The Michigan Daily Vol. XC. No. 8-S Ann Arbor, Michigan-Saturday, May 17, 1980 Ten Cents Sixteen Pages U.S. allies back off on Iranian sanctions Stone on campus Noted journalist I. F. Stone speaks last night in the Union Ballroom on the need for military restraint on the part of the world's super-powers. See story, Page 14. Experts predict still worse nat' WASHINGTON (AP)-Downhill r plunges in factory production and housing construction reported yester- day suggest that economic conditions around the nation-including unem- ployment-will get much worse before they get better, economic experts say. Industrial production last month slumped 1.9 per cent as recessionary weakness continued to spread from the already hard-hit automobile and con- struction industries to other manufac- turers. THE DROP WAS the largest since a 2.2 per cent decline in Febraury 1975, during the last recession; and followed dips of 0.7 per cent in March and 0.2 per cent in February. Meanwhile, Commerce Department reported that housing starts fell 2.1 per cent in April to an annual rate of 1,019,000 units. It was the seventh consecutive month of decline, though considerably more moderate than March's 22 per cent drop, and left home construction 42 per cent below its April 1979 pace. BUILDING PERMITS issued, an in- dicator of future housing activity, fell a precipitous 14 per cent to an annual 800,000 units after dropping 18 per cent in March. Both construction and permit figures were the lowest since the spring of 1975, during the last recession. An annual-rate figure shows how many homes would be built in a year if the construction pattern of a single month were continued for 11 more mon- ths. From AP and UPI Three key Western foreign ministers have told Secretary of State Edmund Muskie the European Common Market will not impose full economic sanctions against Iran this weekend, it was lear- ned last night. Muskie got the news at breakfast in Vienna with the ministers, Jean Fran- cois-Poncet of France, Hans Dietrich Iranian Foreign Minister Sadegh Ghotbzadeh said yesterday economic sanctions against Iran will do nothing to help free the 53 American hostages. See story, Page 6. Genscher of West Germany, and Britain's Lord Carrington. THEY DID NOT inform Muskie precisely how the Common Market will water down the sanctions they decided last month to impose against Iran in a joint effort with the United States to try to gain the release of American hostages held since Nov. 4. - The ministers told Muskie they are economy THE CONSTRUCTION drop was not as bad as home builders had predicted. Merrill Butler, president of the National Association of Home Builders, speculated earlier in the day that home construction starts in April might have dropped to a record low of 800,000. Michael Sumichrast, chief economist for the home builders, said he did not See EXPERTS, Page11 not convinced putting off trade will help gain release of the hostages. Meanwhile, Muskie also lectured An- drei Gromyko publicly on the Afghan occupation yesterday in Vienna, then held a three-hour inconclusive meeting with the Soviet foreign minister. AFTER THEIR private meeting, with only translators present, the American secretary of state said he hoped for further talks and a "resolution of the differences that exist." He termed the session "serious" and said he and Gromyko discussed a "number of practical problems." Muskie said he would report to President Carter before commenting further. Last April 22, the market ministers promised to impose strong economic sanctions against Iran if, by today, it showed no signs of being willing to free the hostages. THE EUROPEAN governments pledged themselves to enact sanctions outlined in a U.N. Security Council resolution vetoed by the Soviet Union last January unless "decisive progress leading to the release of the hostages" had been made. At least some current lucrative con- tracts are likely to be exempted when the Europeans meet in Naples, Italy, beginning today to review their April 22nd decision. The Europeans are known to be reluctant about losing big business deals. Italy, for instance, has $3 billion worth of construction contracts em- ploying some 2,000 Italian workers, and Britain does $70 million worth of business in Iran monthly. MUSKIE WAS TOLD the Common Market will support the United States at least to the extent of barring new trade with Iran except for food and medicine. He will try to persuade Car- ter to accept this asa victory of sorts. At the top of Muskie's agenda for the Gromyko meeting-the first high-level super power talks in eight months-was a proposal by Afghanistan to negotiate a settlement of the Soviet intervention. Muskie dismissed the proposal, but ap- peared intrigued by the fact that the pro-Soviet government of Afghanistan See ALLIES, Page8 New Archives chief University historian Robert Wagner, currently director of the Bentley Historical Library, was appointed head of the U.S. National Archives and Record Service yesterday. See story, Page 3.