The main features of the international situation having been outlined in the Preface, this chapter examines the year's major developments.


I. Trends in the U. S., China, U. S. S. R., and Other Areas


1. U.S., China, and U.S.S.R. Trends (with Emphasis on Bilateral Relations)



(1) U.S.-U.S.S.R. Relations


U.S.-U.S.S.R. relations moved at a generally sluggish pace throughout 1976 against the following background. The Soviet Union repeatedly stressed its desire for "relaxation of tensions," but due to the impossibility of forecasting the outcome of the U.S. Presidential election with any certainty and other factors, it took a rather cautious posture toward its relations with the U.S. On the part of the U.S., the incumbent Ford Administration had to take into consideration such factors as the growing alarm within the U.S. over the Soviet military build-up and the presence of Soviet troops in Angola, and the political judgment that it would hurt candidate Ford's election prospects were he open to charges of having given away too much in the SALT II negotiations. After Ford was defeated in the election, he had limited latitude for initiatives.

In addition, the conflicts of interests and differences of opinion on the problems at issue between the two nations were not such as lend themselves to easy solution. SALT II, for example, was unable to make progress, especially with respect to the problems concerning the cruise missile and backfire bomber. U.S.-U.S.S.R. trade negotiations snagged on the question of most-favored nation treatment. The negotiations on Soviet petroleum exports to the U.S. were also suspended in March.

Nevertheless, accepting that the stagnation in relations between the two nations was unavoidable, they endeavored to maintain the general tendency toward relaxation of tensions. It seemed thus in line with such endeavors of the U.S. and U.S.S.R. that the Treaty between the United States of America and the Union of Soviet Socialist Republics on Underground Nuclear Explosions for Peaceful Purposes was signed in May.

The new Carter Administration, from the perspective of its basic stance on human rights at home and overseas, has taken a sympathetic attitude toward Soviet dissidents, thus drawing a burst of considerable resentment from the Soviet Government. However, both nations' leaders are very concerned for the success of SALT II and these negotiations continue uninterrupted.




(2) Sino-American Relations


No concrete progress was seen in normalizing U.S.-China relations in 1976. Behind this stagnation in relations lie the two nations' unchanging stances regarding Taiwan. In addition domestic considerations necessarily came into play in the U.S. with incumbent President Ford's concern for the Presidential race and in China with the rapid political shifts as symbolized by the leadership changes.

Although President Carter has expressed a desire to improve Sino-American relations, he remains cautious in policy toward Taiwan.



(3) Sino-Soviet Relations


No conspicuous developments were seen in the working-level relations between China and the Soviet Union, and the two nations remained in ideological conflict. Although there were forecasts that the demise of Chairman Mao Tse-tung might provide possibilities for improving the stiff relations between the two nations, China maintained its anti-Soviet policies. The Soviet Union, while refraining temporarily from its criticism of China, was unwavering in its contention that improvement in the bilateral relations hinged upon Chinese attitude. The border negotiations resumed in November were again suspended in February 1977 with no progress having been made, and Sino-Soviet relations remained without improvement.

In international forums too, the two nations remained as adamantly in conflict as they had been in 1975.




(4) Domestic Situations


(a) United States


U.S. domestic politics in bicentennial 1976 centered upon the Presidential race, and major policy decisions were deferred until after the election. While the Democratic Party won the Presidential election for the first time in eight years, the main factors contributing to this victory are thought to have been the growing popular mood in the United States for a new kind of politics after Vietnam and Watergate, the fresh image of candidate Carter who in keen competition with Ford appealed to a majority of the voters by pledging to restore trust to politics, and the solid support for Carter of the Democratic Party, which had overcome its internal strife after Vietnam.

Inaugurated in January 1977 as the 39th President of the United States, President Carter has stressed the importance of gaining the public's support and has moved to solidify his political base.

The U.S. economy, which had evidenced recovery in the first quarter of 1976, subsequently saw the rate of growth again turn sluggish, unemployment and prices rise, and the 1976 trade balance plunge from major first-half surplus to drastic deficit. However, bright signs were again apparent in the economy after November as production and retail sales improved and unemployment decreased.


(b) China


Chinese domestic politics entered a major transitional period with the deaths of the top revolutionary leadership, including Prime Minister Chou En-lai, Chairman Chu Teh of the Standing Committee of the National People's Congress, and Chairman Mao Tse-Tung, the eruption of the Tien An Men incident, and the ousting of Teng Hsiao-ping. These events were followed in October by the expulsion of the "gang of four" (Wang Hung-wen, Chang Chun-chiao, Chiang Ching, and Yao Wen-yuan) and the installment of Hua Kuo-feng as Chairman. The newly begun Hua Administration has forcefully pushed its campaign against the "gang of four" and devoted its energies to restoring party unity and rebuilding the economy.


(c) U.S.S.R.


In the Soviet Union, there were no major personnel or policy changes seen after the February-March 25th Party Congress. In the economy, agriculture rebounded from the disastrous harvest of 1975 to record a high grain output. Industry also surpassed 1976 targets, albeit in part because the targets themselves had been set somewhat low. Nor was sufficient improvement seen in that low worker productivity which is a weakness of the Soviet economy.




2. Other Areas


(1) Korean Peninsula


(a) North-South Relations


Although the August Panmunjom incident raised tensions on the Korean Peninsula, the cautious handling and sub-sequent actions by both North and South Korea as well as the concerned great powers kept it from developing into a more serious situation.

The dialogue between North and South broken off in 1975 has yet to be resumed, and their relations remain firmly stalemated.


(b) External Relations


Attention was focused on what would result from the diplomatic approaches by both North and South Korea to the non-aligned and other nations. On the North Korean side, the approach to the summit conference of non-aligned countries in August ended in failure (20 nations abstaining on North Korea's proposal on the Korean question), and the draft resolution in support of North Korea which had been submitted to the United Nations was abruptly withdrawn before the September start of the General Assembly.

The Republic of Korea continued to plead the necessity of a realistic approach to solving the Korean question before the moderate non-aligned nations.

In the U.S., President Carter reaffirmed after being inaugurated his campaign pledge of withdrawing U.S. ground forces from the Republic of Korea.


(c) Domestic Issues


Taking a firm stance against antigovernment activities as seen in the proclamation to save democracy, the Republic of Korea continued to work to reinforce its self-reliant defense capability and to develop the national economy. North Korea was supposed to have been in severe economic difficulty, as evidenced by its heavy foreign debts and failure to announce the next economic plan.




(2) Indochina


(a) Domestic Developments


The three countries of Indochina worked to consolidate their socialist systems in 1976, each in accordance with its national circumstances. Vietnam achieved formal unification in July, decided upon its post-unification socialist revolutionary policies at the December Vietnam Worker's Party Congress, and formulated its second Five-year Plan. Laos made progress in its work of socialist construction along the policy lines of the Action Program adopted at the December 1975 National Congress of People's Representatives. Cambodia promulgated its new Constitution in January and is working on reconstruction based upon self-reliant policies for self-help under the leadership chosen at the April People's Representative Assembly.


(b) External Relations


As for the external policies of the three countries of Indochina, attention was specifically focused on their relations with China and the U.S.S.R.

Vietnam maintained a basically independent line toward China and the U.S.S.R., but its relations with the U.S.S.R. seemed to tend closer than those with China as a result of the Soviet Union's superior aid-providing ability. Laos also intended to be equidistant from China and the U.S.S.R., but was in fact more heavily influenced by the U.S.S.R. and Vietnam. By contrast, Cambodia was tilting toward China without adjusting its relations or exchanging Ambassadors with the Soviet Union.

Relations between the Indochinese nations and the nations of the Association of Southeast Asian Nations (ASEAN) plus Burma were another focus of interest. While Vietnam and Laos continued to view the ASEAN organization with suspicion Vietnam showed a will to improve bilateral relations with these nations, clarifying the four policy principles for relations with Southeast Asian nations in July and establishing diplomatic relations with the Philippines in July and with Thailand in August. Cambodia, although not showing any major changes in what was considered as a closed-door external policy, established diplomatic relations with Burma, Malaysia, the Philippines, and Singapore after April. At the same time, the friendly stance toward neighboring nations was noticed as evidenced in the March 1977 visits of Deputy Premier Ieng Sary to Malaysia, Singapore, and Burma.

United Nations membership for Vietnam was debated in the Security Council in August and again in November, but the U.S. exercised its veto to block Vietnam's admission.



(3) Southeast Asia


(a) Intra-regional Relations


In 1976, the Southeast Asian nations continued to work for increasing their resilience as national entities. The ASEAN nations also stepped up their efforts for stronger intra-regional solidarity, including the holding of ASEAN's first summit meeting of heads of state and government in February.


(b) Individual Nations' External Relations


The Southeast Asian nations were watched as to how they would respond to the changes in Indochina. The ASEAN states continued their efforts to readjust their relations with the Indochinese nations in 1976.

As to the Southeast Asian nations' relations with China and the U.S.S.R., the Philippines established diplomatic relations with the Soviet Union in June. However all of these nations remained fundamentally cautious toward China and the U.S.S.R., with the result that there were no conspicuous developments.

Relations between the ASEAN states and the U.S. were another focus of attention. In the wake of the U.S. withdrawal from Vietnam, these nations pursued their independent foreign policies further, as illustrated by the withdrawal of U.S. military forces from Thailand, but they still held strong expectations for a U.S. role within the region and showed major concern over U.S. post-election policy moves toward Southeast Asia.


(c) Domestic Situations


The most outstanding features of these nations' domestic situations are as follows. In the Philippines, the October referendum approved partial revision of the Constitution for the continuation of martial law and establishment of the Interim Batasang Pambansa, which strengthened still further the Marcos Administration's base. In Malaysia, although Prime Minister Razak died in January and Deputy Prime Minister Hussein Onn succeeded him, no major policy changes were observed. By contrast, the October military coup d'état in Thailand established the Tanin Government and founded the National Administration Reform Assembly composed of Government-designated members. In Singapore, the ruling People's Action Party again captured all seats contested in the December election to demonstrate anew the current Government's stability with this third straight sweep. In Indonesia, more animated public opinion was seen in preparation for the May 1977 general election. In Burma, despite the coup d'états planned by some military officers and other opposition, none of them posed any threat to the incumbent Government.




(4) Southwest Asia


(a) Domestic Developments


The domestic political and economic situations of the nations on the Indian Subcontinent, though harboring various unstable factors beneath the surface, passed the year 1976 in relative stability with no major disruptions. In India, the Constitutional amendments designed to legitimize the political system under the state of emergency passed Congress in November, while in neighboring Bangladesh November saw Army Chief of Staff Ziaur assume the post of Chief Martial Law Administrator and further solidify his power base.

In 1977, however, the nations of Southwest Asia entered a time of transition, as illustrated by the March Lower House elections in both India and Pakistan. In India, Prime Minister Gandhi's Congress Party was trounced by the united opposition Janata Party and the first non-Congress Government in India's history was formed under Desai. In Pakistan, the Bhutto-led People's Party scored a major victory but the united opposition Pakistan National Alliance (PNA) mounted a campaign charging election irregularities and demanding the resignation of Prime Minister Bhutto and the holding of new elections, with the result that Pakistani domestic politics entered a period of instability.


(b) External Relations


As to the foreign relations within the region, India and Pakistan normalized diplomatic relations in May 1976 and progress was also seen in improving such relations as those between Pakistan and Bangladesh. The Desai Government, which took office in India in March 1977, also indicated a desire to have friendly and neighborly relations with other nations of the region.

In Sino-Indian relations too, signs of improvement were seen after 14 years of conflict or chilliness, and the two nations agreed in April 1976 to exchange ambassadors.



(5) Oceania


Having come to power in the general elections of late 1975, Australia's Liberal Party-National Country Party coalition and New Zealand's National Party devoted their energies to overcoming the economic difficulties which brought them to power. Nevertheless, the battle against inflation and for economic recovery was not an unqualified success, and both nations devalued their currencies in late November 1976.

In their foreign relations, the new Governments of Australia and New Zealand placed a greater emphasis on relations with the U.S. than did the former Labor Party Governments, and at the same time endeavored to promote cooperation with Japan, ASEAN, and the South Pacific nations and to maintain friendly relations with China.



(6) Western Europe


Many Western European nations held general elections (Sweden, West Germany, Malta, Italy, and Portugal) or had new Prime Ministers (Britain and France) in 1976. Especially noteworthy were the major advances by the Italian Communist Party and the defeat of Sweden's Social Democratic Party. Democratic reform was undertaken in Spain in preparation for the holding of the June 1977 general election, and in Portugal a new Constitution was established to lay the foundations for democratization.

In the economic field, as symbolized by the re-withdrawal of the French franc from the European joint-float snake the devaluations of the British pound and the Italian lira, the revaluation of the Deutsche mark, and other currency problems, the gap between such economically strong nations as West Germany and such economically weak nations as Britain and Italy widened to the point where its resolution was keenly felt as an issue of major importance for the EC.

The North Atlantic Treaty Organization (NATO), strongly concerned about the military build-up by the Warsaw Pact nations, worked hard for increased cooperation among member nations, reinforcement of U.S. forces in Europe, weapons standardization, and other measures to maintain and strengthen current arrangements.



(7) European East-West Relations


Despite the Conference on Security and Cooperation in Europe (CSCE) in 1975, no major progress was seen in European East-West relations in 1976. A focal point of interest in East-West relations was how the East would respond to Western demands for implementation of the points agreed upon in the Final Act of the CSCE, especially Basket 3 (for the free flow of people and information). However, the East in its response mixed both hard- and soft-line policies, such as by running counter-campaigns in the Western press while relaxing travel restrictions on Western journalists. At the same time, the East made such proposals as for the holding of an all-Europe cooperation council on environmental, transport, and energy issues and for declarations of no first use of nuclear weapons, but the Western response was cold and the discussion-lagged after summer 1976.

One more focus of East-West relations in Europe was the MBFR negotiations. While these were continued in 1976, no concrete progress was seen, and there was instead notable wariness in the West over the continuing military build-up by the East.

Economically, Comecon made a proposal to the EC for a comprehensive agreement in February to which the EC responded in November with a counter-proposal for an agreement covering information exchanges alone. In June, U.S. Secretary of State Kissinger made a proposal at the Ministerial Council Meeting of the Organization for Economic Cooperation and Development (OECD) for a rethinking of East-West economic relations.




(8) Middle East


Although differences were already evident among the Arab states regarding the Second Sinai Agreement and other points, these differences became further complicated and serious by Syria's intervention in the Lebanese conflict. No new progress was made in discussions for a Middle East peace.

The Lebanese civil war, which erupted in April 1975, developed into an increasingly complex conflict in 1976 as the battle between Christians and Moslems was joined by forces seeking Palestine's liberation and even the Syrian armed forces.

It was under these circumstances that the summit meeting of six Arab heads of state and the eighth Arab leadership conference were held in October at the initiative of Saudi Arabia and others concerned over this exacerbation of intra-Arab differences, these conferences yielding agreement on a Lebanese cease-fire and the dispatch of peace-keeping troops, respect for the Cairo Agreement on the status of the Palestine Liberation Organization (PLO) and other arrangements, thus calming the conflict in Lebanon for the time being.

In 1977, the Arab-African Summit was held in March and the African states affirmed their support for the Arab position on Middle East problems. There were also active exchanges of opinion between the PLO and Arab nations as the Arafat leadership sought to consolidate its position while still holding the Palestine People's Council and indicating a realistic policy line.

Along with these Arab moves, efforts were further strengthened for international mediation. U.N. Secretary General Waldheim visited the Middle East in February 1977 to seek a reconvening of the Geneva Conference. During the same month, the new Carter administration also dispatched Secretary of State Vance to the Middle East to hear the views of the leaders of various countries, while inviting the leaders of the countries concerned to Washington for exchanges of opinions by turns in and after March.




(9) Africa


Africa in 1976 drew considerable world attention for the independence movements of the non-self-governing territories, especially the issue of Southern Rhodesia.

In Southern Rhodesia, black guerilla activity seeking to overthrow white minority rule became more intensified, in part influenced by the establishment of an Angolan People's Liberation Movement (MPLA) Government in nearby Angola. Concerned over a deteriorating situation, the U.S. sent Secretary of State Kissinger to the area to work for a political solution, and as a result the Smith Government agreed to majority rule within two years. Although a Geneva Conference was subsequently held between the black liberation forces and the Smith Government with Britain as chairman, no agreement was reached on the make-up of an interim government or other aspects, and the Conference was broken off.

In Namibia, the Southwest Africa People's Organization (SWAPO) had been demanding direct negotiations with the South African Government, and to this the South African Government responded by somewhat softening its posture after around mid-1976, recognizing Namibian independence at the end of 1978.

In the Republic of South Africa, no basic changes were seen in the policy of apartheid despite the black riots in June and beyond.

Among the developments affecting the remaining non-self-governing territories may be cited Seychelles's independence from Britain in June.

Economically, with the exception of a few favored nations, such as oil-producing Nigeria and Gabon or coffee-producing Kenya and Ivory Coast, most African nations were troubled by domestic economic sluggishness resulting from rising prices and international balance of payments deficits generated by slow primary-product exports and soaring import prices.



(10) Latin America


Among the notable developments in Latin America in 1976 may be cited the increasing trend to military rule in southern South America, including the installation of a military government in Argentina, and the tendency to pay a generally greater respect to rationality in economic management.

Cuba established a new Constitution in February, making its tilt toward the Soviet Union still more explicit, and developed a foreign policy pivoting on harmony with the U.S.S.R. and other Comecon nations. Nonetheless, Cuba suffered from a shortage of capital for building its economy as sugar prices plummeted, and the first five-year plan was off to a very difficult start in its initial year.

The U.S. moved in 1976 to strengthen its ties with the nations of Latin America by announcing a policy of respecting the will of Latin America in Panama Canal negotiations and implementing a new trade act, sending Secretary of State Kissinger on a visit to ten Latin American nations, and otherwise initiating the "new dialogue" proposed by Secretary of State Kissinger in 1973.

At the same time, the Latin American nations' relations with the socialist states were generally low-keyed, a minor exception being the Soviet offer of military aircraft to Peru. Nonetheless, the Soviet approach to Venezuela attracted attention as part of a broader Soviet energy strategy and policy vis-a-vis the developing nations.



II. Multilateral Relations



1. The Economies of the Industrialized Democracies



The economies of the industrialized democracies slowed in mid-year after showing recovery in the first half of 1976.

The pace of recovery varied considerably according to the economies of these countries, and sluggishness in individual consumption and plant investment was seen as holding the economic recovery in check. Under the circumstances, it was feared that some nations would spark renewed inflation along with recovery, and nations whose economies did not recover experienced continuous difficulties with inflation, high unemployment rates, and worsening international balances of payments. International financing was also affected as the widening disparities among different national economies were reflected in currency fluctuation, and trade interests saw protectionist moves arise in some nations troubled by high unemployment rates and other domestic economic woes.

In a follow-up to the first Summit Meeting of Heads of State and Government of the Major Industrialized Countries, the June Puerto Rico summit reaffirmed the common will of the industrialized democracies to find effective solutions to the problems of the global economy through strengthened harmony among nations.

The problem of trade imbalance surfaced between Japan and the EC, some of whose members were facing serious economic difficulties, but efforts to avert any exacerbation of this problem were continued through two-way cooperation based upon free-trade principles.



2. North-South Problems



The North-South dialogue was continued in 1976. Especially at the Conference on International Economic Cooperation (CIEC) convened in December 1975 and at the 4th United Nations Conference on Trade and Development (UNCTAD) in May 1976, the whole gamut of the North-South problem was reviewed. As illustrated at the August summit conference of non-aligned nations, the developing nations set the establishment of a new international economic order as their ultimate goal and tended to give this demand increasingly concrete shape, as was seen in their demand for the adoption of the UNCTAD Integrated Program for Commodities.

Because it was feared that the CIEC Ministerial Session scheduled for 1976 might prove unable to reach agreement between the two sides under such circumstances, the session was not held and the CIEC was left unfinished.



3. Formation of a New Maritime Order



The fourth and fifth sessions of the Third United Nations Law of the Sea Conference were held in New York in 1976. At the fourth session, the single negotiation proposal submitted by the Chairman at the third session was deliberated and a revised draft formulated. Negotiations at the fifth session concentrated on those points in the revised single proposal where differences of opinion were strongest, including exploitation of the deep-sea seabeds, the legal status of economic zones, and defining the outer perimeters of continental shelves. However, there were especially strong differences between the developed and developing nations overexploitation of deep-sea seabeds, and the session ended with no concrete achievements except the decision to hold the sixth session in the summer of 1977.

The difficulties encountered in this Conference in turn spurred moves by coastal nations to expand their jurisdiction so as to conserve their fishery resources. While Japan and some other countries, seeking to protect their pelagic fishing and international maritime transport interests, insisted that any expansion of coastal nations' jurisdiction should be effected through international consensus at the Law of the Sea Conference, the establishment of 200-mile economic zones by the U.S. and other leading nations sparked the Soviet Union, EC nations, and others to follow suit with 200-mile economic zones of their own, leading to the advent of an era in which such 200-mile zones have become internationally common-place. As a consequence, there was also a spate of bilateral fishery agreements concluded premised upon acceptance of these 200-mile economic zones.



4. Nuclear Non-proliferation



In keeping with the increasing advocacy by the U.S. and other nations of tighter restrictions to prevent nuclear proliferation in the wake of India's 1974 nuclear test, President Ford announced a hard-line policy in October 1976 concerning the peaceful uses of atomic energy, including the issue of reprocessing spent nuclear fuel which might lead to development of a capacity to produce nuclear weapons. As the new Carter Administration has taken an even harder line on this than did President Ford international concern has come to focus on the question of how to advance the peaceful use of atomic energy while still avoiding the danger of proliferation.


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