CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A022500020001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 14, 2016
• Document Release Date: June 13, 2003
• Sequence Number: 1
• Publication Date: August 4, 1972
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 042
4 August 1972
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No. 0186/72
4 August 1972
Central Intelligence Bulletin
VIETNAM: Situation report. (Page 1)
.LAOS-CHINA: Defectors report on Chinese presence
in the northwest. (Page 3)
THAILAND-CHINA: Bangkok moves toward improving re-
lations with Peking. (Page 5)
SOUTH KOREA: Pak invokes emergency powers to deal
with economic problems. (Page 6)
WEST GERMANY - CHINA: Bonn may move to normalize
relations with Peking before December. (Page 7)
CHILE: Friction between Allende and Congress.
Page 8)
PHILIPPINES: Political infighting at the constitu-
tional convention. (Page 10)
WEST GERMANY: Balance of payments (Page 11)
CEYLON: Aid from Eastern Europe and the USSR (Page 11)
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North Vietnam: Petroleum Pipeline Construction
Y-.. 1~y: ?Hon Gal
Ha
Duo Hai(ihon9
Petroleum pipeline
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(VIETNAM: The government is encountering heavy
resistance in the campaign to capture the citadel in
Quang Tri City.
Communist artillery attacks and ground action
slowed a South Vietnamese Marine operation launched
yesterday against the citadel, and sharp fighting
was reported along the northern edge of Quang Tri
City. A few miles southwest of the city, South Viet-
namese airborne forces repulsed a strong enemy tank
attack with the help of heavy air strikes.
Farther south, Fire Support. Base Bastogne was
reoccupied without opposition by South Vietnamese
regulars. The Communists directed nearly 300 rounds
of artillery and mortar fire into government strong-
points west of Hue, in addition to placing several
artillery shells within the city itself.
The petroleum pipeline system from China into
North Vietnam continues to be expanded. The system
cannot be confirmed as operational, however, pri-
marily because no pumping stations have been iden-
tified along the line. Analysis of photography
taken between early June and late July indicates
that the system will consist of three single pipe-
lines between the Chinese border and Kep, and a
combination of dual and single lines between Kep
and Hai Duong, where it will connect to the exten-
sive pipeline network that runs south into South
Vietnam and southern Laos? The new system, when
completed, should be more than ade uate for Hanoi's
petroleum import requirements.
4 Aug 72 Central Intelligence Bulletin
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NORTHWEST LAOS
Chinese-built road Road
--- Trail
B "MIA
CHI A
(uang Prabang
NORTH '~
VIETNAMS
Route
19
Muong Soui,w,i
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LAOS-CHINA: The Lao Communists and their North
Vietnamese allies evidently continue to govern in
northwest Laos despite the presence of Chinese road-
building and infantry forces.
Reports from recent defectors indicate that
this area is administered in essentially the same
manner as other parts of the country that have been
under Communist control for some time. Most of
the defectors came from western Luang Prabang Prov-
ince, which the Communists call Oudomsai Province.
Oudomsai is administered by a Lao province chief
and his subordinates who are in charge of districts
and subdistricts or villages. North Vietnamese ad-
visers assist the Lao at the provincial and district
levels.
ao officials are authorized to act independ-
ently in a few matters, but most require the approval
of the senior North Vietnamese adviser.
North Vietnamese advisers also assist Pathet
Lao battalions and some companies. In addition,
small North Vietnamese units sometimes operate with
Pathet Lao units against government troops.
The Chinese, in contrast, do not seem to ven-
ture far from their roads. They provide no advisers
to the Lao Communists in Oudomsai Province, use
only their own people for road construction, levy
no taxes on the villagers along the road, and do
not require the locals to perform porterage or
other duties. Contact is limited to activities de-
signed to cultivate good relations, as in some
areas where Chinese aid stations provide medical
attention to the Lao. On occasion, Chinese con-
struction crews use their equipment to help local
farmers clear fields.
(continued)
4 Aug 72 Central Intelligence Bulletin
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The defectors are not able to provide any real
insight into the reasons for the Chinese road-build-
ing projects. Lao Communist propaganda teams push
the line that the projects are part of agreements
negotiated in the early 1960s between Vientiane
and Peking. The propagandists stress that the Chi-
nese are not a threat, that they have no intention
of annexing any territory or staying permanently,
and that the Chinese activities are designed to as-
sist the Lao people by preparing transport routes.
anoi is using a portion o ese
roads to supp y their forces in northwest Laos.
Their trucks enter Laos from North Vietnam on Route
19 and may proceed as far as Muong Houn on Route
46. most supplies are destined for the
smal nu er of North Vietnamese troops in western
Luang Prabang and Sayaboury provinces. Some are
portered into Sayaboury for use by the insurgents
in Thailand. This is the clearest evidence to date
that the North Vietnamese use the Chinese-built
road to supply the Thai Communists.
4 Aug 72
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THAILAND-CHINA: Bangkok is taking a major
step toward improving relations with Peking.
General Praphat, deputy chairman of the ruling
National Executive Council announced on 2 August
that a Thai ping-pong team would be permitted to go
to China to participate in, matches conducted under
the auspices of the Chinese-backed Asian Table Ten-
nis Union. Praphat had said as recently as last
month that Bangkok would not send a ping-pong team
because the invitation had not come directly from
the Chinese.
Praphat may have conceded on this point in
order to use the ping-pong visit to discuss sub-
stantive matters. The Thai delegation will include
Prasit Kanchanawat, a senior economic official who
is a close associate of Praphat. The Bangkok press
is reporting that Prasit will discuss the possibility
of opening commercial relations between the two coun-
tries and will meet with Prime Minister Chou En-lai.
If true, this too would be a change in the Thai
policy of holding off on discussing economic affairs
until relations had matured further.
The decision to send Prasit and the ping-pong
team to China is a major turning point in the pro-
cess of redirecting Bangkok's policy toward Peking
that was inaugurated by former foreign minister
Thanat in 1968. The wavering and even erratic na-
ture of Bangkok's movement toward better relations
is in part a result of differences within the leader-
ship as well as the unsystematic way the Thai con--
duct their affairs. It also reflects the difficulty
the Thai have had in reconciling what they perceive
to be the increased necessity of establishing con-
tacts with China with their long-standing fears
about China's intentions toward Thailand, as well
as the impact that contacts will have on the large
Chinese community in Thailand.
4 Aug 72 Central Intelligence Bulletin
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SOUTH KOREA: President Pak has invoked emer-
gency powers to deal with the current economic slow-
down and inflation.
The government will make available some $500
million in low-interest, long-term loans to local
businesses. To offset any adverse balance-of-pay-
ments impact, Seoul is likely to increase efforts
to obtain foreign aid to finance this measure. Pak
also announced that bank interest rates will be
lowered, and that liberalized depreciation allow-
ances and tax incentives will be extended to key
industries. Pak also stated that he will seek to
hold commodity price increases to three percent and
stabilize the Korean won which has been slowly de-
valued, driving up import prices.
Seoul hopes to stimulate economic growth that
has been slowing since mid-1971, largely as a re-
sult of tight government credit policies. Monetary
tightening at that time aimed at cooling the rapidly
growing economy that was being fueled by a rising
external debt and a widening trade gap. The re-
strictions have had a severe impact on Korean firms
that have traditionally relied heavily on credit to
meet day-to-day expenses. Some businesses have
failed while many more have sought relief by using
private short-term loans at annual interest rates
as high as 60 percent. To cover these high-cost
loans, firms have been raising prices sharply,
adding to South Korea's inflation.
4 Aug 72 Central Intelligence Bulletin
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WEST GERMANY - COMMUNIST CHINA: Bonn may move
to normalize relations with Peking before the West
German elections in December.
Gerhard Schroeder, shadow foreign minister of
the opposition Christian Democrats, claims that
during his recent fact-finding mission to Peking
the Chinese led him to believe that they were ready
to establish diplomatic relations "immediately"
after the formality of a "brief" contact with a Chi-
nese embassy in some European capital.
Although Schroeder may be overstating the speed
with which China would like to move, his trip to Pe-
king has placed the Brandt: government under some
pressure. The Christian Democrats have long criti-
cized the narrow focus of Ostpolitik upon the USSR
and Eastern Europe, and recent opinion polls show
that almost 80 percent of the West Germans approve
an immediate establishment. of relations with Peking.
Brandt previously had wished to defer a bid to Pe-
king because he felt it might antagonize Moscow,
particularly until the negotiations on a basic po-
litical treaty with East Germany are concluded.
The Schroeder mission, however, probably will
force the govern 's hand on the China issue.
4 Aug 72
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CHILE: President Allende has rebuffed Congress
by naming impeached Interior Minister Del Canto to
another post in the cabinet.
Del Canto is the new minister secretary-general
of government, with the incumbent, Jaime Suarez,
taking the Interior portfolio. Both are Socialists,
and this switch avoids upsetting the political bal-
ance of the cabinet. This was important because
the divided Socialist Party could not agree on a
successor to Del Canto. By exercising this legal
right, Allende has demonstrated the ineffectualness
of congressional harassment and at the same time
bypassed political infighting within the governing
coalition.
The continued friction between Congress and
the President now has been expanded to include the
Supreme Court. Carlos Altamirano, the extremist
chief of the Socialist Party, delivered a stinging
attack on the court at a rally on 1 August, charging
that it is more concerned with protecting property
rights than prosecuting white-collar crime. The
courts, along with the military, traditionally have
been spared from partisan attack; as the Supreme
Magistrates have delivered an increased number of
conservative decisions on politically sensitive
cases, they have moved into the line of fire.
The government may believe these attacks on
the legislative and judicial branches will create
a favorable atmosphere for introducing the draft
of a new constitution, promised for next month.
The new charter presumably will reduce the power
of Congress and the Supreme Court, institutions
which in their present form Allende would like to
convince the voter are unnecessary obstacles in the
path of social justice. Allende apparently plans
to use the draft as a Popular Unity platform for
the congressional elections of March 1973, and push
for its passage in the legislature then elected.
4 Aug 72 Central Intelligence Bulletin
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A plebiscite would probably be necessary for its
adoption. Several of Allende's predecessors also
pressed for constitutional revisions, but were always
bitterly opposed by the propertied classes.
Allende may feel vulnerable to charges that he
has not delivered on previous campaign promises,
and apparently intends to fight the 1973 campaign
on the "big issues." The current flurry of politi-
cal activity may well be an attempt to force the
opposition on the defensive, as well as to obscure
his own Political difficulties.
4 Aug 72 Central Intelligence Bulletin
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PHILIPPINES: Political infighting is still
going on in Manila's constitutional convention, with
anti-Marcos forces bent on delaying tactics.
On 7 July, President Marcos won an important
political victory when the convention passed a draft
provision calling for a parliamentary government to
replace the existing presidential form. Marcos ex-
pects to have an easier time remaining in power un-
der the parliamentary system. Anti-Marcos forces
tried to scuttle his plans by including an article
in the constitution that would ban either Marcos
or his wife from holding office, but this failed.
The anti-Marcos delegates have now decided on
a new tack. Convention president Macapagal, a for-
mer Marcos supporter who defected to the opposition,
has decided to use his office to help delay conven-
tion proceedings through procedural moves and end-
less debates. If completion of the new constitu-
tion is delayed until late spring 1973, there would
not be enough time to hold a referendum and reorgan-
ize the government before the national elections
scheduled for November 1973. The elections would
then take place under the present constitution which
bars President Marcos from succeeding himself.
As a countermove, however, the Marcos forces
would probably push for a provision in the new con-
stitution that would postpone the 1973 elections
and put the parliamentary system into effect at a
later date. The anti-Marcos delegates in turn
might try to foil this countermove by delaying the
convention past November 1973, but the delaying
tactic could backfire. The public is already ir-
ritated at the slow progress of the delegates.
Moreover, President Marcos has demonstrated that
he controls enough votes in the convention to get
what he wants, and if Macapagal's delaying tactics
appear likely to succeed, then Marcos will doubt-
less instiga he ouster of Maca a al from the
presidency.
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NOTES
WEST GERMANY: The massive balance-of-payments
surplus of $2 billion in June, up from $125 million
in may, reflects heavy capital inflows related to
the sterling crisis in June. Even the short-term
capital account was in surplus, for the first time
this year. The long-term capital inflows consisted
primarily of securities transactions that were not
then subject to capital controls. Further substan-
tial inflows occurred in July. The government now
seems determined to prevent further large-scale
flows even if it has to impose more restrictive
controls than those of late June.
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CEYLON: Following his return from Eastern
Europe and the USSR, Minister of Industries Suba-
singhe disclosed that he had negotiated aid commit-
ments totaling about $40 million for 15 industrial
projects. The amount appears to be exaggerated,
and negotiations are far from complete. Some of
the projects may be financed under unused portions
of old credits. Colombo possibly did receive as-
sistance from Prague, and also new aid from Moscow.
Minister Subasinghe, who is known to be pro-Soviet,
may have overstated the size and significance of
the new aid in order to compare it favorably with
Peking's recent credit of $52 million. Neither
Moscow nor Peking, however, granted any hard cur-
rency credits to meet Ce lon's immediate balance-
of-payments problems.
4 Aug 72 Central Intelligence Bulletin
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Secret
Secret
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