CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026100170001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 21
• Document Creation Date: December 15, 2016
• Document Release Date: March 19, 2004
• Sequence Number: 1
• Publication Date: February 15, 1974
• Content Type: REPORT

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Central Intelligence Bulletin
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February 15, 1974
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Central Intelligence Bulletin
IRAN: Tehran may soon adopt measures to recycle
surplus oil revenues back to oil-importing countries.
(Page 1)
ISRAEL: Heavy retaliation for Syrian shelling of
Golan Heights unlikely. (Page 2)
EGYPT-USSR: Soviet pressure may have influenced
Sa at s decision to postpone cabinet changes. (Page 3)
SOUTH VIETNAM: Communists may be increasing military
activity in central highlands. (Page 4)
KOREAS: Naval incident in Yellow Sea. (Page 5)
NATO: Paris appears ready to drop opposition to US
proposal on political consultations. (Page 8)
WESTERN EUROPE: Officials review prospects for link-
ing some activities of Western European Union and
NATO. (Page 10)
INDONESIA: President Suharto asserts personal au-
thor"`i ty.^ (Page 11)
JAPAN: Record balance-of-payments deficit registered
last month. (Page 12)
ARGENTINA-USSR: Trade agreement signed. (Page 13)
ARGENTINA: Leftists within labor movement threaten
to undermine Peron's economic policy. (Page 14)
CHILE: Consumer price index up sharply in January.
Page 15)
GRENADA: Efforts to unseat Premier Gair_y continue.
T ag-el 6 )
FOR THE RECORD: (Page 17)
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IRAN: According to Finance Minister Amouzegar,
Tehran will soon adopt measures to recycle Iran's
surplus oil revenues back to the oil-importing coun-
tries. This is the first indication that oil pro-
ducers will actively seek to alleviate these coun-
tries' balance-of-payments difficulties. The Shah
no doubt hopes to quiet criticism of the sharp price
increases for oil, and to show that Iran will use
its surplus funds productively.
According to Minister Amouzegar, Iran is pre-
pared to:
--lend a sizable portion of its 1974 foreign
exchange surplus to the International Monetary
Fund (IMF);
--allocate funds to developing countries
through the World Bank to enable them to pur-
chase additional industrial products;
--purchase bonds issued by the World Bank and
other international institutions;
--increase foreign aid and invest in the de-
velopment of natural resources in both indus-
trialized and developing countries.
The Shah will present these proposals to IMF
Managing Director Witteveen and World Bank President
McNamara on February 20 and 21 respectively. If
agreement is reached, Tehran will have relatively
secure and profitable outlets for much of this year's
projected $13 billion foreign exchange surplus.
These new commitments presumably will not interfere
with Tehran's obligation to contribute to a proposed
OPEC bank.
Other direct aid that. Tehran has promised to
developing countries is not likely to be large.
Rather, Iran will probably continue to lend funds
at favorable rates to countries in which it seeks
greater influence,
Feb 15, 1974
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ISRAEL: Tel Aviv is not considering heavy
retaliation for recently increased Syrian shell-
ina of Israeli Positions in the Golan Heights.
Eban indicated that there was no discussion
at a cabinet meeting on February 11 of altering
Israel's restrained position. The Knesset, how-
ever, has discussed the apparently deliberate
Syrian bombardment of Israeli civilian settle-
ments.
The Israelis are almost. certainly also
restrained by the concern that a retaliatory
strike at Syria would upset attempts to begin
disengagement talks between Israel and Syria.
Eban indicated that Israeli officials remain
hopeful that these efforts will succeed, and
he expressed cautious optimism about the out-
come of Soviet and French initiatives to prompt
movement on the issue of Israeli POWs held by
Syria.
Feb 15, 1974
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EGYPT:-USSR*, Soviet pressure may have played
a part in President Sadat?s recent decision to post-
pone planned cabinet changes.
Moscow objected to the appoint-
ment of Economy Minister Hijazi., a leading proponent
of economic liberalization, as prime minister,
Foreign Minister Gromyko reportedly used the
occasion of Foreign Minister Fahmi?s visit to Mos-
cow last month to criticize Egypt's "turn toward
the right" and to indicate that Hijazi s appoint-
ment would unnecessarily complicate Soviet assist-
ance to Egypt, Soviet
officials asked how they could be expected to con-
tinue to underwrite assistance to a country whose
views increasingly diverge from the USSR s, and
strongly suggested that Hijazi's appointment be
postponed.
This Soviet pressure, in itself, probably
would not have been sufficient to deter Sadat? He
almost certainly was influenced also by the need
to avoid providing the other Arabs with any evi-
dence that Egypt was emphasizing domestic concerns
to the neglect of wider Arab interests.
Feb 15, 1974
Central Intelligence Bulletin
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SOUTH
VIETNAM
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SOUTH VIETNAM: The Communists may be increasing
their military activity in the central highlands, where
South Vietnamese forces are stretched thin.
A government outpost north of Kontum city was
attacked on February 13, and 200 reinforcements re-
portedly are being sent to the area. West of Pleiku
city, the South Vietnamese operation to retake a
border outpost lost last fall has met stiff resistance
during the past week. As a result, the military
region's only reserve regiment--a poorly disciplined
outfit recently rated unfit for combat--has been sent
to reinforce the operation. In Darlac Province, to
the south, a government effort aimed at harassing the
Communist border supply route has stalled in the face
of North Vietnamese shellings.
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The government's commander in the central region,
General Toan, apparently would like to concentrate
his forces almost entirely on disrupting the Communist
supply corridor that parallels the Cambodian border
in the highlands. Attempts during the fall to inter-
dict this corridor were unsuccessful. With their cur-
rent limited drives apparently stalled, government
forces may run into serious trouble if they try to
push even farther west. Moreover, recent air opera-
tions against the corridor have been ham Bred by in-
creased Communist anti-aircraft fire.
Feb 15, 1974
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C KOREAS: North Korean naval ships from the
squadron based at Cho-do fired on South Korean fish-
ing vessels yesterday in international waters in
the Yellow Sea northwest of the Northern Limit Line.
Apparently at least one South Korean boat was sunk,
and another was reported lying dead in the water.
Other South Korean fishing craft in the same general
area may have been taken under tow by the North
Koreans.
Pyongyang's action is most probably not a de-
liberate attempt to provoke Seoul but rather an
effort to inhibit fishing vessels from operating in
or near the contested coastal waters in the vicinity
of the Northern Limit Line.
The ROK vessels were probably the initial group
of fishing craft which traditionally move into these
waters at this time of year following schools of fish
northward. Pyongyang has seized a number of ROK
and Japanese fishing craft off both coasts over the
years but has generally released both ships and crew
later.
The South Korean Defense Ministry in reporting
the incident indicated that naval ships were en
route to search for survivors. Two ROK ships, in-
cluding one destroyer, have moved to the area, but
they have instructions to,take no hostile action
unless fired upon, and not to interfere if North
Korean vessels have fishing boats under tow.
Although the situation is not likely to es-
calate, the incident will heighten the tense atmos-
phere that has existed in these.. coastal waters for
the past several months. It also is certain to
intensify the ongoing propaganda exchanges between
the two Koreas and fuel Seoul's current anti-
Communist campaign.
Feb 15 , 1974 Central Intelligence Bulletin
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NATO: Paris appears ready to drop its opposi-
tion to a US proposal designed to improve NATO po-
litical consultations.
At an informal meeting of the North Atlantic
Council's permanent representatives earlier this
week, the French representative said that Paris
might be induced to agree to "occasional" NAC meet-
ings attended by the political directors of the
members' foreign ministries, provided:
--no institutionalization of the procedures
resulted from the proposed meeting on Feb-
ruary 28 and any subsequent ones;
--the political directors did not meet alone--
Paris wants the permanent NAC representatives in
attendance;
--each member was free to determine whom it
would designate as its political director.
This French statement appears to be a retreat
from Paris' previously expressed attitude toward
the US proposal. At the NAC meeting on January
22,
the French representative stated that Paris was
posed to the plan and would not allow either its
op-
Foreign Office political director or its permanent
NAC representative to attend the meeting on Feb-
ruary 28.
The French had indicated that they opposed
NAC :meetings "reinforced" by the presence of the
political directors because they would duplicate
and depreciate the work of the NATO permanent rep-
resentatives. An even more basic French concern
is that such meetings might detract from the regu-
lar meetings of the EC political directors and
furnish the US with an indirect voice in EC po-
litical discussions.
(continued)
Feb 15 , 1974 Central Intelligence Bulletin
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At the NAC meeting this week NATO Secretary
General Luns announced that he was now inclined
to issue an "open-ended" invitation to a NAC/po-
litical directors' meeting on February 28. His
announcement followed statements of support b
most of the representatives.
Feb 15 , 1974 Central Intelligence Bulletin
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WESTERN EUROPE: The foreign ministers of the
seven-nation Western European Union (WEU), at their
next meeting, may review prospects for linking some
of the activities of WEU and NATO. The other Euro-
pean allies hope to use French interest in the
European arms market to edge Paris toward acceptance
of such a linkage.
Since the Western powers used WEU in 1954 to
pave the way for the admission of West Germany and
Italy to NATO, it has served as a forum for the
discussion of defense matters, including the en-
forcement of certain controls on West German arms
production and the initiation of a limited number
of joint arms programs.
At a recent meeting of the WEU deputy arma-
ments directors in Paris, the participants dis-
cussed closer European cooperation in arms devel-
opment and procurement. The Belgians used the
occasion to urge development of a link between WEU,
of which France is a member, and the NATO Eurogroup,
from which Paris has excluded itself.
The French, who have consistently opposed
arrangements that would tie them more closely to
the alliance's integrated military command, re-
acted negatively to the Belgian idea, but did not
reject it outright. Paris suggested that some in-
formal mechanism might be designed to channel ar-
maments information from the Eurogroup to WEU.
No firm decision was reached at the meeting,
and the subject is now expected to be considered
at a forthcoming meeting of WEU permanent repre-
sentatives in London and possibly by the WEU for-
eign ministers at their next meeting. The US
Embassy in Paris, although anticipating no early
French move to associate with the Eurogroup, be-
lieves that the French want to hold on to a share
of the arms market in Europe and this may even-
tually pull Paris toward closer association with
the Eurogroup.
Feb 15, 1974
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INDONESIA: President Suharto has moved in the
past month to impose his personal authority over
broad areas of national policy and to clamp down on
potentially divisive elements. He evidently has
concluded that his former style of relaxed leader-
ship encouraged competition among his subordinates
and caused a loss of confidence in the government's
ability to act decisively.
Suharto has reshuffled military and intelli-
gence personnel ostensibly to increase effective-
ness. The net result has been to erode the power
base of the armed forces deputy commander in chief,
General Sumitro.
Jakarta is rife with rumors that Sumitro and
some of his allies may be appointed ambassadors--a
favorite device for removing potentially trouble-
some generals.
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though Suharto's position within the military gov-
ernment has long been widely characterized as
primus inter pares, he is now acting more like
a man with absolute authority. He has recently
created a new political and security stabilization
council to "ratify" his decisions, but this coun-
cil includes only one ex officio representative
from the defense establishment. Since taking over
in 1966, Suharto has fostered greater centraliza-
tion of authority in the Jakarta bureaucracies.
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Feb 15, 1974 Central Intelligence Bulletin
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JAPAN: A record $1.9-billion balance-of-
payments deficit was registered last month, as
oil price increases helped boost the import bill
by 85 percent over a year ago and capital. outflows
remain high.
Although exports grew by 42 percent in Janu-
ary,, imports rose even more rapidly and produced
a $740-million trade deficit. Two key Japanese
exports--steel and automobiles--showed big in-
creases. in January and, with the exception of oil,
the growth rates of many imports are expected to
drop in the coming months. Real gross national
product will probably grow about 5 percent this
year and import volume should increase only slightly
over 1973. Import price rises for most goods should
also be lower this year.
Long-term capital outflows dropped from $1.2
billion in December to $760 million in January.
Tokyo is seeking to cut these outflows to about
$400 million a month to ease pressure on foreign
exchange reserves. The calm on the Tokyo money
market thus far in February hints that capital out-
flows may decline again this month.
The January balance-of-payments deficit put a
strain on Tokyo's foreign exchange holdings. Offi-
cial reserves dropped by about $700 million and
other assets were reduced by nearly $1 billion dur-
ing the month. If Tokyo's efforts to discourage
capital outflows and encourage inflows are success-
ful, pressure on foreign exchange rese is
likely to ease in the coming months.
Feb 15 , 1974 Central Intelligence Bulletin 12
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ARGENTINA-USSR: Buenos Aires signed a $200-
million trade agreement with Moscow Wednesday
that may eventually involve the Soviets in Argen-
tine hydroelectric development.
The pact calls for an exchange of Argentine
agricultural and manufactured products for un-
specified Soviet goods valued at $100 million and
for cooperation in steel production, oil drilling,
petrochemicals, transportation, and fishing. The
pact also calls for the USSR to extend a credit of
$100 million for the purchase of Soviet heavy
equipment. The heavy equipment to be financed by
this credit probably includes equipment and ma-
terials for the Salto Grande hydroelectric project
that Argentina plans to build with Uruguay. The
joint Argentine-Uruguayan technical commission,
in soliciting bids for the project from a number
of sources including two US firms, received a
low bid of $65 million at concessionary credit
terms from the Soviets.
Soviet participation in the Salto Grande
project may lead to involvement in two other hydro-
electric projects planned by Argentina. Western
firms will be hard pressed to compete with Moscow
if the Soviets offer the same favorable conces-
sionary financing, repayment terms of ten years
at about 5-percent interest.
Feb 15, 1974
Central Intelligence Bulletin 13
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ARGENTINA: Strong opposition from leftists
within the labor movement to the wage and price con-
trols accepted by worker and management federations
last: June threatens to undermine Peron's basic eco-
nomic policy.
Two influential leftist trade unions have
flatly rejected the government's "Social Pact,"
which established price and wage controls, and are
demanding the right to strike for salary increases
that could set a dangerous precedent for other unions.
The unions in question are dominated by radical
leftists who oppose Peron on other counts as well.
For instance, they have denounced a recent law passed
by the Peronist-dominated Congress giving the govern-
ment wide new powers to intervene in regional labor
matters. The major union involved is the powerful
automotive workers union in Cordoba, where labor ten-
sions have long created intermittent headaches for
the central government. The other, in the capital,
is a printers federation headed by a radical left-
wing Peronist.
If the government uses its powers of interven-
tion against these and other restive labor organiza-
tions, it risks a confrontation with leftist-led
workers, many of whom are well armed. If, on the
other hand, Peron avoids a head-on clash by permit-
ting a major departure from wage controls, business
profits will slump to even lower levels and new in-
vestment will be deterred.
Feb 15 , 1974 Central Intelligence Bulletin
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CHILE; The junta continues to lose ground in
its battle against inflation. After a relatively
modest rise of 4.7 percent in December, t:he consumer
price index rose some 16.4 percent in January.
The continuing escalation of prices makes gov-
ernment austerity programs a growing source of dis-
content among people of all classes.
Consumers, already reeling from the over 500
percent increase in the cost of living last year,
found that food prices had increased last month by
nearly 20 percent despite lower prices for fruits
and vegetables. Price increases in February could
easily match January's jump because of sharp price
increases of petroleum products, electric power,
and cigarettes.
Although inflation has added to the burden on
Chilean consumers generally, the poorest families
were given bonuses on February 1 on a per child basis
to counteract the January increases. For example,
a family with three children earning about $100 per
month received a bonus of 16.5 percent of its salary.
Families earning over $150 per month received no
bonuses.
Feb 15 , 1974 Central Intelligence Bulletin
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GRENADA: The opposition is continuing efforts
to unseat Premier Gairy by a general strike,
Communications workers voted Monday to continue
their shutdown, and dockworkers show no signs of
ending their strike or of withdrawing their request
for a boycott of Grenada-bound cargo by neighboring
islands. Businessmen feel that Gairy's reprisals
will be severe enough to bankrupt them and that they
have no choice but to keep their businesses closed.
The leaders of the opposition fear that Gairy's in-
ability to end the general strike will cause him to
increase his strongarm tactics.
The opposition realizes that it is not yet
prepared for an armed showdown. The leaders, how-
ever, believe that Gairy's continuing financial dif-
ficulties will soon add significant numbers of un-
paid civil servants and school teachers to their
ranks.
Feb 15 , 1974 Central Intelligence Bulletin
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C Arab Summit - US: Egyptian Foreign Minister
Fahmi and Saudi Arabian Minister of State for For-
eign Affairs Saqqaf will be in Washington this week-
end to discuss the outcome of the two-day Arab sum-
mit. in Algiers that ended yesterday. The two en-
voys left Algiers for Paris immediately after the
conference to brief the French.
UN: A majority of UN members yesterday endorsed
an Algerian proposal for a special session of the
General Assembly to debate the problems of raw
materials and relations between industrialized and
developing states. According to UN rules, the
General Assembly should convene within 15 days, but
the session might be delayed in order to permit bet-
ter preparation.
USSR-Guinea: The USSR has agreed to install
three petroleum storage tanks at a small Guinean
naval base to be constructed on Tamara Island off
Conakry, according to reports reaching the US Em-
bassy in Guinea. The Soviets will pay all costs
and supervise the building of the tanks in return
for access rights for their naval vessels. Clear-
ing work on the Guinean base has already begun,
but. construction of the petroleum facilities probes
ably will not begin before the end of the year.
Bolivia: President Banzer has carried out a
cabinet reorganization intended to bolster his po-
litical position. The most important change is
the creation of the post of minister coordinator
of the presidency--in effect a prime minister who
can handle administrative affairs and also absorb
some of the heavy criticism currently directed at
Banzer.
Feb 15, 1974
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