CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A019200070001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 14, 2016
• Document Release Date: July 31, 2003
• Sequence Number: 1
• Publication Date: June 8, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
State Department review completed
N2 040
8 June 1971
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No. 0136/71
8 June 1971
Central Intelligence Bulletin
JAPAN: Trade and investment policy. (Page 1)
EGYPT: Further cabinet changes reportedly are
planned. (Page 2)
INDIA: Damage to the wheat crop. (Page 3)
USSR-IRAQ: Soviet participation in the oil in-
dustry. (Page 4)
MALI - COMMUNIST CHINA: Aid request. (Page 5)
ORGANIZATION OF AFRICAN UNITY: The Ministerial
Council will convene Fri ay. (Page 6)
ZAMBIA-PORTUGAL: Talks aimed at ending Lisbon's
suspension of grain shipments. (Page 7)
PERU: Attempt to sell fishmeal to Communist
countries. (Page 10)
SWITZERLAND: Xenophobic new political party.
(Page 11
EGYPT: Military budget (Page 13)
USSR-CUBA: Submarine tender (Page 13)
COMMONWEALTH SUGAR: Undertaking by EC (Page 13)
AUSTRALIA: Membership in OECD (Page 14)
SOUTH AFRICA: Iron exports to Japan (Page 14)
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*JAPAN: Tokyo's recently announced program
to change drastically" its foreign trade and in-
vestment policy is not expected. to have much impact
in the near future.
The program, coming less than two months after
Prime Minister Sato's decision to re-examine Japan's
trade and investment policy, is designed to curb
growing foreign criticism of these policies and to
relieve pressure for revaluation of the yen. It was
announced just prior to this week's Ministerial Coun-
cil meeting of the Organization for European Coop-
eration and Development, apparently in hope of head-
ing off criticism there of Tokyo's policies. Most
of the program's eight points concern liberalizing
imports, but steps to cut back export growth also
are included. Moreover, Tokyo hopes to step up
capital outflows, primarily to restrain rapidly
growing foreign reserves.
Despite the urgency and importance attached to
the program, however, few significant changes in
Japan's restrictive policy are expected soon. Many
of the so-called policy changes in fact already are
in effect, some for several years, while other as-
pects of the eight-point program are still in the
study stage. In the case of removing nontariff
trade barriers, which is essential to a meaningful
import liberalization reform, Tokyo merely states
progress will be made. In addition, Tokyo will
find it very difficult to speed up its already rapid
expansion of Japanese capital expenditures abroad.
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*The acting director of the Bureau of In-
telligence and Research, Department of
State considers that in view of the scant-
iness of the information thus far received
on the new Japanese announcement, it is
premature to reach any analytical judg-
ments about its real import.
Central Intelligence Bulletin
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EGYPT: The US Interests Section in Cairo re-
ports information that
President Sadat is p anning ur er adjustments in
the cabinet formed after the major purge in mid-May.
The reputed scenario calls for Prime Minister
Mahmud Fawzi to move up to the vice presidential
post left vacant by Ali Sabri's dismissal. In two
other reported shifts, Abd al-Munim Qaysuni, a
former deputy premier for finance and economy under
Nasir, would replace Fawzi as prime minister, and
Deputy Premier for Industry and Trade Aziz Sidqi
would be appointed secretary general of the Arab
Socialist Union, Egypt's only political party.
Such a realignment would be plausible if Sadat
sees a need to install a second vice president to
go along with the incumbent Husayn Shafii, whom
most observers discount as a political lightweight.
Furthermore, Sadat might well prefer the septuage-
narian Fawzi as his constitutional successor rather
than some more ambitious man.
Little is known of Qaysuni's activities during
the present administration. During his service in
the cabinet under Nasir he was regarded as a highly
competent and effective technician and a political
moderate. If Deputy Premier Sidqi is appointed to
the ASU post, it might be interpreted as a demotion,
because the organization has come under heavy crit-
icism since Sadat purged its top leadership last
Central Intelligence Bulletin 2
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INDIA: The government may request additional
PL-480 food aid as a result of the serious damage
to India's wheat crop by last month's heavy rains.
The four states that account for 70 percent of
India's wheat and other spring crops claim that in
some areas the entire wheat crop was washed away,
including grain already harvested but lying in the
fields and inadequately stored in local markets.
Total losses include several million tons of wheat
as well as cotton, rice, fruit, and spices. This
damage will add to the drain on the Indian food
stocks for the Pakistani refugees.
Mrs. Gandhi had promised during the election
campaign that concessional food-grain imports would
end in 1971, but in May, before the rains, New Delhi
requested another million tons of PL-480 wheat in
addition to a 1.6-million ton agreement signed in
April. This request may be increased and shipments
extended into 1972.
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USSR-IRAQ: Moscow is to expand its participa-
tion in the development of the Iraqi oil industry.
Under the terms of two recently signed contracts
the USSR has agreed to prepare plans for the second
stage of development of the North Rumaila oil field,
a concession formerly held by the Iraq Petroleum
Company (IPC), and for the exploitation of a small
oil field nearby. These contracts are part of a
$67-million Soviet credit extended in 1969.
Work on the first phase of the development of
North Rumaila, primarily the drilling of ten wells,
has been going on since last September. The second
stage, which includes the drilling of 20 wells and
construction of pipelines, is expected to begin early
next year and should be completed in 1974. Annual
production from the North Rumaila area is expected
to reach nearly 20 million tons ultimately, while
the small oil field nearby will provide two million
tons per year.
The Iraqi Government and the IPC are expected
to resume negotiations later this year on the sta-
tus of North Rumaila. Although talks on this sub-
ject have been going on periodically since 1961,
they have been dormant since 1965. The IPC has no
illusions about recovering its former concessions
in North Rumaila, but it hopes through the upcoming
negotiations to buy, perhaps at preferential prices,
future production from this field. The expansion of
the Soviet presence in the area may militate against
such hopes.
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MALI - COMMUNIST CHINA: Peking has agreed to
study in depth a major aid project.
Further reporting on the results of a trip to
Peking last month by Mali's foreign minister indi-
cates China soon will undertake a year-long feasi-
bility study of the $130-million Manatali dam proj-?
ect which Mali considers central to its development.
If approved, construction would not begin before
1973, with completion expected in three years. The
project comes under the umbrella of the Organization
of Senegal River States, a regional economic group-
ing consisting of Mali, Guinea, Mauritania, and
Senegal.
China may also have held out the possibility
of limited military aid during the foreign minis-
ter's trip. The French ambassador to Mali believed
arms were offered. A Chinese military delegation
has been visiting Mali since 2 June on its return
home from a trip to neighboring Guinea. Results of
its discussions are not yet known.
These latest contacts between Bamako and Peking
on aid have prompted Paris, Mali's main financial
backer, to be more forthcoming with its own assist-
ance. The French ambassador has indicated that a
French mission coming to Bamako this week will
study new developmental. aid and that Paris has also
decided to grant additional budgetary help if re-
quested.
Mali's desperate need for economic aid and the
pragmatic outlook dominant within the military junta
that rules the country have led it to seek help from
all quarters. Also, increased aid from any non-
French source--including Communist--is seen as a
way to avoid the risks of overdependence on the
former metropole. Nevertheless, Bamako still re-
lies heavily on French economic and political sup-
port and no major Malian drift away from France and
toward China is likely.
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ORGANIZATION OF AFRICAN UNITY: The 16th OAU
Ministerial Council is scheduled to convene in Addis
Ababa on Friday to prepare for the heads of state
conference opening on 21 June.
The last session of the Ministerial Council
ended abruptly in March after participants became
deadlocked over whether to seat representatives
of Uganda's ousted president Obote or a delegation
from the new military government. Apparently a
majority of OAU states now favor seating the mili-
tary government. Moreover, Tanzania, which was in
the forefront of those states that favored the Obote
delegation and that later succeeded in changing the
venue of the coming conferences from Kampala to
Addis Ababa, now will not strongly oppose seating
the military government's delegation.
If the Uganda issue has in fact been resolved,
it is uncertain what the conference delegates will
discuss. Among the most likely topics are British
arms sales to South Africa and the controversial
proposal of President Houphouet-Boigny of Ivory Coast
that African states enter into talks with South Af-
rica without requiring Pretoria first to modify its
racial policies.
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ZAMBIA-PORTUGAL: Talks begin today between
Zambian and Portuguese officials in New York in an
effort to end Lisbon's unofficial suspension of
grain imports to Zambia over Portuguese African
railroads.
Portugal stopped virtually all grain shipments
last February because of the abduction in Mozambique
and probable slaying of five Portuguese civilians
by Zambia-based guerrillas. The Zambians are also
likely to raise the question of Portuguese involve-
ment in cross-border raids into Zambia conducted
last month by Angola-based Zambian dissidents. Pre-
vious efforts to resolve the dispute through direct
talks in the UK and Malawi ended in a deadlock, and
the Zambians have avoided diplomatic contact since
early April.
The Portuguese reportedly are not optimistic,
and will demand at a minimum that Lusaka show some
willingness to reduce its support of the anti-Portu-
guese guerrillas. Lisbon especially wants Zambia
to punish the guerrilla organization that touched
off the dispute in January.
prepared to discuss these i
some give in the Zambian position may develop
as negotiations proceed, however, especially if last
month's raids into Zambia helped to convince Lusaka
that it should at least talk things over with Lisbon.
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PERU: The Velasco government is making a con-
certed effort to sell its excessive fishmeal stocks
to the Soviet Union, Communist China, and Cuba.
In addition to the trade mission already in
China, Minister of Fisheries Tantalean will travel
to Peking on 14 June to discuss the subject follow-
ing similar talks currently under way in the USSR.
talks on a pos-
sible sale are also going on wit a Cuban delega-
tion in Lima.
The large buildup in stocks of fishmeal, which
deteriorates in storage, results from the fixed
price policy of the state marketing agency. Cut-
ting prices to encourage sales on the world market,
however, would involve rebates on earlier sales con-
tracts. Unless Velasco is successful in disposing
of these stocks without financial loss he will be
open to strong criticism from military officers who
are already disenchanted with many of the regime's
policies. F7 I 25X1
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SWITZERLAND: James Schwarzenbach, a maverick
member of Parliament and controversial spokesman for
ultraconservative political opinion, has formed a
new political party to compete in the national elec-
tions this fall. The announced intention of the
new group is to gain at least ten seats in the Na-
tional Council.
Schwarzenbach's group, the National Republican
and Social Action Movement, will continue his zealous
campaign against the high incidence--nearly 16 per-
cent--of foreign residents and laborers in the country.
Schwarzenbach attributes all of Switzerland's domestic
ills, including inflation, to foreign influence. A
year ago the Schwarzenbach initiative--his proposal
to reduce the number of foreign residents to ten per-
cent in each canton and to 25 percent in Geneva--
stirred the Swiss from their political lethargy for
the first time in several years. Although defeated
in a national referendum, the proposal revealed a
sizable conservative and xenophobic sentiment, par-
ticularly in German-speaking cantons and among the
lower-income and old age groups.
In an attempt to counter the impact of Schwarzen-
bach's efforts, the government, prior to the referendum,
instituted a quota system for work permits which was
aimed at reducing foreign laborers gradually and in-
directly through yearly attrition rates. Whether or
not this tactic had any political influence, the de-
feat of the initiative enabled the government to con-
tinue discussions with the Common Market, which has a
free labor market mechanism, unencumbered by Schwarzen-
bach's legislation.
Bern's quota program has been partially success-
ful in reducing the number of persons under resident
worker permits, but in fact the total of all foreign
nationals in Switzerland actually rose to an all-time
high during 1970, which may serve to reactivate the
Swiss "silent majority."
(continued)
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Although the three dominant Swiss political
parties apparently intend to maintain the present
government coalition, Schwarzenbach's xenophobic
movement underscores the dilemma inherent in Bern's
attempts to reconcile conservative domestic senti-
ment and efforts to curb foreign labor, while at
the same time desiring a modus operandi with the
intra-European oriented Common Market.
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NOTES
EGYPT: The recently announced military budget,
which calls for outlays in the fiscal year beginning
in July of about $1,5 billion, represents an intent
to spend about $170 million more than in the year
now drawing to a close. The bulk of the increase
appears earmarked for the "emergency fund" which
finances civil defense,_refugee relief,.and other
extraordinary outlays. The regular budget alloca-
tion suggests that a high level of military con-
struction--such as the recent extension of more com-
plete air defense installations along the Mediter-
ranean and Red Sea coasts and in the lower Nile
Valley--will be pursued in the coming year. It
also includes sums to meet, pay raises for increased
numbers of men under arms. As in past years, equip-
ment supplied by the USSR, which amounted to $650
million in calendar year 1970, is not included in
the budget.
COMMONWEALTH SUGAR: Commonwealth sugar pro-
ducing nations, meeting in London, have agreed to
accept on faith the undertaking by the European
Communities (EC) to safeguard their economic in-
terests in the event of British entry into the EC.
Although there are no specific sugar quotas, the
undertaking is regarded as firm assurance of a
secure and continuing market on fair terms for the
quantities now sold to the UK under the Commonwealth
Sugar Agreement which expires in 1974. Future mar-
keting arrangements for developing Commonwealth
sugar producers have been a major issue in British-
EC negotiations.
(continued)
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AUSTRALIA: The government formally joined the
Organiz to ion for European Cooperation and Develop-
ment (OECD) during the Ministerial Council meeting
in Paris yesterday, thereby becoming the twenty-
third member and fourth non-European country along
with the US, Canada, and Japan. Membership will
permit Canberra to become more actively involved in
international financial policy-making, because it
will be able to participate in Working Party 3 on
balance-of-payments problems. Canberra's interest
in becoming a member of the OECD probably reflects
the growing likelihood that the UK will join the
European Communities and therefore will be less
likely to look out for the Australians in the OECD.
I
SOUTH AFRICA: The government has decided to
spend an estimated $560 million on railroad and
harbor improvements in anticipation of a surge in
iron ore exports to Japan. New contracts with Japa-
nese importers, expected to be signed by the end of
this year, will increase South Africa's iron ore ex-
ports from $28 million in 1970 to more than $100
million annually. A new 525-mile railroad will
connect government-owned iron ore deposits with
Saldanha Bay north of Cape Town, where facilities
will be built to accommodate 250,000-ton ore car-
riers.
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