CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A022500030001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 14, 2016
• Document Release Date: June 16, 2003
• Sequence Number: 1
• Publication Date: August 5, 1972
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N9 042
5 August 1972
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No. 0187/72
5 August 1972
Central Intelligence Bulletin
SOUTH VIETNAM: Situation report. (Page 1)
EUROPEAN COMMUNITIES: A summit meeting will prob-
ably take place in October. (Page 2)
UK: Government declares state of emergency. (Page 4)
INTERNATIONAL LABOR: British oppose European re-
gional conference. (Page 6)
KOREA: Pyongyang seeks to delay Red Cross talks.
(Page 7)
GUYANA-CUBA: Diplomatic relations. (Page 8)
ITALY: The government's budget for 1973 calls for
cone nued expansionary policies (Page 9)
CANADA: US imports (Page 9)
VIETNAM: A New Enemy Offensive Shaping Up. (Page 11)
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(SOUTH VIETNAM: Government forces in Quang Tri
City are making limited progress.
South Vietnamese Marines are nearing the Quang
Tri City citadel on two sides but continue to be
hampered by heavy Communist artillery shellings and
solidly fortified enemy positions. Late reports
indicate that the South Vietnamese are now attempt-
ing to flank the citadel on the west to block the
flow of supplies to North Vietnamese forces in the
city.
Farther south, the Communists continue to di-
rect substantial artillery and mortar fire against
major government strongpoints west of Hue. In west-
ern Quang Ngai Province, Son Ha district capital
was occupied by the enemy on 3 August after changing
hands at least twice. Southwest of Pleiku City in
the central highlands, the Communists yesterday at-
tacked and overran a small hamlet. In the delta,
scattered fighting continues throughout Dinh Tuong
Province.
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EUROPEAN COMMUNITIES: Although a final deci-
sion will be made only in September, it now seems
likely that the summit meeting of the EC Ten will
take place as scheduled in October. The summit will
emphasize monetary matters, as the French have wished.
Paris is again bullish on the summit prospects
following last week's meeting in Italy between Pom-
pidou and Italian leaders. The meeting culminated
a round of talks between the French President and
leaders of most of the present and prospective EC
member countries in which Pompidou variously threat-
ened and cajoled to get support for a summit "French
style." His efforts, although successful only in
part, have tended to strengthen bilateral diplomacy--
rather than the EC's institutions--as the means to
advance community projects.
France has insisted in these talks that prog-
ress on economic and monetary union is the best way
to demonstrate a successful summit. What this may
amount to in practice is still not clear, but one
possibility is the creation of a European fund for
monetary cooperation. Several EC committees have
jointly prepared a report on this project that will
presumably be presented to the finance ministers of
the Ten when they meet in Rome in September along
with the foreign ministers to draw up a final summit
agenda. A re-evaluation of gold for official intra-
EC transactions--a subject raised at the French-
Italian meeting--also may come up for community dis-
cussion in September.
Any summit decision on international monetary
reform probably will depend on what happens at the
IMF ministerial session in Washington, also in Sep-
tember. Concern over future large injections of
dollars into the international system persists in
Europe despite the recent intervention of the US
Federal Reserve on behalf of the dollar.
continued)
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Any declarations at the summit on relations be-
tween the community and other industrialized coun-
tries, Eastern Europe, and less-developed countries
now seem likely to be bland. Paris remains unwill-
ing to make any special reference to relations with
the US, fearing that some cooperative mechanism with
the US would interfere with EC solidarity.
Only minimal commitments to strengthen the in-
stitutions of the community can be expected at the
summit. The French may permit some vague reference
to the review functions of the European Parliament,
but it appears that most of France's partners are
reconciled to postponing any real battles over in-
creased "federal" powers for another day--at least
until well after the EC is in fact enlarged. France
has persisted in its campaign to locate any new po-
litical secretariat in Paris, and in the process has
conceded that such a body should be more than a
paper-pushing agency. Whether this concession is
enough to overcome the reluctance of the British,
Dutch, and Belgians in particular, to establishing
a rival to the community's center in Brussels re-
mains doubtful, however.
The EC Commission as well as some of the Ten
have been hoping that agreement could also be reached
at the summit to extend community jurisdiction over
areas not specifically mandated in the treaties. The
French position on this has been ambiguous, but the
Italians gained a French commitment to improve com-
munity coordination of regional development policies.
The Commission itself wants to have the summit au-
thorize community industrial, research and d v, -
ment, and environmental p rograms.
5 Aug 72
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UK: The government's declaration of a state
of emergency over the national dock strike has over-
shadowed other efforts to grapple with the under-
lying causes of labor-management strife.
The state of emergency, the fourth since the
Tories took over in June 1970, gives the government
wide powers to maintain essential public services.
The government probably will form special committees
in the port cities to recommend action. So far,
there have been no signs that troops will be used
to move vital supplies off the docks.
There is a fair chance that a new conciliatory
effort by the labor-management committee investi-
gating the dispute will succeed. The committee's
original report--rejected by the dockers--recom-
mended a liberal voluntary severance pay scheme and
preference to dockers over warehousemen in handling
containerized cargo shipments. The 18 union dele-
gates who abstained in last week's 39-29 strike vote
hold the key and now might favor a return to work.
Even if the union accepts a settlement, it is un-
likely that the dockers would return to work until
late next week at the earliest.
Earlier this week, a broad discussion on the
economy between representatives of the government,
the Trades Union Congress (TUC), and the Confedera-
tion of British Industries (CBI) got off to a good
start. The CBI and the TUC, after bilateral nego-
tiations, announced the establishment of a voluntary
conciliation and arbitration service. The new serv-
ice will be independent and the unions hope that
it will eventually make the government's own concil-
iation service unnecessary. The speed with which
both sides reached agreement underlines their deep
concern over Britain's troubled industrial relations
as well as their interest in avoiding use of the
controversial industrial Relations Act.
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The Heath government is hopeful that these dis-
cussions will lead to some sort of voluntary arrange-
ments limiting wage and price increases. The effec-
tiveness of these arrangements would depend largely
on whether union leaders could sell the terms to
their highly independent shop stewards--the insti-
gators of much wildcat industrial activity.
Speculation is growing that the government may
soon try to amend the more contentious sections of
the industrial relations law, and this might provide
the necessary calm to work toward an over-all set-
tlement.
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INTERNATIONAL LABOR: The British have reacted
negatively to ILO Director-General Jenks' suggestion
that an ILO European regional conference be held
next April.
Jenks is seeking the views of West European
governments on a Soviet proposal to him that such
a conference take place before a Conference on Se-
curity and Cooperation in Europe (CSCE) and include
the East Germans as official observers. If a date
could be agreed upon for the ILO regional conference,
Moscow might well propose that an all-European trade
union conference be held concurrently. An all-Euro-
pean conference has been a pet project of the Soviets
since 1969 as part of their campaign for a CSCE.
While Moscow has. long disagreed with the way the ILO
is structured, it has not hesitated to use the organ-
ization to press its objectives.
Even though leaders of West and East European
trade unions agreed informally last year that an all-
European trade union conference should be held--pro-
vided it restricted itself to discussing economic
and social matters--the governments of France and
West Germany are likely to share the reservations
the British expressed to Jenks. Primarily, they
think that convening the ILO regional meeting, and
possibly an all-European conference, before a CSCE
would be a needless complication. They also believe
that it is an inappropriate time to raise the ques-
tion of East German participation and that the high
cost of the conferences would be a waste of the ILO's
limited resources.
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KOREA: Pyongyang appears to have been caught
off guard by Seoul's willingness to move ahead
rapidly with the Red Cross talks and is now seeking
to delay the discussions.
In recent meetings with their South Korean
counterparts, North Korean Red Cross officials re-
neged on their original agreement to commence
plenary talks on 5 August and raised new proposals
that will probably delay the opening of the plenary
sessions for several weeks. Pyongyang may have
proposed-the early starting date anticipating that
the cautious South Koreans would not make a rapid
positive response and would thus be at a propaganda
disadvantage. Seoul's quick acceptance of the date
and its eagerness to move the talks along apparently
found the North Koreans ill.-prepared to cope with
the prospect of large numbers of South Koreans ar-
riving in Pyongyang on short notice.
Another North Korean motive for its action may
be to delay the opening of the talks until consider-
ation of the Korean question in the UN next month.
The North Koreans may see such a delay as undercut-
ting the main argument South Korea and its support-
ers are using to get a postponement of the Korean
question this fall--that progress in North-South
contacts would be jeopardized by a UN debate.
The North Koreans will bear the onus for de-
laying the talks and have left themselves open for
propaganda criticism from the South. Nevertheless,
Pyongyang apparently believes it is more in its im-
mediate interest to keep the talks limited in scope
and pace, meanwhile advancing its case in the UN.
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C GUYANA-CUBA: Prime Minister Burnham will prob-
ably use the non-aligned foreign ministers confer-
ence, to be hosted by Guyana from 8-ll August, to
announce formally the establishment of diplomatic
relations with Cuba.
Burnham believes that his standing in the
third world may be enhanced through such an exchange.
Although there has been limited trade and cultural
contacts between the two countries in past years,
little material benefit is expected to accrue to
either, but the propaganda gains will be immense.
Cuba will almost certainly respond favorably
to what is apparently a Guyanese initiative. Guyana's
action will raise to five the number of Western
Hemisphere nations having full diplomatic ties with
Cuba. Less than a month ago, Peru joined Mexico
and Chile by re-establishing relations with the
Castro government; Canada has had full relations
since before Castro took power.
This latest move will probably put additional
pressure on other Caribbean nations such as Trinidad-
Tobago and Jamaica to develop closer ties with Cuba.
Although Guyana is not an OAS member, this develop-
ment will continue the steady erosion of the 1964
sanctions by further reducing Cuba's isolation in
the hemisphere.
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NOTES
ITALY: The government's proposed budget for
1973 calls for a continuation of expansionary poli-
cies in the face of Italy's worst postwar recession.
Expenditures are slated to increase by 18.5 percent,
while receipts are expected to rise by only 12.6
percent. As a result, the budgetary deficit would
reach a record $6.2 billion, almost double this year's
deficit. The progressive deterioration in the
growth of output, demand, and employment seems to
have halted, but even a moderate recovery probably
will not occur this year. Parliament will not be-
gin its debate on the budget until this fall, and
final approval is not likely until next spring.
CANADA: Ottawa will begin on 1 September to
identify imports from US companies that benefit from
tax deferral measures. The use by these companies
of domestic international sales corporations (DISCs)
enables them to defer payment of taxes on part of
their export profits, thereby improving their com-
petitive position. Ottawa contends that the DISC
violates the General Agreement on Tariffs and Trade,
and is concerned about the possible adverse impact
of the program on domestic Canadian manufacturers.
The government's 1972-73 budget includes a lower
tax rate and accelerated depreciation to compensate
manufacturing companies for the competitive advan-
tages offered by DISC.
5 Aug 72
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THA.ILANi~
,ease Are,
Gulf of
Thailand
AN
XUYEN
MNH
DINH
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VIETNAM: A New Enemy Offensive Shaping Up
A review of current evidence indicates that
Communist main force units may try to initiate a
substantial and coordinated offensive in several
areas of South Vietnam, perhaps within the next
few weeks. Although the attacks probably will not
be on the scale of the Communist thrusts in early
spring, Hanoi will be hoping to secure battlefield
gains that will have an influence on domestic pol-
itics in the US and strengthen their bargaining
hand at Paris.
the enemy's top southern comman , UQ8VN, a
ordered another strong round of attacks to try to
force a settlement of the war on Communist terms,
and that August and September would be important
months because US election fervor would be rising.
The recent deployment of almost two additional
enemy infantry divisions from North Vietnam into
northern Military Region (MR) 1 and the steady, ad-
ditional deployment of enemy units into the north-
ern delta, suggest that these two areas will be the
focal points of the campaign. Renewed assaults
around An Loc and in the provinces northwest of
Saigon also appear in prospect, along with a sub-
stantial step-up in enemy operations in sectors of
the central coast. In the western highlands, how-
ever, where the Communists laid siege to Kontum this
spring, there are few signs of enemy planning for
substantial new attacks.
The Quang Tri - Hue Front
The movement of elements of two additional
North Vietnamese divisions--the 312th and 325th--
into northern South Vietnam to augment four enemy
divisions already there began in mid-July, shortly
after the South Vietnamese counteroffensive into
Quang Tri Province. There had been earlier indica-
tions that the North Vietnamese were planning to
commit at least elements of these two divisions to
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the northern front. The South Vietnamese counter-
offensive appears to have forced Hanoi's hand. The
current location of the additional divisional ele-
ments suggests that the North Vietnamese plan to use
them in a vigorous counterpunch at the South Vietnam-
ese units strung out along Route 1 to Quang Tri City,
hoping to cut off and defeat these government troops,
who are some of Saigon's best.
So far, there has been little evidence that the
Communists are augmenting their infantry force to
the west of Hue, an action the enemy would presum-
ably consider necessary if a full-scale attack on the
city were planned for the near future. The Commu-
nists have recently stepped up their attacks against
government positions in Thua Thien west of Hue, where
two government fire support bases have changed hands
several times within the past month. Enemy gunners
are within artillery range of the old imperial cap-
ital, and it appears that the Communists would like
to push back the defending South Vietnamese lst Divi-
sion.
Similar enemy strategy appears to be involved
in Quang Nam Province to the south, where another
division-sized. enemy force--the' 7.1.1th Di' ition-- is
pressing from the west against government outposts
and district strongpoints in Que Son and Duc Duc
districts.. The Communist intent probably is to keep
friendly forces tied up and to stretch government
resources as thin as possible. Earlier in the of-
fensive, the Communists employed a similar strategy
in Quang Nam Province to back their operations to
the north. The North Vietnamese may hope that in-
creased attacks in Quang Nam Province will keep
South Vietnamese units there from reinforcing the
northern battlefront should the fighting begin to
turn against the government there.
The Delta and the Saigon Area
The Communists have massed the largest concen-
tration of main force units ever seen in the north-
ern delta. At least five infantry regiments and
elements of an artillery regiment already are there,
Aug 7 2 Central Intelligence Bulletin 12
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and possibly two more infantry regiments are on the
way. Most of the infiltrating units, including the
enemy's 5th Division, have been heading for a base
camp in the northwestern triborder area of Dinh
Tuong, Kien Tuong, and Kien Phong provinces .-F
eavier enemy action
is being planned for August and September in the
northern delta.
In moving substantial forces into this area,
the Communists appear to have several objectives in
mind. It is a long-time Communist stronghold which,
in the past, has provided relatively good protection
and good access by waterway to resupply from Cambo-
dia. The area lies close to Route 4, the government's
main road link to the delta, and to a variety of
canals over which food is moved to Saigon. If the
Communists could regularly interdict the road and
water routes through the area for an extended period,
they would seriously disrupt the government's abil-
ity to support its forces in the southern delta
provinces, and thus facilitate additional gains by
their own units farther south. The base area also
provides a favorable position for attacks around and
on My Tho, a strategic provincial capital.
Despite reports that increased attacks are be-
ing planned for the provinces to the northwest of
Saigon, particularly in Tay Ninh and Hau Nghia, to
date there are few indications that the Communists
are moving additional main force units into these
provinces. They would need more manpower to mount
a telling offensive there,. Most enemy forces in-
volved in the heavy fighting earlier in MR 3 have
recently seen only limited action. Most of the
units from the Communist 7th and 9th divisions prob-
ably are still in the An Loc area. It seems likely
that these units would again be used in Binh Long
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or Binh Duong provinces in the hope of preventing
Saigon from diverting additional forces north to
MR 1 or reinforcing threatened units elsewhere.
Present main force dispositions suggest that
enemy activity in the western highlands will not in-
crease substantially in the coming weeks. Many of
the units previously engaged in the fighting in Kon-
tum and Pleiku provinces have moved out of the area.
On the coast, however, government efforts to re-
capture enemy-held areas in northern Binh Dinh Prov-
ince suggest that fairly hard fi hting lies ahead.
Prisoners claim that the
Communists plan stronger action along the heavily
populated central coast in August and September.
Prospects
The renewed Communist offensive is likely to
be smaller and more selective than the thrusts in
April and May. With the heavy rains and flooding
in some areas, resupply difficulties may limit Com-
munist abilities to sustain a heavy pace of fighting.
This spring's combat also has reduced the strength
and fighting ability of many enemy units. The newly
trained troops that Hanoi sent south probably have
offset troop losses, but even after refitting, the
performance of these units will suffer from the loss
of experienced leadership cadre and specialists.
Despite such limitations, the Communists appar-
ently believe that heavy action in the coming weeks
offers a possibility of at least limited tactical
gains as well as significant political impact. Some
evidence of the scope of enemy plans is appearing
in current North Vietnamese propaganda on the war.
Hanoi's Defense Minister Giap recently claimed that
"favorable opportunities" now exist in the South to
push forward on the battlefields. Radio and press
commentaries are emphasizing both uan Tri and the
delta as theaters of operation.
5 Aug 72
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Secret
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