CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A021200020001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 14, 2016
• Document Release Date: April 15, 2003
• Sequence Number: 1
• Publication Date: February 12, 1972
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 042
12 February 1972
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No. 0037/72
12 February 1972
Central Intelligence Bulletin
CHILE: Allende retaliates against Christian Demo-
crats. (Page 1)
NORTH KOREA: Kim Il-sung clarifies Pyongyang's
terms for a Korean settlement. (Page 2)
SOUTH KOREA: Moves to alleviate economic problems.
(Page 3)
USSR-SUDAN: Khartoum accepts new Soviet ambassador.
(Page
BOLIVIA: Church intervention in dispute over de-
tention of political prisoners. (Page 6)
UGANDA: Government seeks new weapons despite de-
t ier orating economy. (Page 7)
ITALY: Fresh attempt to form new government (Page 8)
URUGUAY: Civil service wage increase (Page 9)
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CHILE: The Allende government is retaliating
against the Christian Democratic Party for its more
vigorous opposition in recent weeks.
It has charged several officials of the former
Frei administration with criminal fraud in credit
operations used to raise money for Christian Demo-
cratic candidate Tomic in the 1970 presidential
campaign. Some have been arrested. The party is
vulnerable to the charges, although such means of
lining campaign chests by governing parties have
not been unusual in Chile. This vulnerability has
been one factor in the Christian Democrats' will-
ingness to seek accommodation with Allende on many
issues during most of last year.
Allende's failure to influence the Christian
Democrats to drop impeachment proceedings against
Interior Minister Toha and government defeats in
recent by-elections probably precipitated the de-
cision to move openly against the major opposition
party. Another factor was pressure from extremist
leaders of Allende's Socialist Party. These men,
who are vying for a dominant role in the govern-
ment's Popular Unity Coalition, are increasingly
impatient with government policies they regard as
too cautious.
Central Intelligence Bulletin
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NORTH KOREA: Kim Il-sung has spelled out more
clearly his terms for a Korean settlement.
In an interview published in a Japanese Social-
ist paper on 26 January, which has just become avail-
able, Kim called for an "immediate" peace agreement
with the South prior to the withdrawal of US troops.
This formulation sharply departs from Pyongyang's
previous demand that an American troop pull-out must
precede any agreement with Seoul and erases the am-
biguity on this question that marked Kim's much-
heralded statement to another Japanese newspaper on
10 January.
The latest North Korean statement also called
for peace talks with the South and clearly offered
for the first time to deal on a bilateral basis
with the South Korean Government. These are also
departures from previous North Korean statements
and, taken together, are designed to make Pyongyang
appear more reasonable and flexible.
While North Korea almost certainly does not
anticipate any positive response from the South at
this stage, it may calculate that such a forthcoming
position eventually will increase pressures on South
Korea to enter political discussions, either at the
Red Cross talks or elsewhere. In the interim, the
North Koreans can use their more moderate position
to improve their international standing and under-
cut the South in the United Nations. Kim used the
interview to spell out in detail Pyongyang's nega-
tive attitude toward the UN, but also indicated
that there is some flexibility in its position. He
stated that North Korea's "final" policy on the UN
had not yet been determined and carefully avoided
any implication that Pyongyang would refuse to at-
tend the annual UN debate ores this fall.
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SOUTH KOREA: Seoul is moving to alleviate the
balance-of-payments problem and to counter rising
domestic prices.
A new program to be announced on 14 February
will place heavy emphasis on reducing the growth in
imports. A 20-percent jump in imports last year re-
sulted in a record trade deficit of $1.1 billion.
The government hopes to accomplish this by substan-
tially raising tariffs and by boosting interest
rates on import financing. At the same time Seoul
is seeking more foreign aid from the US and Japan.
To cope with rising prices the government al-
ready is restricting credit expansion and further
tightening is expected. Consumer prices increased
14 percent in the first three quarters of 1971
and, although this rate of inflation is not exces-
sive for a country growing as fast as South Korea,
it creates some unrest among workers whose wages
rise more slowly than prices.
Despite nagging problems, the current govern-
ment forecast that over-all economic growth in 1972
will approach last year's ten-percent level appears
attainable. Export prospects have been enhanced
by Seoul's continued pegging of its currency to the
devalued dollar, giving it a further edge over two
of its major competitors--Japan and Hong Kong.
Moreover, Seoul periodically has devalued its cur-
rency to combat the ill effects of inflation on
its competitive international position. Nonethe-
less, the country will continue to be heavily de-
pendent on foreign capital and any prolonged polit-
ical disruptions would seriously hurt the nation's
favorable climate for foreign investment.
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USSR-SUDAN: The acceptance of a Soviet ambas-
sador by the Sudan probably reflects the success of
Egyptian and Libyan lobbying on Moscow's behalf with
President Numayri.
Egyptian Foreign Minister Ghalib visited Khar-
toum in January and encouraged Numayri to mend his
fences with the USSR, and Libya's President Qadhafi
apparently carried the same message on his visit
earlier this month. Numayri's regime is divided be-
tween a pro-Egyptian faction and a nationalist clique,
and his acceptance of the Soviet ambassador indicates
he may be leaning to the former at this time.
The Soviets and the Sudanese had withdrawn their
ambassadors in August, following the abortive coup
by Communist military officers in Khartoum and the
consequent crackdown on the Sudanese Communist Party.
The Soviets wanted to name a new ambassador last fall
in order to repair damaged relations, but the Suda-
nese apparently rebuffed this overture. The new am-
bassador, Vladimir Porfiryevich Polyakov, has previ-
ously served as counselor at the Soviet embassies in
Syria and Egypt.
Soviet military and economic aid has come to a
standstill since last July and this also may have
influenced Khartoum's acceptance of Polyakov. Nu-
mayri has successfully lined up substantial economic
aid from China and Romania but may be concerned about
obtaining spare parts for his military equipment,
more than half of which is Soviet-supplied. Moscow
previously provided the Sudanese with advanced weap-
ons such as MIG-2ls and SA-2s.
Central Intelligence Bulletin 5
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I3ULIVIA; The Catholic Church has defended a
two-day'Whunger strike by relatives of political
prisoners as a legitimate means of inducing the
government to "comply with elementary human rights"
and has officially asked the Banzer regime to speed
up the processing of detainees.
Many political prisoners have, in fact, recently
been released. Several hundred others will be ex-
iled if the government can persuade other countries
to offer them asylum.
Some of the detainees have been held since last
August, while others have been picked up in the
government's continuing campaign against leftists.
Public clamor for movement on the detainee issue
has been building, and the government has responded
by promising to expedite its investigations and
free individuals whose "offenses" are not serious.
The regime has stressed, however, that former par-
ticipants in guerrilla activities will receive
neither freedom nor leniency.
Under some pressure from its congregations and
fearful that leftist clergymen might use the issue
to disrupt and embarrass the Church, the tradition-
ally conservative Church hierarchy has now strongly
backed those seeking the prisoners' release. The
archbishop of La Paz reportedly warned that anyone
forcing his way into the Church where the hunger
strike was held would be automatically excommuni-
cated.
The interior minister h again promised to
accelerate legal processing and has reportedly
stated that following interviews with the prison-
ers which will begin next week, he expects to re-
tain only about 70 in custody. The government
will probably continue to stall for time, while
attempting to refocus public attention o the
machinations of leftist exiles in Chile. With the
Church's intervention, however, the government
will be under intense pressure to come up with a
solution to the prisoner problem.
12 Feb 72 Central Intelligence Bulletin
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UGANDA: President Amin shows little sign of
reducing heavy military spending, despite the coun-
try's serious economic situation.
The year-end balance sheet of the Bank of Uganda
revealed last month just how far the economy has de-
teriorated. Net foreign exchange reserves fell in
1.971 from $54 million to $9 million. An estimated
additional $9 million held by commercial banks gives
Uganda only enough reserves to sustain about five
weeks of imports. Moreover, bank loans last year
for government expenditures reached $97 million,
more than double that of the previous year.
The Kampala Government has taken some steps
to alleviate its financial woes. It has introduced
foreign exchange and import restrictions and asked
Britain to reschedule its debt. Nevertheless, the
government does not appear ready to attack the root
of its problem--mounting budget expenditures, espe-
cially by the defense ministry.
Central Intelligence Bulletin 7
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ITALY: Premier-designate Andreotti has been
asked to make another effort to form a government,
but President Leone probably will dissolve parlia-
ment, appoint a caretaker cabinet and call for gen-
eral elections this spring, a year early. Center-
left leaders reportedly are debating the party com-
position of a caretaker government for the interim.
The Christian Democrats would like to make up a
single party government. The two Socialist parties
reportedly are demanding inclusion, however, because
their position within the government would enhance
their electoral prospects.
(continued)
12 Feb 72 Central Intelligence Bulletin 8
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URUGUAY: The economic problems that will face
the new government to be inaugurated 1 March were
intensified by an estimated 13a-percent pay hike for
public employees granted by President Pacheco in his
last month in office. This followed a 15-percent
boost on 1 January. Because wages absorb about
three-fifths of the budget, the new pay schedule is
likely to more than double the already substantial
government deficit as well as influence wage demands
by the largely unionized private sector. It also.
will help to boost the rate of inflation, which
was 36 percent in 1971, contributing to a further
worsening of Uruguay's export performance and poor
economic growth record.
12 Feb 72 Central Intelligence Bulletin
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