"In May the United States and Brazil reached an interim

agreement on the potentially serious issue of fishing rights in waters claimed in Brazil. The agreement provides for continued fishing by U.S. vessels off the Brazilian coast within the 200-mile zone claimed by Brazil, but not recognized by the United States.

"Also in 1972, the United States and Brazil negotiated a pact amending their 1965 Agreement for Cooperation in Civilian Uses of Atomic Energy.

"The International Coffee Agreement weakened during 1972 as producers formed an organization among themselves to control coffee marketing in a manner which the consuming countries saw as contrary to the purpose of the Agreement. The heavy coffee surpluses which led to the creation of the Agreement have disappeared for the moment, at least. The changed prospects for the coffee market have produced a fresh examination of the role of international cooperation. That process will move forward in 1973. The U.S./Brazilian tradition of solving difficult bilateral problems through negotiation is expected to continue in this

"Negotiations for a new Panama Canal treaty, to replace the treaty of 1903, continued during 1972 although little progress thus far has been made.

"At the United Nations, Panama campaigned hard during the year for a meeting of the Security Council in Panama City. Panama became a rotating member of the Council in January 1972. The United States expressed strong reservations whether there was sufficient justification for such a meeting and stressed that it should not be used in the context of U. S.-Panamanian issues.

"The attention of the Panamanian leadership was primarily focused on a major political restructuring involving presidential and National Assembly elections and constitutional reform.

"On May 29 the Panamanian Government took over the Panama Power and Light Company, 90 percent owned by Boise

Cascade Corporation. The action came after a breakdown in negotiations for a new service contract. During difficult negotiations which followed, the U.S. Embassy in Panama provided good offices and helped facilitate an agreement in principle by the two parties for the purchase by the Panamanian Government of the Boise Cascade interest in the company.

"The use of Panama by international narcotics traffickers as a transshipment point for channeling illicit drugs to the United States emerged as a problem of major mutual concern. We gave priority to the development of a cooperative narcotics control program with Panama. Despite setbacks early in 1972, increasing cooperation has since been evident, highlighted by the arrest and deportation to the United States of several international narcotics traffickers and fugitives from U. S. narcotics law.

"During the year our development assistance was designed to promote a better distribution of the benefits of growth, particularly in favor of the rural areas. A.I.D. provided $3.5 million in technical assistance grants for activities in agriculture, health and family planning, education, and industrial development. It also authorized development loans in housing and tourism totaling $19 million.

"Some progress was made on the construction in Panama of the Darien Gap Highway, the final link in the Pan American Highway system. The United States is providing two-thirds of the total financing for this project.

Reading List

1. Bourne, Richard. Political Leaders of Latin America. 2nd ed. New York: Knopf, 1970.

2. Burnett, Ben G. and Johnson, Kenneth F. Political Forces in Latin America: Dimensions of the Quest for Stability. 2nd ed. Belmount, Calif.: Wadsworth, 1970.

3. Casanova, Pablo Gonzalez. Democracy in Mexico. Translated by Danielle Salti. New York: Oxford Univ. Press, 1970.

4. Delger, Carl N. Neither Black nor White. (subject: Brazil). New York: MacMillan, 1971.

5. Duncan, Walter Raymond and Goodsell, James N., eds. The Quest for Change in Latin America; sources for a 20th century analysis. New York: Oxford Univ. Press, 1970.

6. Fagen, Richard R. The Transformation of Political Culture in Cuba. Stanford, Calif.: Stanford Univ. Press, 1969.

7. Johnson, William W. Heroic Mexico: The Violent Emergence of a Modern Nation. Garden City, N. Y.: Doubleday, 1968.

8. Lodge, George C. Engines of Change. New York: Knopf, 1969.

9. Needler, Martin C., ed. Political Systems of Latin America. 2nd ed. New York: Van Nostrand Reinhold, 1970.

10. Poppino, Rollie E. Brazil: The Land and People. New York: Oxford Univ. Press, 1968.

11. Ruiz, Ramon E., ed. Interpreting Latin American History From Independence to Today. New York: Holt, 1970.

12. Stephan, Alfred. The Military in Politics: Changing Patterns in Brazil. Princeton, N.J.: Princeton Univ. Press, 1971.

MIDDLE EAST

There is no generally accepted definition of the term, "Middle East. For the purpose of this background reading, it consists of Iran, Iraq, Israel, Jordan, Lebanon, Saudi Arabia, Syrian Arab Republic, Turkey, Arab Republic of Egypt, Yemen (Yemen Arab Republic), Southern Yemen (People's Democratic Republic of Yemen), Oman, the United Arab Emirates, Qatar, Bahrein, and Kuwait. This area covers approximately 6,000 miles from east to west and 3,000 miles from north to south, with a population of about 125 million.

The Middle East is the home of the oldest civilizations known to man. The hub of three continents, it has been a crossroads for many peoples, each of which has left some trace among the present population. These have included the original inhabitants of the valleys of the Tigris and Euphrates Rivers in Iraq and the Nile in Egypt and succeeding waves of migrants and conquerors, among them Arabs, Greeks, Turks, and Persians.

The region is the birthplace of three world religions: Judaism, Christianity, and Islam. The majority religion in the area is Islam, practiced by most of the inhabitants of the Arab states, as well as Turkey and Iran. The main languages of the area are: Arabic, spoken in the Arab states; Turkish, in Turkey; Persian, in Iran; Hebrew, the official language of Israel.

The interests of the United States in the Middle East are primarily strategic and economic. The Middle Eastern area contains approximately two-thirds of the world's known oil reserves under its sands. The continuing uninterrupted flow of this oil, at an economic price, is necessary to the economic and military strength of our European allies, which is important to the security of the United States.

U.S. oil companies' investment in Middle East oil (about 54 percent of the total) is centered around the Persian Gulf. There are also fields in northern Iraq, in southern Turkey, and along the Gulf of Suez. Not only is this oil important to the economic and military strength of the non-communist countries but it is also the

main source of foreign exchange for the economic development of the area.

The other major U. S. interest in the Middle East is the land, sea and air routes which link Asia and its raw materials with Western Europe. The Middle East is also a gateway to Africa and its vast human and mineral resources are just beginning to play a role upon the world stage.

The United States has long been interested in the Middle East and its peoples--not least because the religious traditions of most Americans trace back to this area.

Formal relations date from the early period of the new American Republic; the first official treaty with the Turkish Ottoman Empire was signed on 7 May 1830. American educational institutions such as Robert College at Istanbul (founded in 1863), Istanbul Women's College (1871), and the American Universities at Beirut (1896) and Cairo (1919), to mention only a few, have exerted an influence throughout the area for generations.

American trade with the Middle East also has a long history and has grown to substantial proportions. Our heaviest imports are petroleum and petroleum products. Still the United States imports less than five percent of its petroleum requirements from the Middle East. The great bulk of oil products from U. S. oil investments in the area are sold to Western Europe.

The United States believes that economic and social progress are the best safeguards against internal unrest or subversion. Our aim is to encourage and help in the development of prosperous and stable societies whose material benefits are widely distributed.

One of the Middle Eastern problems which has been of great concern to the United States is that of protecting the region from external aggression. The Soviet Union after World War II continued its efforts to penetrate the Mediterranean and Persian Gulf areas, first by occupying and setting up a Communist-dominated autonomous region in northern Iran, and later by pressure on Turkey to cede rights in the Bosporus and the western Turkish areas bordering on the USSR.