CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A018900090001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 14, 2016
• Document Release Date: May 2, 2003
• Sequence Number: 1
• Publication Date: May 4, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 040
4 May 1971
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No. 0106/71
4 May 19 71
Central Intelligence Bulletin
CONTENTS
EAST GERMANY: Honecker has replaced Ulbricht as
party chief. (Page 1)
CAMBODIA: A government compromise is before the Na-
tional Assembly. (Page 3)
PERSIAN GULF: Attempts to form a federation continue
to be thwarted. (Page 5)
CYPRUS: Both the Turkish and Greek Cypriots are
taking tougher positions. (Page 6)
CHILE: Allende has increased pressure on private
banks. (Page 7)
COMMUNIST CHINA - LAOS: Road building (Page 9)
PHILIPPINES: Demonstrations (Page 9)
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C EAST GERMANY: Walter Ulbricht, 77, has stepped
down as first secretary of the East German Communist
Party (SED) in favor of 58-year-old Erich Honecker.
There is no evidence that Ulbricht was forced
out. He will retain his position as head of state
and will take a newly created honorary post as
"chairman" of the party. While age and health were
certainly factors in Ulbricht's decision, policy
problems also entered into it. Ulbricht was out-
voted last December on economic policy, when the
East German leadership had to recognize that the
pursuit of overambitious plans had brought the eco-
nomy into serious difficulties. The pressure of
Bonn's Ostpolitik may have influenced the move as
well, because Ulbricht has on occasion been at odds
with his allies on how to handle it.
Honecker, who has been Ulbricht's heir-apparent
since 1961, is considered by most observers to be as
dogmatic as his mentor. For several,years, Honecker
has been running the party's routine operations, and
it is not likely that he will
encounter meaningful domestic
opposition. Honecker'is per-
sonally known to most of the
present Soviet leaders and
received special attention from
them during the recent CPSU
congress. The timing of the
move, just six weeks before
the East German party congress,
'gives Honecker time to consol-
idate his hold and formulate
his plans.
Ulbricht's retirement
will generate considerable
speculation in West Germany
over prospects for Bonn's
currently stalemated Ost-
politik. It is widely
4 May 71 Central Intelligence Bulletin
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contended in Bonn that Ulbricht was in large measure
personally responsible for frustrating Ostpolitik by
successfully lobbying in Moscow. Although the more
optimistic West German leaders will hope for new
progress with Ulbricht's departure, most leaders,
Brandt included, have long regarded Honecker as
little or no improvement. For his part, Honecker
will want to stress continuity in foreign policy in
order to avoid arousing expectations of change which
might destabilize the domestic political situation.
Honecker was born in Neunkirchen, which is in
West Germany. His father, a Saarland miner who
lived in West Germany until his death in 1969, was
a Communist and enrolled his son in a party school
when he was eight years old. Honecker joined the
Communist Party of Germany (KPD) in 1930. He was
imprisoned by the Nazis in 1935 and spent the war
years in prison. He was liberated by the Soviets
after the war and became the party's youth secretary
in 1945. He rose rapidly, becoming a candidate
member of the politburo in 1950 and a full politburo
member in 1958. His second wife, Margot Feist, is
presently the East German education minister.
4 May 71 Central Intelligence Bulletin
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CAMBODIA: The latest attempt to break the po-
litical stalemate apparently is now up for National
Assembly approval.
Under a compromise worked out yesterday, Lon
Nol would continue as nominal prime minister with
Sirik Matak serving as his "delegate." In effect,
Matak would discharge most of the responsibilities
of prime minister, at least until such time as Lon
Nol was physically able to play a more active role.
National Assembly President In Tam, whose own bid
for the prime ministership was vetoed by Lon Nol,
has been offered a new post of vice prime minister.
At last report, In Tam was expressing reservations
about exactly how the new jerry-built setup would
work and has not yet decided to participate.
In Tam's refusal to lend his support to the
scheme would hurt its prospects in the assembly,
where some parliamentarians are likely to grumble
about its constitutionality. The combined weight
of Lon Nol's prestige and the backing of the major
factional interests could whip the assembly into
line, provided there is a general consensus in the
capital that the new arrangement is the best that
can be hoped for in the present circumstances.
As the proposal now stands, the new government
would in effect represent a return to the same sit-
uation that prevailed before Lon Nol's resignation.
At that time the disturbing prospects of running a
country with a physically disabled prime minister
and an inadequately supported deputy contributed to
the pressure for Lon Nol's resignation and the en-
suing two-week political impasse. Although the new
arrangement might be acceptable as an interim meas-
ure, it does not come to grips with the fundamental
cleavages in the political situation.
4 May 71 Central Intelligence Bulletin
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PERSIAN GULF: Attempts to form a federation
of Persian Gulf states continue to be thwarted by
conflicting ambitions and personalities.
The UK hoped to federate the nine small states
in 1968 when it decided that it could no longer sup-
port the political and financial burden of maintain-
ing a "protector" role in the area. This scheme has
been dogged by the traditional conflicts among the
states, by Iranian ambitions to replace the British
as they withdraw in late 1971, and by Saudi Arabia's
dilatory. support for the project.
Bahrain, the most populous and advanced of the
nine gulf states, has now decided to abandon the
British plan for federation and to seek independence
and membership in the UN.
Britain still hopes to salvage a smaller, seven-
state federation after Bahrain and--probably--Qatar
declare independence. Abu Dhabi and Dubai, however,
are believed to oppose a truncated union. The re-
maining states--still without significant oil finds--
are too small and poor to influence the decision or
even to maintain their own independence. These
states, in fact, maintain close relations with Iran,
whose claims to several small gulf islands conflict
with the interests of several Arab sheikhdoms sup-
ported by Saudi Arabia.
Bahrain intends to reveal its plans to the
other states shortly and to use the six-week delay
to prepare for the formalities of independence.
The Bahraini move will encourage a new flurry of
political activity among the lower gulf states as
each ruler struggles to reach some accommodation
before one is imposed on him.
(Map)
4 May 71
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CYPRUS: The Turkish Cypriots are taking a
harder position in the intercommunal talks in retal-
iation for President Makarios' recent statements
favoring enosis (union with Greece).
The Turkish Government, apparently believing
that Makarios was trying to exploit the recent po-
litical crisis in Turkey, called Rauf Denktash, the
Turk Cypriot negotiator in the local talks, to
Ankara for consultations. Denktash subsequently
has agreed to continue the talks but has warned
that the Turk Cypriots would react strongly to any
further pro-enosis statements by prominent Greek
Cypriots. One possibility, according to Denktash,
would be to declare "permanent" the Turk Cypriot
community provisional administration, a move that
President Makarios has already threatened to oppose
at all costs.
Denktash has suggested that only Athens and
Ankara could really resolve the problem of enosis.
The dangers involved in forcing a solution on Ma-
karios, however, have so far precluded any serious
discussion between the two states. Both prefer
that the talks continue, if only to preserve the
present tenuous peace on Cyprus.
Denktash met with his Greek counterpart,
Glafkos Clerides, on 28 April and agreed to see him
again on 17 May. Further meetings will be deter-
mined by the Greek Cypriot reaction, but the tough-
ening of both sides' position will probably keep
the talks stalemated.
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CHILE: Allende has increased pressure on
Chile's remaining private banks by sharply re-
stricting their foreign currency operations.
Except for some export-import transactions,
only state-owned banks--including those recently
taken over--may now ,deal in foreign exchange.
this move will greatly in-
crease the already large losses sustained by
private banks. Chile has already taken over
seven domestic private banks, and two West Eu-
ropean - owned banks are reportedly about to
accept offers from the government to buy them
out. The two US-owned banks have not yet re-
ceived government offers.
The timing of these recent actions may have
been influenced by falling reserves and the need
to increase government control over foreign ex-
change operations. The restrictions may be
counterproductive, however,, because they will
probably further reduce the credit lines avail-
able to Chile from foreign banks.
4 May 71
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CHINA
REA OP MAP-..
NORTH
VIETNAM
(NORTHERN LAOS: Communist Chinese Road Construction
-Al
Muong Hour
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Phong Salt
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NOTES
COMMUNIST 'CHINA 'L'AOS: Chinese road builders
in northwest Laos appear to have done relatively
little new work this dry season, which should end
in mid-May. Recent photography shows that Route 46
southwest of Muong Sai to Muong Houn has not been
extended this dry season. Road construction is
continuing on Route 45 northeast from Muong Sai.
The Chinese also are constructing a number of small
bridges and culverts on the northern half of this
route. Construction of a large bridge or ferry
across the Nam Ou River to connect with Route 19
from North Vietnam, however, has not yet been started.
During the past month, the Chinese have constructed
three miles of new motorable road and there are
signs of four miles of survey traces from Route 412,
close to the China border. It is not clear whether
work on this road will continue into the rainy sea-
son. F7 (Map)
PHILIPPINES: The fatalities that occurred in
the May Day demonstrations in Manila probably will
provoke a new period of domestic turmoil. Present
were only untrained antiriot: forces, who fired on
leftist student and labor protestors after they
allegedly hurled home-made bombs; four people were
killed and 30 injured. An indignation rally set
for 7 May promises to be massive, although the
clear readiness of the security forces to open fire
may encourage the organizers to avoid provocative
acts. Any violent street action could prompt Presi-
dent Marcos to impose martial law, a step that
4 May 71 Central Intelligence Bulletin
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