CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026200030001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 15, 2016
• Document Release Date: November 13, 2003
• Sequence Number: 1
• Publication Date: February 23, 1974
• Content Type: REPORT

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Central Intelligence Bulletin
Top Secret
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February 23, 1974
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February 23,
Central Intelligence Bulletin
CONTENTS
SOUTH ASIA: Major step taken in resolving Pakistan-
Bangladesh issues. (Page 1)
PHILIPPINES: Marcos
mit. (Page 3)
apprehensive
THAILAND: More agitation from
about Islamic
students. (Page 4)
ISRAEL: National Religious Party adamant
t-o~ jo n Meir government. (Page 5)
USSR-MBFR: Soviets make concessions
matters. (Page 6)
USSR-LIBYA: Seizure of Soviet ship
(Page 7 )
INTERNATIONAL MONETARY DEVELOPbtENTS: Major curren-
cies post strong gains against o ar. (Page 9)
JAPAN: Strengthening of yen may be temporary. (Page 10)
OECD: Members at odds on dealing with impact of higher
oi3~-prices on current account balances. (Page 11)
BRAZIL: Government again devalues currency to combat
trade-deficit. (Page 12)
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FOR THE RECORD: (Page 14)
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SOUTH ASIA: Pakistan's recognition of Bangladesh
yesterday moves the two countries a long step closer
to resolving problems left over from the division of
Pakistan in 1971.
-Prime Minister Mujibur Rahman will head a Bangla?
desk delegation. to the Islamic summit meetings that
began in Lahore yesterday. Various Muslim leaders
had made a major diplomatic effort to get Islamabad
and Dacca to agree to some formula under which Bangla-
desh--the second most populous Muslim nation--could
participate. The government in Dacca, however, had
refused to send a delegation prior to formal recogni-
tion by the Pakistanis.
It is not yet clear whether Dacca has agreed to
the immediate release of 195 Pakistani prisoners of
war accused of war crimes, the quid pro quo that
Prime Minister Bhutto had been demanding. The Benga-
lees have been implying that they will release the
prisoners.
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The major remaining issue between Dacca and Is-
lamabad is the division of Pakistan's foreign debt.
Negotiations with the consortium of Western aid donors
on the rescheduling of the debt and on new aid to the
two nations have been hindered by the refusal of the
two governments to meet to resolve the debt question.
Recognition may marginally improve Pakistan's
relations with India, since it could be seen in New
Delhi as an indication of Pakistani reasonableness.
More likely, however, the Indians will be concerned
about the effect of recognition on growing anti-Indian
Feb 23, 1974
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sentiment in Bangladesh, which Pakistan has already
been attempting to exploit. by playing on traditional
Muslim fear of Hindu domination.
At home, Pakistani religious conservatives, who
strongly opposed recognition, will not be happy with
Bhutto's announcement, but they may have difficulty
criticizing it because he took the step in th -
text of the summit and Islamic solidarity.
Feb 23, 1974
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THAILAND: Student activists are again raising
the political temperature in Bangkok. They have
charged that government security elements recently
leveled a village in northeast Thailand suspected of
aidin Comm ni
Three major student organizations staged a rally
on February 20 to demand "unconditionally" that the
government compensate the villagers and punish those
involved. Thus far, the government has not responded
to this demand, the first that has directly affected
the military's interests.
The ability of the students to enlist broad
popular support on this issue is questionable. Re-
cent press articles in Bangkok have .suggested that
the student movement has begun to lase its influence
with the public, which has grown weary of unruly
students. Several recent articles have even portrayed
a prominent student leader as a Communist sympathizer.
Such allegations could give army leaders--who are
becoming increasingly restive over student disorders--
a pretext to clamp down on leading activists.
In any event, the current student unrest will
clearly strengthen army chief Krit Siwara's growing
conviction that the caretaker government of Prime
Minister Sanya should stay on after the national
elections scheduled for this summer. Krit--and per-
haps the King--apparently. believe that the Sanya
government represents the best compromise between
military rule and a left-wing regime.
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ISRAEL: The National Religious Party shows no
sign of reconsidering its decision of three days ago
not to join Prime Minister Meir's cabinet. Alignment
leaders are now concerned that the party may act in
concert with the Likud to block legislation in Knesset
committees. National Religious Party leader Yosef
Burg, generally regarded as a moderate, said yesteoSday
that the party would have to become a genuine opp
tion party if it stayed out of the government.
Mrs. Meir is still actively attempting to con-
vince party leaders to reconsider their decision not
to join, but the party's price may have gone up. A
party spokesman said on February 21 that the party no
longer felt bound by the compromise on the religious
issue worked out earlier with the Alignment. He
claimed it was once again demanding that Mrs. Meir
agree to press for immediate revision by the Knesset
of the Israeli Law of Return so as to recognize only
orthodox conversions. Alignment and National Religious
Party negotiators are scheduled to talk again tomorrow
to see if their differences can still be reconciled.
The Alignment factions early yesterday morning
approved Mrs. Meir's decision to head a minority gov-
ernment. Defense Minister Dayan and Transportation
Minister Peres, both Rafi faction members, reportedly
supported the decision, although they have refused to
take cabinet posts themselves.
The Prime Minister is scheduled to present the
new cabinet to President Katzir on February 27 and to
the Knesset for a vote of confidence a few days there-
after. Mrs. Meir reportedly failed again yesterday
to convince Dayan and Peres to lansrto holdrtheirstwo
not to serve. 5h.e apparently p
posts herself should they .remain adamant--in effect
avin them the option of joining the cabinet later.
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USSR-MBFR: The Soviets have made concessions
on procedural matters for informal sessions at the
MBFR talks, helping to get the stalemated discussions
moving forward.
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At an informal meeting between NATO and Warsaw
Pact representatives on February 20, the Soviets
tentatively agreed that reductions of US and Soviet
ground forces could be considered prior to discussing
the reduction of other ground troops. They also ten-
tatively agreed not to bring up the question of nu-
clear and air forces during the discussion of ground
forces. They dropped their insistence that air and
nuclear forces be a specifically named topic for the
agenda, but retained the right to raise the subject
under a proposed agenda item called "other topics."
The tentative agreement of February 20 does not
alter either side's position on any substantive is-
sues, but it does offer a formula under which discus-
sions could continue. The negotiations had become
bogged down by disagreements on the subject matter to
be discussed. Substantive talks will continue to take
place in informal "social meetings" rather than in
plenary sessions; thus the Soviet concessions may not
be noted publicly.
The Western allies are generally pleased that
the Soviets have agreed to focus first on US and
Soviet ground forces reductions, but most remain
wary about the "other topics" agenda item. They
hope to keep to a minimum any discussion of reduc-
ing air and nuclear forces, but--given the Soviet
position that this topic must be negotiated--will
probably not be able to avoid the issue entirely.
Feb 23, 1974
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USSR-LIBYA: The crew of the Soviet freighter
Nezhin, arrested by the Libyans on February 12, has
been released. Two of the three Soviet warships that
took up patrol positions near Libya on February 15
have moved away from the area. The Soviet Embassy
in Tripoli considers the matter closed.
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The Nezhin affair has not disrupted Soviet mer-
chant shipping to Libya. Since the incident, a Soviet
freighter in Tri oli and another has left
Benghazi.
No Soviet naval reaction to the affair was no e
until February 14--two days after the arrests were
made. At that time, three Soviet warships of the
Mediterranean Squadron, a cruiser and two destroyers,
began steaming toward Libya and took up patrol posi-
tions near the coast. The .cruiser and one of the
destroyers patrolled off Benghazi, but both shi s
~...a m,,.,~,a a~.7a~r from the coast by the 20th.
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INTERNATIONAL MONETARX DEVELOPNl,ENTS: The world's
major currencies posted strong gains against the
dollar again yesterday in volatile and heavy trading.
The dollar's decline ranged from about 0.5 percent
against the yen, lira, and German mark to 2 percent
against the k'rench franc. The price of gold surged
to a record $16.3 an ounce in London yesterdays up
nearly 40 percent since January 1.
Traders attributed the currency markets' vola-
tility to continuing economic uncertainties over the
effects of .the oil price rise and rumors of dollar
sales by central banks. There was, however, no major
intervention reported yesterday.
Since its peak in-mid-January, the dollar has
undergone a depreciation ranging from 4 percent
against the lira to more- than 10 percent against .the
Swiss franc. The French franc has regained much of
the ground it lost against major European currencies
.following its withdrawal from the European 'oint
float in-mid-January.
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JAPAN: The yen has appreciated 3.6 percent
against e dollar in the past week to a rate of 280.5,
bringing the increase in its value over the past month
to 6.2 percent. The trend will probably be reversed
in the coming months, however, because of substantial
balance-of-payments deficits.
Trading volume has been light on the Tokyo money
market since January 24. The Bank of Japan has inter-
vened in only minimal amounts, compared with the al-
most daily--and sometimes massive--support of the yen
during the preceding 10 months.
Some $300-$400 million was forced onto the money
market this month because of limitations placed by
the government on dollar holdings by residents. At
the same time, export earnings are growing rapidly.
The Ministry of Finance also has exerted a steadying
influence by its scrutiny of financial activities
since the wave of speculative dollar-buying on Janu-
ary 23. In addition, slightly more optimistic projec-
tions for the economy, .relaxation of controls on over-
seas borrowing by Japanese firms, and weakening of the
dollar. in Europe have helped the yen.
Although the yen is now showing strength, the
balance-of-payments deficit will soon exert renewed
downward pressure. The $1.9-billion payments deficit
registered last month may not be repeated, but sub-
stantial deficits are likely as a result of higher
oil costs. The 300 yen exchange rate for dollars for
future delivery in 90 da s reflec anticipated
weakening of the yen.
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OECD: Members of the Organization for Economic
Cooper tia on and Development are at odds on how to
deal with the impact of higher oil prices on their
current account balances.
At a recent. OECD session, the members reported
new balance-of-payments objectives for 1974 that took
account of the dramatic rise in oil prices. The
new targeted deficits failed to add up to the cor-
responding oil producers" surplus as projected by
the OECD staff.
The OECD staff believes that the statements of
the Japanese? Swiss? and Norwegians project a more
favorable payments position than is consistent with
the objectives of other memberso The staff warned
that the goals set forth in these statements could
be realized only if the US, Germany, and the develop-
ing countries were prepared to accept greater deteri-
oration in their balances than were already anticipated.
Unless inconsistent national goals are reconciled,
there is a danger that OECD members will take action
to improve their balance-of-payments position at the
expense of others. The French withdrawal from the
European joint float in January, although motivated
also by other considerations, is a notable example
of unilateral action, Other countries may follow
the French exampled Italy a r ad has hinted it will
impose new trade controls.
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BRAZIL: Brazil devalued the cruzeiro 2 per-
cent th s week, in a move to reduce the expected
large trade deficit brought about by the interna-
tional oil situation. This was the second devalua-
tion in less than a month. The exchange rate is
now 6.4 cruzeiros to the dollar.
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These recent adjustments in the official ex-
change rate indicate a shift to more frequent and
larger devaluations. Brazilian exporters have been
complaining that the cruzeiro was not sufficiently
devalued last year and that they are facing even
stiffer international competition this year..
The latest devaluation still leaves Brazil's
currency overvalued. The illegal parallel market
rate is a r 'mately 7.2 cruzeiros to the dollar.
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Ethiopia: Addis Ababa was quiet yesterday, fol-
lowing three days of demonstrations by students and
others protesting the government's educational and
economic policies. Teachers and bus and taxi drivers
are continuing their strike, however, and schools re-
main closed. The government made one concession to
the teachers by postponing implementation of
educational program opposed by the teachers.
Romania: President Ceausescu will make an offi-
cial ivy e-day visit to Argentina beginning March 5,
according to press reports. The Romanian leader
postponed a similar visit last fall after the coup a
in Chile interrupted his Latin American tour.
Feb 23, 1974
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Top Secret
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