGUE — Czechoslovak leaders have been forced to agree to three more divisions of Soviet troops, about 45,000 soldiers, being stationed in their country, reliable informants said last night. This would raise the total Soviet occupation force from 60,000 or 70,000 to perhaps 115,000. Czechoslovak informants said the Russian troop buildup was part of the "political price" which Communist Party First Secretary Alexander Dubcek said the country would have to pay for anti- Russian demonstrations that followed Czechoslovak victories over the Soviet ice hockey team at the world championships last week. Establishment of press censorship and strengthening of the security police have already been announced officially as part of this "price." There was no official announcement of the increase in occupation forces. The report of more Soviet occupation troops destined for Czechoslovakia coincided with unconfirmed word that a number of Czechoslovak army units were being ordered to vacate permanent barracks in order to make way for new Russian contingents. Meanwhile, Russian, East German, Polish and Czechoslovak troops ended five days of Warsaw Pact war games. They were conducted in Czechoslovakia, Poland and East Germany under the leadership of Gen. Boleslaw Choca, the Polish forces chief of staff. Without mentioning any Soviet troop increase, the Czechoslovak parliament declared yesterday that it would support whatever measures were needed to insure "unconditional observance of the law." It denounced the hockey game demonstrations as "a grave barrier to the normalization of relations between Czechoslovakia and its socialist allies, mainly the Soviet Union," reported CTK, the off i c i a 1 Czechoslovak news agency. With the clamp down on freedoms under way, government censors have returned to Czechoslovak newspaper offices to prevent any anti- Soviet news from getting into armed print. Informants said the censors were checking all stories before they were set in', type. Even the chief Communist Party newspaper, Rude Pravo, has been affected by the new censorship. Sources said deputy editors Emil Sip and Dislav Sule have been demoted to lower posts on the paper. Sip had been in charge of foreign news and Sule was responsible for economic coverage. Censorship in Czechoslovakia was abolished when Dub- cek came to power more than a year ago. Self- censorship was ordered after the Soviet-bloc invasion last summer, but newspapers, radio and television continued to carry information critical of the occupying powers. Laos requests U.S. weapons SAIGON (UPI) -Royal Laotian Premier Prince Sou- vanna Phouma has secretly asked for an urgent shipment of American weapons for his troops engaged in heavy fighting with Communist Pathet Lao guerrillas and North Vietnamese troops, informed U.S. sources said yesterday. The request mainly is for the sophisticated M16 rifle to replace Ml rifles received from the United States in the early 1960s, the sources said. Artillery and other armaments also were reported being sought for the 60,000-man Royal Laotian army. The United States has indicated its willingness to send the weapons but has not yet done so, the sources said. They said there are two factors that create a dilemma for the United States. The first is that the M16 is in short supply, and U.S. military authorities have been , rushing to equip South Viet- - nam's 821,000-man army even '. at the expense of some American troops. 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