CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A024900040001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 15, 2016
• Document Release Date: October 8, 2003
• Sequence Number: 1
• Publication Date: July 19, 1973
• Content Type: REPORT

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Top Secret
Central Intelligence Bulletin
Top Secret
61.1 G 4
19 July 1973
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1 fly 1973
Central Intelligence Bulletin
CONTENTS
EGYPT-LIBYA: Sadat attempting to head off Qadhafi's
"march on Cairo." (Page :L)
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SOUTH VIETNAM: Some strains developing at top levels
of Thieu government. (Page 3)
SOUTH VIETNAM: Saigon has difficulty formulating
economic policy. (Page 4)
CHILE: Allende making little progress in effort to
ease tensions. (Page 6)
THAILAND-BURMA: Arrest of key smuggler will aid cam-
paign against flow of narcotics from Burma. (Page 7)
IRAQ: Ruling Baath Party agrees to form national
front with Communists. (1?age 8)
SOUTH KOREA: Exports, including many to US, expand-
ing fast. (Page 9)
ICELAND: Government adopts more reasonable approach
to US - manned NATO base. (Page 10)
FOR THE RECORD: (Page 12)
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EGYPT-LIBYA: President Sadat is attempting
to head off the Libyan "march on Cairo," President
Qadhafi's latest effort to dramatize his demand for
complete and immediate union with Egypt.
Radio Cairo has broadcast Sadat's direct ap-
peal to Qadhafi that the march be canceled in the
interests of the "seriousness, objectivity, and
responsibility" that should govern the ongoing con-
sultations on merger. Sadat stated that the march
is "not a proper revolutionary measure" and could
open the door for "enemies of the revolution" rather
than facilitate the process toward union. The
Libyan motorcade began yesterday morning and is
scheduled to arrive in Cairo by 23 July.
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Sadat's warnings will probably have little im-
pact on Qadhafi, who appears intent on underscoring
his differences with Egypt, even to the point of
risking a confrontation with the Egyptians.
In an attempt to avoid an incident and save
both sides from more embarrassment, Sadat offered,
after the procession began, to allow the marchers
to enter Egypt; he will send an Egyptian delega-
tion to meet them at Mersa Matruh, well away from
Cairo. Qadhafi may not be satisfied with this,
but Sadat is in any case unlikely to bow to the
Libyan demands on the larger issue of union.
Central Intelligence Bulletin
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SOUTH VIETNAM: Some strains are developing at
the top levels o the Thieu government. Prime Min-
ister Khiem reportedly is having trouble with Pres-
ident Thieu's closest advisers, particularly Hoang
Duc Nha and Nguyen Van Ngan.
Khiem's influence with Thieu has been dropping
for some time, and the Prince Minister is now com-
plaining that few matters are referred to him for
action. Thieu recently rejected Khiem's choices for
several government positions that normally fall within
the prime minister's jurisdiction, and selected pro-
teges of Nha instead. Khiem claims he decided
against running for the Senate next month because
his candidacy would have been exploited to arouse
Thieu's suspicions about his ambitions to succeed
the President.
Rivalries among the men around Thieu have been
present during most, if not all, of the President's
tenure. Since the government's stability depends
essentially on the political adroitness of Thieu
himself, the maneuvers of his lieutenants are not
likely by themselves to undermine the regime. Such
frictions are, however, likely to hamper the govern-
ment's effectiveness in dealing with the complex
issues of the cease-fire period.
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SOUTH VIETNAM: Saigon is having difficulty
formulating a program to combat continuing economic
problems.
The modern sector of the economy has been in
recession since the 1972 Communist offensive, and
continued uncertainty following the cease-fire has
prevented much of an upturn, Retail prices in
Saigon have gone up nearly 10 percent in the last
month. Nearly all commodities are becoming more
expensive, but pressures on the prices of rice and
imported goods have been the most severe and visible.
The difficulties in arriving at some solution
are reflected in recent meetings of the National
Council on Reconstruction and Development, estab-
lished about a month ago to oversee economic policy
and to improve economic planning, coordination, and
cooperation within Saigon's unwieldy bureaucracy.
Consisting of all of the senior officials with re-
sponsibility for economic matters, the council has
broad powers--subject to President Thieu's approval--
and is intended to be a sort of superministry.
On 12 July the council was able to agree on
several new measures, the most important being a
25-percent pay increase for government workers and
the military, to be announced later this week.
Prices of petroleum products and sugar will be
raised at the same time. The council could not
work out the thornier problem of a rice policy,
however, and deferred this for future decision.
Another unresolved problem is popular confusion
over the value-added tax that went into effect on
1 July. Moreover, efforts to step up tax collec-
tions have caused considerable complaints..
The major short-term obstacle to the establish-
ment of an effective program is a developing split
in the council between those who favor present pol-
icies and a newly emerging group that advocates
reverting to more controls. Several influential
officials, including Hoang Duc Nha, Thieu's closest
adviser, favor more government control of the econ-
omy and reportedly recommended such measures as
Central Intelligence Bulletin 4
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comprehensive price controls, rationing of key com-
modities and bans on some luxury goods, government
take-over of rice distribution, abolition of the
value-added tax, and major restrictions on foreign
investment. Such departures from existing policies
have been headed off for the moment largely by the
efforts of the Minister of the Economy, Phan Kim
Ngoc, and the Finance Minister, Ha Xun Trung. They
have indicated that they fear increased corruption
and profiteering should the economy revert to wide-
spread government control. There is a significant
chance that such controls might be reimposed, how-
ever, because Nha and his allies appear to be exert-
ing a growing influence in economic matters. The
final decision will be up to Thieu, whose position
is unclear. F_ I
Central Intelligence Bulletin 5
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CHILE: President Allende is making little per-
ceptibble progress in easing tensions, and he may soon
face new challenges from militant civilian opponents.
Allende's attempt to open a formal dialogue be-
tween the Popular Unity parties and the Christian
Democrats has reached an impasse over preconditions.
The Communists, who are vigorously pursuing their
recently adopted tough line toward the opposition,
apparently have joined the Socialists in impeding
Allende's effort to work out a new modus vivendi.
The rhetoric emanating from the leaders of both Marx-
ist parties has become increasingly inflammatory.
On the extreme right, the Fatherland and Freedom
movement has announced it will go underground and use
"all available methods" to combat the regime, in
hopes of provoking the armed forces into moving
against the government. Spearheaded by the truck
owners' federation, private enterprise and profes-
sional "guilds" reportedly are considering a last-
ditch effort of their own to galvanize the military
into action. The guilds plan to paralyze the country
with a nationwide strike tentatively scheduled to
begin next week.
Fatherland and Freedom's brazen threats are more
likely to subject it to further repressive measures
than to accomplish its goals, but the outcome of a
repetition of last October's guild strikes is less
predictable. The armed forces remain much concerned
over the continued arming of the government's civil-
ian supporters and over suggestions by some Popular
Unity leaders that soldiers should evaluate the con-
stitutionality of their officers' orders before obey-
ing.
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THAILAND-BURMA: A major step forward in the
campaign to halt the flow of narcotics out of Burma
was taken with the capture of a principal southeast
Asian opium smuggler, Lo Hsing-han, by Thai police
on 17 July.
Lo had fled into Thailand to avoid a Burmese
Army attack against his camp, which is located inside
Burma a few miles north of the Thai border. Thai
officials had been alerted that Lo might move into
Thailand and the police were deployed accordingly.
Lo's arrest has thrown his trafficking apparatus
into further disarray. Earlier this month, Burmese
officials arrested Lo's brother--who was reportedly
the financial mastermind of the operation--and another
key official of Lo's organization. Lo had important
competition from ex-KMT Generals Li and Tuan, who
are based in northern Thailand, and the flow of
narcotics out of Burma will not be stopped completely.
The effectiveness of the Burmese suppression efforts,
however, may have an intimidating effect on other
traffickers in the area.
Whether the Thai choose to jail Lo or turn him
over to the Burmese is a decision that can only be
made by Prime Minister Thanom and Deputy Prime Min-
ister Praphat. The Thai leadership does not appear
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other dissident groups will now choose to goeir
own way again remains to be seen but, for the moment,
Lo's capture will make it difficult for them to
unite effectively in opposition to the Burmese Govern-
Central Intelligence Bulletin
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IRAQ: The ruling Baath Party has agreed to
form a national front with the Iraqi Communist Party.
The way has been left open for the Kurds to join at
a later date.
The agreement, which was signed on 17 July by
President Bakr and the Communist first secretary,
culminates a long period of negotiation. It is
being hailed by both parties as a major step toward
national unity and the realization of common goals.
The text of the joint statement deals only with
broad generalities of principle and intent. It
gives no indication of the working relationship of
the two parties in any future government.
Inclusion in a national front has long been
one of the primary goals of the Iraqi Communist
Party and has been openly espoused by the Soviet
Union. The highly publicized agreement will give
the Communists increased status and enhance their
potential for attracting popular support. The
Baathists may have decided to form a front with
the Communists at this time to demonstrate national
unity in the wake of the coup attempt. Based on
past experience, however, the Communists will not
be allowed to endanger Baathist supremacy.
19 Jul 73
Central Intelligence Bulletin 8
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SOUTH KOREA: Export sales are continuing to
expand at a rapid rate, with the US remaining the
principal customer. Following a 52-percent in-
crease in 1972, South Korea's exports were up 106
percent for the first five months of this year over
the corresponding period of last year, reaching
$1.1 billion. Sales to the US were up by 66 per-
cent to $416 million, but the US share of Korea's
exports fell.
South Korea's trade deficit, however, increased
as imports were up 63 percent in the first five
months of 1973 over the comparable period of 1972,
surpassing $1.5 billion. Imports from the US were
up 70 percent, and the US Share of all imports in-
creased from 29 percent to 31 percent. This re-
sulted in a $63-million deficit for South Korea in
its trade with the US for the period. The US gain
resulted in part from deliberate efforts by Seoul
to encourage imports from the US. In view of South
Korea's extensive new Heavy and Chemical Industry
Development Plan, prospects for US sales to South
Korea remain bright for the next several years.
Although South Korea's trade deficit worsened,
the over-all balance-of-payments position continued
to improve. This was due to large increases in in-
visible receipts, mostly from tourism, and an increase
in net transfer receipts. As a result, preliminary
figures indicate that South Korea's current account
deficit decreased by $62 million in the first half
of 1973 compared to the first half of 1972, and that
foreign exchange reserves rose $154 million.
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ICELAND: A more flexible attitude toward the
US-manned NATO base at Keflavik on the part of some
government leaders augurs well for retention of the
facilities in a modified form.
On 1.3 July, Foreign Minister Agustsson outlined
his government's latest bargaining position for the
forthcoming negotiations. Although his demands were
considerably greater than those expressed last fall,
they constitute the first encouraging remarks on the
subject in nearly two months. Agustsson called for
the removal of as many defense force functions "as
possible," and for a reduction of up to one third
of the military personnel over the next five years.
The functions to be terminated should not, according
to the Foreign Minister, "impair the effectiveness
of the defense force," and the staff can b aug-
mented by American and Icelandic civilians More-
over, the Foreign Minister has tried unsuccessfully
to discourage attempts by the Communists and left-
ists in the government to includ their people on
the Icelandic negotiating team.)
Prime Minister Johannesson also projected a
more relaxed attitude toward the base in an inter-
view published on 14 July. Johannesson emphasized
that the coalition agreement did not stipulate un-
conditionally that the defense force had to leave
Iceland before the end of his government's term.
This contrasts sharply with demands by other gov-
ernment officials, following Britain's introduction
of warships into the Cod War on 18 May, for the re-
moval of all US military personnel and Iceland's
withdrawal from NATO.
A belief that the coalition government's two
Communist ministers are divided over tactics on the
base issue may have encouraged Progressive Party
leaders to be more forthcoming. The main aim of
Fisheries Minister Josefsson is to resolve the
fishing dispute with the British. Industries Minis-
ter Kjartansson, on the other hand, stakes his po-
litical career on the troop issue, even if it means
toppling the government.
(continued)
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The Progressive leaders may see an opportunity
to seize the initiative from the Communists, who
capitalized on popular outrage over Britain's role
in the fishing dispute. Nevertheless, base nego-
tiations remain linked in Icelandic minds to the
unresolved fishing dispute, and unless the latter
can be resolved before base talks commence in Sep-
tember, Reykiavik's position could harden again.
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Guyana: Incomplete returns from last Monday's
elections indicate that the ruling People's National
Congress has retained power; Prime Minister Burnham
may have exceeded his announced goal of a two-thirds
majority in parliament. The extent of rigging is
not yet known.
*These items were prepared by CIA without consultation
with the Departments of State and Defense.
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Top Secret
Top Secret
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