CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026200150001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 15, 2016
• Document Release Date: May 11, 2004
• Sequence Number: 1
• Publication Date: March 9, 1974
• Content Type: REPORT

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Top Secret
)) c3
Central Intelligence Bulletin
State Dept. review completed
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Top Secret
B
March 9, 1974
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Marc 9,
Central Intelligence Bulletin
CONTENTS
SYRIA-ISRAEL: Fighting broke out on the Golan Heights
yesterday. (Page 1)
SYRIA: President Asad implies Syria will continue
to seek military disengagement with Israel. (Page 2)
ARGENTINA: President Peron gains congressional ap-
proval for improving federal control over Cordoba
Province. (Page 3)
EGYPT: Cabinet reportedly will be reorganized.
Page 4)
ETHIOPIA: Agreement reached to end general strike.
(Page 5)
FRANCE: Announcement of new measures to boost ex-
ports expected. (Page 6)
CAMBODIA: Press reports that 700 Khmer Communist
troops defected appear to be false. (Page 8)
SOUTH VIETNAM: Evidence that Thieu has reduced au-
thority of two controversial advisers. (Page 9)
SOUTH VIETNAM: Economy, a Threat to Thieu. (Page 10)
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*SYRIA-ISRAEL: Fighting'broke out on'the Golan
Heights front yesterday. Israeli and Syrian forces
exchanged tank and artillery fire during the day on
the northeastern edge of the Israeli salient into
Syria. The fighting, which began in the early morn-
ing hours, apparently ended by afternoon.
*Because of the shortage of time for preparation of this item, the analytic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of the Bureau of Intelligence and
Research, Department of State.
Mar 9, 1974
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*SYRIA: Syrian President Asad, in a speech yes-
terday marking the 11th anniversary of the Baath
Party's seizure of power, implied Syria will continue
to seek a military disengagement with Israel in the
Golan Heights.
Although Asad said Syria will continue to main-
tain a state of war with Israel until all occupied
land is liberated, he also said the struggle has en-
tered a political phase.
Speaking one day after the departure of Soviet
Foreign Minister Gromyko, Asad stated Syria will not
have its decisions dictated by anyone, including the
decision "to be absent where we should be absent and
to be present where we should be present." He may
have been reacting to Soviet pressure to participate
in the Geneva talks and, perhaps, to reported urgings
by Gromyko to insist that the disenga ement talks be
held in Geneva instead of Washington.
*Because of the shortage of time for preparation of this item, the analytic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of the Bureau of Intelligence and
Research, Department of State.
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*ARGENTINA: President Peron has gained congres-
sional approval for improving federal control over
Cordoba Province, but basic problems remain that may
lead to renewed disturbances in the troubled indus-
trial center.
Congressional action came after heated debate
on the government's decision to take over the provin-
cial executive following a police revolt against
Cordoba's governing officials last week. Peron ap-
parently won the necessary two-thirds vote for the
measure by making a deal with opposition political
leaders. The ousted governor and his deputy have
been allowed to resign "with honor," and Peron may
have promised to consult with opposition legislators
before naming a federal administrator for Cordoba.
Meanwhile, sporadic violence continues in the
provincial capital, where leftists remain bitter over
what they see as the high-handed maneuvering of Peron
and his conservative entourage in Buenos Aires to
engineer the removal of left-wing government and
labor leaders.
The situation remains tense, and there is no as-
surance that Peron will win an easy--or peaceful--
victory over his adversaries. Indeed, there are in-
dications that the government's performance so far
may have soured moderate leftist Peronists and eroded
the President's reputation as the consummate politi-
cian. Such disillusionment will only strain the al-
ready badly split Peronist movement and aggravate
Peron's domestic difficulties.
*Because of the shortage of time for preparation of this item, the analytic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of the Bureau of Intelligence and
Research, Department of State.
Mar 9, 1974 Central Intelligence Bulletin
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EGYPT: President Sadat will reorganize his cab-
inet within the next three weeks, according to Ali
Amin, the recently appointed editor of the semi-offi-
cial Cairo daily Al-Ahram. The reorganization, post-
poned from January, wou1r formalize a program of re-
construction and domestic reform that has accelerated
in the last month.
Amin wrote on March 7 that Sadat probably will
also streamline the cabinet's operations by reducing
the number of ministers, more clearly defining their
tasks, and providing for a more efficient delegation
of authority within the ministries.
Amin mentioned no names and gave no indication
of whether Sadat himself would relinquish the prime
ministership, a post he has held along with the pres-
idency for the last year. Amin, in an article of a
few weeks ago, had predicted that Sadat would retain
the post "until the last Israeli soldier has left the
territory of the homeland."
When a cabinet change was first rumored in Janu-
ary, Finance Minister Hijazi was mentioned as the most
likely candidate for the prime ministership. Sadat,
however, postponed the reorganization, apparently be-
cause he feared it would give the impression he was
concentrating too heavily on domestic affairs before
the struggle with Israel had been resolved. There are
also indications that the Soviets, who oppose the
economic liberalization measures Hijazi authored, may
have objected to his appointment.
The liberalization and reconstruction program,
nonetheless, has gone forward, and Sadat may now have
decided to proceed with the cabinet reshuffle, making
nominal accommodations to the objections of those who
have opposed it. He could, for instance, retain the
prime ministership himself and claim that the govern-
ment is equally ready for war and for domestic recon-
struction; he originally assumed the post in a move
to facilitate preparations for war. Remaining in the
office would also avoid some of the problems Hijazi's
appointment would almost certainly precipitate. The
Finance Minister, however, will probably stay on and
continue to be heavily involved in reconstruction and
economic reform.
Mar 9, 1974 Central Intelligence Bulletin
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ETHIOPIA: Government and trade union representa-
tives reached a proposed agreement yesterday to end a
two-day general strike. Union leaders are scheduled
to meet this morning to study the agreement, which
must be approved by both the labor confederation's
general council and Prime Minister Endalkatchew. Un-
til then, a union spokesman says, the workers will
remain off their jobs. The negotiators revealed no
details of the agreement but described it as a com-
promise solution. The secretary-general of the Ethi-
opian Labor Confederation said there was "a meeting
of minds on all points."
The settlement, if approved, would remove one of
the direct threats to the government, but continuing
unrest among other dissatisfied groups will prevent
an early return of stability. Teachers are still on
strike because of grievances over pay and proposed
educational policies they believe will limit educa-
tional opportunities for large numbers of Ethiopians.
Students and some elements in the military continue
to oppose Endalkatchew, who they believe has not ac-
cepted their goal of far-reaching political and social
reform.
The government has attempted to demonstrate a
willingness to search for constructive answers to the
demands of the dissidents. The US Embassy reports,
however, that cabinet members are deeply concerned
over their precarious situation and believe that the
country remains hostage to various militant groups.
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FRANCE: In line with its stated objective of
eliminating by the end of 1975 the trade deficit
resulting from higher oil prices, Paris reportedly
will soon announce measures designed to boost exports.
The government may also encourage exporters to devote
special efforts to promoting sales in the areas least
affected by the oil crisis, in particular North Amer-
ica and Eastern Europe.
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Measures under consideration include aid to firms
that increase investment in order to export more.
Such aid might come in the form of exemption from
borrowing limits or accelerated depreciation allow-
ances, possibly conditional on a firm's formal com-
mitment to export a given share of its output. Paris
is also apparently studying a package of measures that
would facilitate the export of complete plants. Other
possible steps include improvements in guarantees
designed to reduce exchange-rate and political risks.
The action most desired by exporters--preferential
interest rates on export financing--appears less
likely to materialize, because steps in this direc-
tion would probably violate GATT and EC rules.
Whatever Paris decides, there is likely to be
little effect on the trade balance this year. Short-
term expansion of exports in most sectors of French
industry will be hampered by a lack of excess pro-
duction capacity and by the weakening of demand in
the economies of France's main trading partners.
Although action begun now could narrow the trade
deficit next year, balanced trade by the end of
1975 seems unlikely.
Mar 9, 1974 Central Intelligence Bulletin
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CAMBODIA: Press reports about the defection of
some 700 Khmer Communist troops appear to be false.
Cambodian Army officers involved with the government's
rallier program are convinced that most of the ral-
liers presented to the press last week were Phnom Penh
residents paid to pose as Communists. According to
the US Embassy in Phnom Penh, the group of civilian
government officials who presented the alleged ral-
liers to the press last week has since December been
promoting a scheme that ultimately was supposed to
lead to the defection of 25,000 insurgents.
Stories of mass insurgent defections during the
war are not new. Prominent figures such as former
prime minister In Tam and High Political Council
member Cheng Heng claimed in the past to have large
numbers of insurgent troops ready to rally. They
promoted such stories in part to demonstrate their
personal ability to influence the insurgents. Other
officials have used the rallier ploy to improve their
financial and bureaucratic positions.
Money appears to be a motive in this latest epi-
sode. The civilian officials who have been "negoti-
ating" with the ralliers have already gone through
substantial funds provided personally by President
Lon Nol, and they are seeking to have their new charges
placed on army payrolls.
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SOUTH VIETNAM: There is growing evidence that
President Thieu has reduced the authority of two con-
troversial advisers as part of his recent reorganiza-
tion of the executive branch. Such a move will mol-
lify senior military figures who have complained of
meddling by the two,men.
Hoang Duc Nha, who was Thieu's closest aide, was
moved out of the presidential office and appointed
minister of information and Chieu Hoi (the rallier
program) last month. Nguyen Van Ngan remains in
Thieu's office, but his present duties are not clear
because part of Ngan's responsibilities reportedly
have been transferred to Prime Minister Khiem's of-
fice.
A power struggl -n Nha and Na
the open last fall.
an broke into
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Nha and Ngan clearly have lost some ground, but
new power relationships at the presidential palace
have not yet been firmly defined. Nha probably still
h i
s
has some access to Thieu, particularly since e
closely related to the President, and Khiem remains
concerned about Nha's activities.
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SOUTH VIETNAM: Economy, a Threat to Thieu
South Vietnam's economy has been in a slump
for almost two years, and the outlook is for more
of the same for the remainder of 1974. Economic
problems now pose the greatest threat to President
Thieu's otherwise strong domestic position, and
continued deterioration will increase the risk of
political instability.
Thieu recognizes the gravity of the situation
and has made a number of changes in economic policy-
making positions in recent months. Cabinet ministers
who favored reliance on free market forces have been
replaced and the government is leaning toward more
direct controls, but no clear-cut economic policies
have emerged. Saigon possesses only limited finan-
cial or administrative tools to deal with short-
term problems.
Thieu also realizes that global inflation and
economic stagnation have increased South Vietnam's
need for foreign aid. His recent moves to improve
government efficiency and crack down on corruption
have been designed, in part, to improve Saigon's
image overseas, in hope of attracting additional
aid from the US and other countries.
South Vietnam's economic problems--declining
real aid, stagnation in industrial production,
rapid inflation, and the sharp reduction in US
spending--have affected urban areas and persons
on fixed incomes most of all. Retail prices went
up 65 percent during 1973 and have risen another
15 percent so far this year. Wages generally are
failing to keep pace with the rising cost of living.
This is particularly true of government employees,
both civilian and military, who account for more
than one fifth of the labor force. Despite a 25-
percent pay hike last year, the real wages of gov-
ernment employees are only two thirds of what they
were a year ago.
(continued)
Mar 9, 1974
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The regular salaries of lower level employees--
including a series of special allowances and commis-
sary privileges--now barely cover a family's spending
on rice. Moonlighting and the employment of more
than one family member help, but jobs are scarce.
In addition to lay-offs by Vietnamese manufacturers,
US official Interests, which at their peak in 1969
directly employed some 150,000, are reducing the
number of jobs for South Vietnamese. Unemployment
is on the increase; precise data are not available,
but a recent study by the US Embassy in Saigon esti-
mates that unemployment may now be on the order of
1 million people--some.15 percent of the labor force.
Agriculture
Agriculture is now relatively strong, having
recovered from a disappointing year in 1972. Real
incomes on the farms have apparently increased some-
what over the past few years, and preliminary indi-
cations point to a record rice crop now being
harvested.
This performance is unlikely to be sustained.
Recent increases in rice production have been due
almost entirely to increased use of high-yield
varieties, more intensive use of chemical fertiliz-
ers, and increased mechanization. Now, fertilizer
is scarce and fuels are expensive. The retail
price of fertilizer has more than doubled in the
past year and gasoline is up more than 200 percent.
Some farmers reportedly are reverting to other va-
rieties of rice that, while hardier and less depend-
ent on fertilizers and the vagaries of weather, are
also lower yielding.
Thus, while farmers will probably still be
able to meet their own needs, private merchants or
government buyers may find it increasingly diffi-
cult to purchase rice in the delta for shipment to
Saigon and the rice-deficit provinces farther north.
Higher prices for farmers should eventually lead to
increased supply; prices were nearly doubled last
year. Further price increases, however, could not
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be absorbed by most low-income urban families.
Should the government subsidize rice sales, this
would further strain a budget already in deficit.
To ensure adequate rice supplies, the embassy has
requested 450,000 tons of rice under PL-480 this
year, up from 300,000 tons in 1973.
Foreign Trade
World prices for the goods purchased abroad
by South Vietnam rose last year by an average of
25 percent. For the same volume of imports this
year, including the major ones--fertilizer, rice,
wheat, and petroleum products--Saigon would have
to pay well over $900 million. Although South
Vietnamese exports have increased, they are ex-
pected to bring less than $100 million in 1974.
The US Embassy believes that South Vietnam
will need supplemental aid this year of $250 mil-
lion in addition to the $500 million the US has
provided annually over the past few years to get
the economy moving again. Saigon's major source
of foreign exchange other than foreign aid has been
US spending in South Vietnam and this has dropped
sharply from a peak of $400 million in 1971 to about
$130 million last year.
Aid from countries other than the US, primarily
Japan and France, will probably increase, but over
the short term this will meet only a small portion
of Vietnam's aid and import requirements. Aid from
these sources will probably double this year, but
even so it is likely to total somewhat less than
$100 million.
At currently anticipated levels of foreign
aid, the economic outlook for 1974 is similar to
that of 1973--low domestic and foreign investment,
little or no growth in production, widening inequal-
ities in income, growing unemployment, and continued
deferral of reconstruction and development. Each
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increase in consumer prices that is not accompanied
by a gain in income for the working classes is likely
to increase the prospects for political unrest, which
has been virtually nonexistent within the non-Commu-
nist majority in recent years.
There have been reports of economic hardship
and concern within some South Vietnamese military
units, but instances of increased desertions or
disciplinary problems are few and localized. Nor
is there much open complaining in antigovernment
circles. Buddhist and student groups, which led
demonstrations against Thieu in. the past, are now
weak and badly divided, and they show little few sn-
clination to challenge Thieu openly. A radical groups have tried to exploit the economic
situation, but thus far have not attracted an si -
nificant mass support.
Mar 9, 1974
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