NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026800010002-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 23
• Document Creation Date: December 20, 2016
• Document Release Date: March 22, 2006
• Sequence Number: 2
• Publication Date: July 18, 1974
• Content Type: REPORT

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?C x
National Intelligence
Bulletin
State Dept. review completed
Top Secret
18 July 1974
I
Copy
No 631
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National Intelligence Bulletin
July 18, 1974
CYPRUS: Key figures in Cyprus crisis meet in London to
discuss situation. (Page 1)
USSR-CYPRUS: Official Soviet statement moderate in tone.
(Page 4)
PORTUGAL: Prime Minister Goncalves announces cabinet.
(Page 6)
LAOS: Prime Minister's condition has stabilized.
(Page 8)
EGYPT-FEDAYEEN: Egypt continues to refuse to release
fedayeen terrorists who murdered diplomats in Khartoum.
(Page 9)
CANADA: Trudeau formulates legislative strategy.
Page 12)
ITALY: Legislative test set on government's austerity
program. (Page 14)
SPANISH SAHARA: Madrid's policy toward overseas prov-
ince rekindles territorial dispute. (Page 17)
JAPAN: Trade deficit for first half of year was about
2.8 billion. (Page 19)
FOR THE RECORD: (Page 20)
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National Intelligence Bulletin July 18, 1974
CYPRUS
The political center of the crisis shifted to London
yesterday as Turkish Prime Minister Ecevit--accompanied
by his defense minister--and ousted president Makarios
held separate talks with British leaders. The discus-
sions may continue today.
According to press reports, Prime Minister Wilson
and Foreign Secretary Callaghan agreed to Mak arios' re-
quest that London refuse recognition of the Sampson re-
gime and support him in the UN Security Council. De-
tails of Ecevit's three-hour discussion are not known
yet. A British announcement said only that the two coun-
tries had expressed their concern abqut Makarios' over-
throw and "fully discussed the position arising" from
the 1960 treaty, under which Britain and Turkey--along
with Greece--are guarantors of the independence of Cyprus.
The Turks seem anxious at the moment to act within
the framework of their alliances and international com-
mitments to resolve the Cyprus problem. Ankara is calm,
and there has been no attempt to arouse popular senti-
ment over the issue. The press and all the political
parties, however, support a firm Turkish reaction.
The Turkish charge' in Nicosia told the US embassy
yesterday that members of the Turkish Cypriot community,
whom he thought had shown great restraint so far, were
extremely uneasy about the naming of Nicos Sampson as
President. He said that Ankara, which views Sampson
as a puppet of Athens and a determined foe of the Turk-
ish community, found the new government completely un-
acceptable and would have to act unilaterally unless
outside intervention restored a situation compatible
with the constitution, which is guaranteed by the Lon-
don-Zurich accords. He said he was afraid the UK was
inclined to accept the situation as it was evolving.
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National Intelligence Bulletin
July 18, 1974
In Athens, two high-level Greek officials have as-
sured the USeembassy that Greece will not increase the
size of its contingent of forces on the island. Ankara
fears that the Greeks plan to do just that tomorrow dur-
ing the semiannual rotation of half their 950-man force.
Meanwhile, former prime minister Karamanlis, in a
rare public statement from his exile in Paris, called
on the Greek armed forces to restore Archbishop Makarios
to power in Cyprus. He also urged a return to democracy
and offered to lead a return to democracy in Greece.
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National Intelligence Bulletin July 18, 1974
Makarios is expected to arrive in New York today
and to request a meeting of the UN Security Council
either this afternoon or tomorrow. He will press for a
Security Council resolution that would declare him to be
the legitimate head of the Cyprus government, call on
Greece to withdraw its officers from the Cypriot National
Guard, and ask Greece to withold recognition of Sampson
and his regime.
Five Security Council members have drafted a resolu-
tion that would call for withdrawal of the Greek offi-
cers but would not recognize Makarios as the legitimate
chief of state. The US mission to the UN reports a grow-
ing uneasiness among Security Council members about the
implications of explicitly recognizing Makarios as Cyprus'
legitimate president.
The members of NATO, increasingly sensitive to hints
from the East that the Alliance was somehow involved in
the overthrow of Makarios, took new steps yesterday de-
signed to put pressure on Greece. Most of the members
endorsed the suggestion of the UK government that Athens
should replace the Greek officers in the Cypriot National
Guard. They also called on Greece to follow the recently
signed Atlantic Declaration by consulting fully both in
the NATO context and in the context of the 1960 treaty
guaranteeing an independent Cyprus. In addition, they
asked for assurances that Athens would fulfill its in-
ternational obligations under the 1960 treaty. Secretary
General Luns said he thought prompt response from Athens
was imperative.
The European Community, which earlier had presented
a joint expression of concern in the UN Security Council,
took further action yesterday by authorizing France, the
current president of the EC Council, to deliver demarches
in Athens and Ankara. In Athens, the EC spokesman will
point out that Greece has a "special responsibility" for
the stability and independence of Cyprus, and that the
Nine are opposed to all threats to the sovereignty of
Cyprus as well as any interference in Cyprus' internal
affairs. In Ankara, the spokesman will express the hope
that Turkey will continue to show restraint.
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National Intelligence Bulletin July 18, 1974
USSR-CYPRUS
Moscow last night issued an official government
statement on Cyprus that is notably moderate in tone,
avoiding threats or any assertions that the USSR sees
its security affected by developments on the island.
The statement--Moscow's most authoritative pro-
nouncement on the coup--reiterates Soviet support for
the island's independence, calls for international sup-
port of the "legitimate" government of President
Makarios, and condemns Greek interference. It demands
the immediate removal of all Greek military personnel
from the island, but does not threaten Athens with any
consequences if that course is not followed.
The Soviet pronouncement calls for the UN Security
Council to take action to resolve the situation. It
indirectly expresses displeasure with US policy, saying
that "some" in the West are accepting the Greek con-
tention that the situation is an internal Cypriot matter.
The Soviets do not commit themselves to assisting
actively any Cypriot movement to return Makarios to
power. Moscow's initial statement on the coup--issued
late Monday--suggested that the USSR was holding such
a course open.
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Meanwhile Soviet Deputy Foreign Minister Kuznetsov
brought up the Cyprus situation in talks with Ambassador
Stoessel yesterday. Kuznetsov claimed that Moscow's com-
munications with its embassy in Nicosia have been cut,
and asserted that the lives of Soviet personnel may be
in danger.
While this statement may have been intended to in-
timate the possibility of unilateral Soviet action,
Kuznetsov otherwise provided no indication that the USSR
has been considering that possibility. He told the am-
bassador their dialogue was merely "free conversation."
Kuznetsov generally was ske tical of any UN role in re-
solving the crisis soon.
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National Intelligence Bulletin July 18, 1974
The most striking feature of Prime Minister Vasco
Goncalves' cabinet, announced last night, is the in-
creased prominence of the organizers of the April coup.
Although clearly in control since then, they have pre-
ferred to avoid the limelight. The political coloration
of several members of the cabinet is not yet known, but
some shift to the left may have occurred.
Although the new cabinet contains a majority of ci-
vilians drawn from the parties represented in its pre-
decessor, the military make up the largest single unified
group. The seven officers in the cabinet, including the
Prime Minister, are drawn largely from the Armed Forces
Movement, which engineered the coup. In addition to get-
ting two ministers without portfolio, the military took
over the key ministries of interior, information, and
labor. They retained the Defense Ministry, which will
continue to be occupied by Mario Miguel, who was Presi-
dent Spinola's original choice for prime minister.
The Communists do not appear to have been especially
favored in the cabinet reshuffle. They did not retain
the Labor Ministry, nor did they gain the interior and
information ministries, as they would have liked. Their
leader, Alvaro Cunhal, did retain his slot as minister
without portfolio. The Communists may have also picked
up some of the five ministries filled by new appointees,
whose political orientation is not yet known.
The Socialists have the greatest number of hold-
overs. Mario Snares, the Socialist Party chairman,
stayed on as foreign minister, and the party retained
the portfolios of justice and interterritorial relations.
The centrist have only one carry-over, Joaquin Magalhaes,
who moved from interior to minister without portfolio.
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National Intelligence Bulletin
July 18, 1974
Now that members of the Armed Forces Movement are
stepping forward into the government, their political
orientation will become more obvious. From their begin-
ning as the "captains movement" several years ago, there
have been reports of the leftist leanings of some of
these officers, generally said to be in the minority.
The main orientation of the movement, however, is con-
sidered to have been reformist and nationalist, and
these principles likely still predominate, although it
is possible that leftists may be making some inroads.
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National Intelligence Bulletin
July 18, 1974
Prime Minister Souvanna's condition has stabilized,
The immediate problem is still to find an interim re-
placement whose decisions would be accepted by Communists
and non-Communists alike. The Lao Protocol of September
1973 does not rank non-Communist Deputy Prime Minister
Leuam Insisiengmay and Pathet Lao Deputy Prime Minister
Phoumi Vongvichit, nor does it provide any means by which
Souvanna's half brother, Pathet Lao Prince Souphanouvong,
could be moved from the chairmanship of the advisory
political council to take over temporarily as prime min-
ister. Similarly, the Lao constitution does not address
temporary substitution whenever the prime minister is
incapacitated.
Although the political atmosphere in Vientiane
could become tense as the search for a satisfactory com-
promise proceeds, both sides seem anxious to preserve the
coalition and to avoid jeopardizing the limited progress
made so far toward reconciliation.
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National Intelligence Bulletin
July 18, 1974
Egypt--for the moment, at least--is remaining stead-
fast in its refusal to release to the Palestine Liberation
Organization the fedayeen terrorists who murdered one
Belgian and two US diplomats in Khartoum last year.
The terrorists were released by Sudan in late June,
ostensibly to serve out their sentences under the control
of the PLO. The group, however, is being held by Egyptian
authorities, and PLO officials are pressing for their re-
lease. If turned over to the Palestinian organization,
the terrorists almost certainly would be taken either to
Lebanon or Syria, and probably be given complete freedom.
Egypt's determination to hold on to the group for
the present reflects in large part President Sadat's
reluctance to take any action that would jeopardize
Egypt's relations with the US. For the same reason,
Cairo has so far refused to release a different group of
commandos who last December carried out an attack on a
US airliner and hijacked a second aircraft at Rome air-
port. That group, originally apprehended by the Kuwaitis,
was also released "to PLO officials in Cairo."
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National Intelligence Bulletin July 18, 1974
Prime Minister Trudeau has begun to formulate leg-
islative strategy and to plan some cabinet changes fol-
lowing his decisive election victory in early July.
Trudeau announced this week that he intends to re-
introduce the budget proposals that caused the defeat
of his minority administration in May. There have been
hints that he will modify some provisions to reduce fed-
eral-provincial tensions over taxation of Canada's pe-
troleum and mining industries. Trudeau said he will
bring back legislation left pending from the last par-
liament, including controversial measures dealing with
energy policy.
In what should prove to be a.popular move, Trudeau
announced he was taking executive action to rescind im-
mediately the 12-percent federal sales tax on shoes and
clothing. He said parliament would pass the necessary
legislation retroactively after it convenes on September
26.
Trudeau's remarks followed the first cabinet meet-
ing since the election. The ministers may have discussed
the shape of the new cabinet, which is likely to require
some shifts in top ministerial portfolios.
There have been indications that Finance Minister
John Turner wants a new post after two and one-half
years in the most demanding slot in the cabinet. Marc
Lalonde, the current minister of health and welfare and
a Trudeau confidant, has been mentioned as a possible
successor. The new cabinet is likely to be announced
in early August before the Prime Minister goes on vaca-
tion.
The Progressive Conservatives and the New Democrats
have begun to focus on leadership questions in the wake
of their election losses. Tory members of parliament
will caucus in Ottawa on August 14 to evaluate the elec-
tion and discuss strategy for the new parliament. Al-
though a spokesman for Tory leader Robert Stanfield
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July 18, 1974
said he doubts that party leadership problems will be dis-
cussed at this meeting, it appears only a matter of when,
and not if, Stanfield relinquishes his post.
New Democratic leader David Lewis, defeated in his
Toronto district, has already indicated that he will
step aside. The party's parliamentary delegation is ex-
pected to elect a new parliamentary leader soon. In the
meantime, Lewis will probably continue as party chairman
until a convention is held later this year.
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National Intelligence Bulletin July 18, 1974
The Italian Communist Party's attempt to amend the
government's austerity program in parliament has set the
stage for a legislative test that could strain the center-
left coalition. The Communist move comes at a time when
the dominant Christian Democrats are caught up in an in-
ternal feud and their Socialist coalition partners are
torn between responding to labor's unhappiness with.some
features of the austerity program and keeping the coali-
tion intact.
The Communist amendments would soften the impact of
the austerity measures on labor and require increased
sacrifices from upper income groups. The proposals are
certain to appeal to organized labor and tempt the Social-
ists and the Christian Democratic left to support them.
The Communist decision to force the issue at this
time suggests that the party leadership has finally
reached a decision on how best to exercise Communist
leverage in the current situation. Some Communist lead-
ers have been concerned that, by sticking to their "soft"
opposition policy of the last year, the party might lose
its influence with organized labor; Communist labor
leaders have been heckled at labor rallies for not press-
ing the government harder.
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The disarray within the Christian Democratic Party
will complicate the government's efforts to meet the Com-
munist challenge, The Christian Democrats' key delibera-
tive body--the National Council--opens its meeting today,
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National Intelligence Bulletin
July 18, 1974
with some left-wing elements and younger parliamentarians
in revolt against the party leadership.
that the austerity measures are designed to produce.
The government will probably be forced to accept
some of the Communist proposals. A government crisis
may ensue, however, if the Communists succeed--with the
parliamentary support of elements of the majority--in
forcing changes that substantially reduce the revenue
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National Intelligence Bulletin
July 18, 1974
Madrid's plan to grant increased autonomy to its
overseas province of Spanish Sahara has rekindled a
controversy over the territory that has embroiled Spain
with rival North African claimants since the late 1950s.
Morocco, the most active claimant, has reacted sharply
to Spain's plan and may be moving toward employing
limited force to back up its case.
Spain's new policy provides for the replacement of
the present territorial legislature, appointed by Madrid
in 1967, with a more powerful assembly. Two thirds of
the new body is to be popularly elected. Although the
policy eventually envisages a popular referendum on self-
determination, Spain undoubtedly wants to retain some
ties with its desert province to realize a return on its
major investment in developing the phosphate deposits
there.
When Morocco's King Hassan learned early this month
of Madrid's plans, he immediately sent a letter to Gen-
eralissimo Franco warning that such a move would lead to
a deterioration in relations. The King followed up with
a speech reiterating the history of Morocco's efforts to
regain its "seized territory." He asserted that he would
not permit the establishment of a puppet state in Spanish
Sahara, which Rabat suspects is Madrid's objective, and
implied that if dialogue failed, other means would be
pursued.
Hassan probably believes new efforts to reclaim
Spanish Sahara will help him rally popular support and
distract attention from political and economic problems
at home.
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July 18, 1974
The Rabat government believes that the recent devel-
opments in Portugal and its overseas possessions will
inevitably accelerate the pace of decolonization in Span-
ish Sahara. The Moroccan government is waging a vigorous
campaign to secure external support for its position.
Thus far, however, it has elicited only a few qualified
statements that avoid explicit support for Morocco's irre-
dentist aspirations.
Meanwhile, Mauritania has called for consultations
in Nouakchott on July 20 with the Algerian and Moroccan
foreign ministers to discuss the status of Spanish
Sahara. Although Mauritania still officially claims the
area, Foreign Minister Mouknass recently indicated that
his country would support immediate self-determination
of Spanish Sahara through a UN-sponsored plebiscite. He
added that if the Saharans choose independence, Mauritania
will support retention, for several years, of a Spanish
military presence--which now amounts to 15,000-20,000 men--
to guarantee the territorial integrity of the new state.
Mauritania has always feared a common border with
Morocco; Rabat only dropped its claim to Mauritania and
recognized the Nouakchott government in 1970, eight years
after its independence. The Mauritanians may also fear
that the departure of the Spanish could result in another
Moroccan-Algerian border war, much like the one in 1963.
Tripartite talks between these countries have been
held infrequently since 1970, but conflicting Moroccan
and Mauritanian territorial claims and Algeria's insis-
tence on a role as an interested party have prevented any
agreement on practical steps to hasten decolonization of
Spanish Sahara. Neither Mauritania nor Algeria wishes
to see Moroccan sovereignty expanded, and Algeria would
oppose any strong unilateral action by Morocco to force
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JAPAN
July 18, 1974
During the first half of this year japan registered
a $2.8-billion trade deficit, primarily the result of
higher oil import costs.
Export value grew 48 percent between January and
June 1974, compared with the same period in 1973, with
growth rates accelerating to 60 percent in recent months.
Higher prices accounted for most of the gain, although
sales volume increased. In May and June export volume
was about 20 percent above the same period in 1973.
Most of the increase went to less developed and Commu-
nist countries, but exports to the U$ and Western Europe
picked up sharply in the April-June quarter.
Imports were up 85 percent in the first half of the
year, largely reflecting a $7,-billion increase in oil
imports over the January-June period last year. Oil
imports have probably hit their peak, however, and non-
oil imports--up 43 percent-in the first half--are slack-
ening in response to the slowdown in the domestic econ-
omy. If the trend continues. Japan's already large
non-oil trade surplus will increase sharply in the
second half of 1974. During the first half of the year,
this surplus totaled $6.5 billion, compared with $3.9
billion a year earlier.
Japan's overall payments deficit between January
and June 1974 totaled $7.2 billion. In addition to the
deficit on the trade account, net service payments in-
creased sharply, averaging $500 million monthly because
of higher shipping costs. Long-term capital movements
abroad, although under restraint, still amounted to $3
billion in the first half of the year.
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FOR THE RECORD
July 18, 1974
North Vietnam: Politburo member Le Thanh Nghi is
continuing visits to Communist countries in an attempt
to drum up economic aid--an annual effort that he usu-
ally heads. After a three-day stay early this month in
Peking, Hanoi reported China's continued "support and
aid" without details; Chinese reports also did not spec-
ify any details of new aid commitments. Nghi then made
a brief stop in Moscow on July 8. During his subsequent
visit to Bulgaria from July 9 to 12 he signed an agree-
ment on economic cooperation, and then flew to East Ger-
many where he discussed next year's aid to North Viet-
nam. Nghi is now in Hungary.
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