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CONTINUATION OFCLASSIFICATION**SECRET**DISPATCH SYMBOL AND NUMBERΠΜΜΑ-38700doubly disappointing in view of the fact that as she became more and more unreasonable, GERENDE was moving in the other direction.5. The outcome can still not be predicted. As can be seen from GERENDE's memos, the two sides are still far apart on a number of points, including specifically money. LIEMPTY-19 insists on 10,000 pesos per month. GERENDE is willing to pay 5,000. GERENDE is currently on half-pay, which means that his total (all source) monthly income is around 14,000 pesos. From this, he would not only have to pay the amount which is finally agreed upon, he must also continue payments of 2500 pesos per month to LIEMPTY-19's father (paying off a loan obtained to build their house). The complicating factor is the uncertainly of GERENDE's future with RVROCK. The Station has maintained for some time that it is impossible to continue to pay GERENDE his full salary solely torun the LICALLA and LILYRIC basehouses. Now that FERNALD has absorbed this duty with only small inconvenience and some loss of timeliness, it makes even less sense to put GERENDE to work only to do this. GERENDE has long been aware of the Station's thinking in this regard, and. prior to the current personal crisis he had been told that he would have to work harder at a greater variety of tasks in order to retain his position. As Headquarters is aware, he had been given additional tasks, and, as reported in reference, he had begun to respond very well. There has never been any question of GERENDE's ability. As we have previously stated, he is personable, intelligent, bilingual and binational, and has had good training and experience in certain fields. On the other hand, there has long been doubt about his seriousness of purpose, his initiative, and his ambition. The "reversal of roles" which he describes in one of the attached memos, which took place when he was confined to his home as an LP keeper, did more than cause domestic problems -- it apparently deprived him of the discipline of a daily job. His well-deserved reputation for being lazy was earned years ago.6. The question which must be answered is whether or not to terminate GERENDE. He can be useful to the Station, but the Station has learned to get along without him. What are the security hazards involved? The general range of his knowledge is described in paragraph 5 of reference. If all of this were blown, the loss to the Station, particularly in terms of support operations against the MHHARSH target, would be considerable. The Station does not believe that GERENDE would deliberately expose any of this, but it is impossible to predict what LIEMPTY-19 might do, particularly since she would feel that she had nothing to lose, having already lost a possible source of income through the termination. GERENDE'S termination bonus would probably be in the neighborhood of ten thousand dollars. Presumably LIEMPTY-19 is aware of the fact that he would get such a bonus, although the Station has never discussed this with her and the possible division of such a bonus between the two of them has never been mentioned.LICALLA7. The LICALLA basehouse continues to function without changes, except for the fact that Bruce H. FERNALD has been meeting LIEMPTY-9 since 9 December 1969. Brief meetings with LIEMPTY-9 are held once a week at pre-arranged times and places (well away from the MHHARSH area). Occasionally special meetings are called, by phone, by FERNALD, if special coverage is desired (as in the AESEASICK case, for example). There have been no problems, operational or personal, involving the basehouse or LIEMPTY-9 during the reporting period. LIEMPTY-9 provided 1,728 photographs during the reporting period, and in addition to his regular reporting on observed activities of MHHARSH personnel, he provided special coverage as requested. This "special coverage" consists of his observations of a selected individual -- who does he spend his time with, how is he behaving, when was he present (or absent), etc. LIEMPTY-9 spends over 40FORM53 a USE PREVIOUS EDITION.CLASSIFICATION**SECRET**X CONTINUEDPAGE NO.3