CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A022400030001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 9
• Document Creation Date: December 14, 2016
• Document Release Date: June 16, 2003
• Sequence Number: 1
• Publication Date: July 24, 1972
• Content Type: REPORT

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op ecret
DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Top Secret
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r~
24 July 1972
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24 July 1972
Central Intelligence Bulletin
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LAOS: Souvanna is taking, a hard line against a re-
newed challenge by the rightists. (Page 4)
CHILE: The government is considering a radical cur-
rency reform. (Page 6)
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LAO5: The two-month struggle between Prime
Minister Souvanna Phouma and rightist elements in
the national assembly may be moving toward resolu-
tion.
An earlier compromise between Souvanna and his
critics broke down. when the King reused to invest
the prime minister"s government unt~,l it had re-
ceived a vote of confidence in the new national as-
sembly. The rightists, led by the powerful Vien-
tiane-based Sananilcone family, are interpreting the
King's refusal as supporting their position that
under the Lao constitution the Souvanna government
must resign and present a new cabinet for the ap-
proval of the assembly elected last January. The
Sananikones hope to force Souvanna to reshuffle his
cabinet and to drop their nemesis, 5isouk, as fi-
nance minister. They also hope to force Souvanna
formally to resign, thus undermining the prime min-
ister's argument that :his "coalition" government
was invested by the 1962 Geneva Accords.
Souvanna is taking a hard line against the re-
newed challenge from the rightists. He has with-
drawn his earlier commitment to reshuffle the cab-
inet and has made it clear that under no circum-
stances will he disrupt the continuity of the gov-
ernment by resigning. The burden of terminating
the government will thus fall on the assembly, and
Souvanna appears confident that the Sananikones
lack the votes to force the issue in the assembly.
Souvanna has moved quickly to line up support.
During a meeting on 21 July, he gained the strong
backing of top military leaders--including General
Kouprasith, whose influence is in the Vientiane
area and who has long-standing ties to the Sanani-
kone family. The generals and prominent civilian
politicians are now lobbying with assembly deputies
on Souvanna's behalf.
The timing of the prime minister's next move
will depend on how much support he calculates he
has in the assembly. He has indicated that he may
Central .Intelligence Bulletin 4
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 Approv
outwait the 5ananikone5, but if the proselytizing
effort goes well, he could move as early as 26 July
to present his cabinet for the assembly's approval.
In the unlikely event that Souvanna lost such a
vote, the King would probably d' miss the assembl
and call for new elections.
Central .Intelligence Bulletin 5
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CHILE: Presidents Allende has scheduled a
rally tomorrow during which he will announce new
economic policies that may include radical currency
reform.
economic o ~.c:ia s o e i can overn-
ment are making preparations to recall currency
now in circulation and to issue a limited amount.
of new money. Such a move would sop up excess pur-
chasing power overnigYit if, as is likely, the price
structure remains uncYianged. Currency reform would
be a far more effective tool than rationing to deal
with mounting inflation and spreading shortages.
Such a reform could be structured in a way that
would protect lower income groups. It would, how-
ever, have an extremely adverse effect on middle-
and upper-class Chileans. Many of them have stripped
their companies and farms for cash gains in expecta-
tion of expropriation or other losses and still have
large escudo holdings despite their vigorous efforts
to convert them into goods or foreign assets. Even
those wealthy citizens who legally dare to turn in
these holdings would receive only a fraction of
their value.
The only way the Allende government can suc-
cessfully institute its currency reform is by ad-
ministrative fiat. Congress is controlled by op-
position parties whosE~ financial resources would
be severely affected. Moreover, public knowledge
of the government's p:Lan would trigger a nation-
wide panic and aggravate alread severe shorta es
of oods and forei n exchange.
24 Jul 72
Central Intelligence Bulletin
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Top Secret
Top Secret
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