NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A027000010002-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 28
• Document Creation Date: December 21, 2016
• Sequence Number: 2
• Content Type: REPORT

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Top Secret
National Intelligence
Bulletin
State Dept. review
completed.
DIA review
completed.
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National Intelligence Bulletin
September 18, 1974
CONTENTS
GREECE-NATO: Athens has begun withdrawal from NATO.
(Page 1)
TURKEY: Prime Minister Ecevit reportedly will formally
submit resignation today. (Page 5)
EC: Ministers postpone decision on borrowing to meet
members' oil-related payments needs. (Page 6)
USSR-UN: Soviets to press for ban on environmental war-
fare at UN. (Page 7)
WEST GERMANY: Gromyko's visit produces no breakthroughs.
Page 9)
PALESTINIANS: UN strategy. (Page 11)
MOROCCO-SPAIN: Hassan calls for international adjudica-
Eil-oiTof -Spanish Sahara dispute. (Page 1-3)
MOZAMBIQUE: Transitional government to be sworn in~this
week. (Page 16)
THAILAND: Process to establish constitutional govern-
ment moves forward. (Page 17)
INDIA-PAKISTAN: Successful talks. (Page 18)
CHINA: Modern integrated circuit plant under construc-
teon. (Page 19)
EEg).M : Cairo's Objectives in the Persian Gulf Area.
(Page 21)
FOR THE RECORD: (Page 25)
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National Intelligence Bulletin
September 18, 1974
Greece has taken steps to implement its withdrawal
from NATO's integrated military structure. While these
steps could be reversed, NATO has begun to prepare for
negotiations on the Greek withdrawal.
NATO Secretary General Luns announced on Monday
that the Greek delegation had told him that, effective
immediately, Greek representatives will not attend
meetings of the Defense Planning Committee, Defense Re-
view Committee, Executive Working Group, and Nuclear
Planning Group. Greece hopes to leave its representative
in the Military Committee during the withdrawal period.
The Supreme Allied Commander has also just received
official notification from the Greek commander in chief
that Greek forces ceased to be committed to NATO on
August 14.
Those aspects of Greece's future relationship with
NATO that are of most importance to the other allies are
still undefined. Athens has made no decision about the
future of US and NATO forces and facilities in Greece.
Nor has Athens yet made known whether it will continue to
participate in NATO's early-warning air defense network
or what it will do about NATO's basic communications sys-
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National Intelligence Bulletin September 18, 1974
Prime Minister Ecevit reportedly will formally sub-
mit his resignation to President Koruturk today and seek
approval from the national assembly for calling an elec-
tion in December. Ecevit's moves were approved last
night by the senate and assembly delegations of his Re-
publican People's Party.
Ecevit's action ends a shaky coalition with the Na-
tional. Salvation Party, whose cabinet members last week
precipitated the collapse of the government.
There is speculation in Ankara that President Koru-
turk will ask Ecevit to form a minority government to
serve until the election. Ecevit discussed his plan
with the President before presenting it to his party..
The Justice Party, the major opposition group in
the assembly, is pledged to block Ecevit's formation of
a minority government, and wants no election before mid-
1975. Justice Party leader Demirel is concerned that
Ecevit might win a majority this year because of the
popularity of Turkey's intervention on Cyprus. Demirel
believes that this popularity will be eroded in the next
few months by the effects of inflation, particularly
after the economic impact of the Cyprus operation is
felt.
Ecevit may already have sufficient votes from other
parties in the assembly to get approval for holding an
election this year. Leaders of the Democratic and the
Republican Reliance parties said yesterday that they were
prepared for an early election. At the same time, both
parties avoided any commitment to joining a new coali-
tion.
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National Intelligence Bulletin September 18, 1974
EC finance ministers met Monday to discuss EC borrow-
ing to meet members' oil-related payments needs. The
proposal was referred to the EC's Monetary Committee for
further study. The question will probably be taken up
again at the finance ministers' next meeting in October,
when some action is possible.
At :Bonn's insistence, the ministers decided to post-
pone a decision to launch a Community effort to attract
oil exporters' funds for use by member countries in need
of balance-of-payments financing. The French had proposed
borrowing $2.4 billion, to be jointly guaranteed by the
EC. The EC Commission had recommended an even larger
amount. Because Bonn has already indicated that it would
support a small loan--perhaps $1 billion--the ministers
will probably be able to agree eventually on a limited
borrowing plan, if responsibility for backing the loan
can be worked out to the satisfaction of Germany and the
other EC members.
The French also proposed that the European joint
float be revamped in favor of a more flexible system
which would permit greater fluctuation for each country's
currency. Currency fluctuations of member currencies
are maintained within 2.25 percent of each other. Five
EC countries plus Norway and Sweden currently maintain
the narrow joint float margins which France decided to
drop last January, It is highly unlikely that the
present float members would be willing to modify the
joint float agreement sufficiently to accommodate France
as well as the UK, Ireland, and Italy, which have also
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National Intelligence Bulletin
USSR-UN
September 18, 1974
The Soviets have added one new item to their propa-
ganda arsenal at the UN General Assembly this year--the
banning of environmental warfare. They will also take
an active role on Middle East and Cyprus issues, but on
most other items they are showing little interest.
In. a letter to Secretary General Waldheim, Moscow
called for an international convention that would out-
law modification of the environment for military purposes.
A statement on this subject was signed at the US-Soviet
summit meeting last June.
Moscow's attention to Middle Eastern issues is
likely to focus on the Palestinian question. The Soviets
encouraged Palestinian leader Arafat to take this issue
to the UN and are prepared to support the Arab nations
there. They probably expect that UN support for the Pal-
estinians will enhance the fedayeen's claim to be rep-
resented at the Geneva conference.
On Cyprus, the Soviets have indicated that they
will support a Greek and Cypriot attempt to put the is-
sue on the agenda. Although the Soviets do not want to
get too far out of step with the Turks, they can hardly
oppose General Assembly consideration of the question
while they push their own proposal that an international
conference be held under UN auspices to work out guaran-
tees for Cypriot independence.
On other questions likely to come up at the UN
meeting, the Soviets:
--Will support, but not press for, the seating of
a Sihanouk government in place of the present Cam-
bodian government at the UN.
-?-Will continue to support the North Korean position
that the continued presence of UN troops in South
Korea is an obstacle to reunification, but will be
reluctant to push this issue now because it would
baring them into conflict with the US.
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National Intelligence Bulletin September 18, 1974
--Favor nuclear-free zones in general, but appar-
ently have reservations about recent proposals,
such as Pakistan's, along these lines.
--Remain opposed to any attempts to revise the UN
charter or to increase the UN budget.
--Will seek to generate some enthusiasm for their
"showcase" proposal of 1 f military
budgets.
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National Intelligence Bulletin
WEST GERMANY
September 18, 1974
Soviet Foreign Minister Gromyko's visit. to Bonn on
September 15-16 produced no breakthroughs on. bilateral
agreements under negotiation but, for the sake of Chan-
cellor Schmidt's trip to Moscow in late October, both
sides have publicly proclaimed that progress was main-
tained.
According to a West German official, neither side
dwelt on the dispute this summer over the Federal En-
vironmental Office in West Berlin. Schmidt gave assur-
ances that no other offices would be established without
careful consideration of political as well as legal fac-
tors. Gromyko reportedly replied that there would be
no further problems over transit traffic on the auto-
bahns to West Berlin.
Gromyko stood firm, however, on the issue of clauses
in the proposed bilateral agreements on technology and
legal assistance that would extend their provisions to
West Berlin. The Soviets prefer proposals discussed
with the Brandt government earlier this year; the pres-
ent West German government finds them less than satis-
factory. It was decided to continue discussion at a
lower level.
The Soviet Foreign Minister pressed hard for the
expansion of trade and economic cooperation, seeking
government credits and subsidies for large-scale indus-
trial projects. Schmidt has been under pressure to
grant such aid from some advisers who argue that Bonn's
trade surplus with the Soviets may decline this year
as a result of the high cost of raw materials. The
Chancellor, nevertheless, stuck to his position that
the need to control inflation rules out such financial
gestures at this time.
Discussion of joint projects for the delivery of
electrical power and natural gas from the USSR will be
taken up by the bilateral economic commission when it
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National Intelligence Bulletin
September 18, 1974
meets in Moscow in mid-October, but Bonn's parsimonious
attitude virtually forces the Soviets to bargain over
terms with individual German firms.
On international issues, Gromyko made a strong ef-
fort to get Bonn to support concluding the European secu-
rity conference as early as possible. He hinted at flex-
ibility on the question of the freer movement of peoples
and ideas, provided that Bonn accept the Soviet concept
of non-interference in internal affairs.
Schmidt would like to see the conference concluded
by early next year, but does not want to abandon Bonn's
hope of obtaining strong language in the final conference
document that would acknowledge the right to alter bor-
ders by peaceful means. Foreign Minister Genscher asked
the Soviets to support a new US formulation, but Gromyko
restated Moscow's preference for softer language accepted
at a conference session last spring.
Schmidt's discussion with Gromyko regarding the ne-
gotiations at Vienna on troop reductions produced no
changes or flexibility in the Soviet stance.
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National Intelligence Bulletin
PALESTINIANS
September 18, 1974
Muhammad al-Farra, Arab League assistant secretary
general for Palestinian affairs, says that at a minimum,
the Arabs' aim in raising the Palestinian issue at the
UN General Assembly is to win US support for a resolution
affirming that the Palestinians have certain inalienable
rights.
Farra told a US embassy officer in Cairo on Saturday
that the Palestinians would be satisfied with a moderate
resolution, if the US would go beyond its past acknowledge-
ment of Palestinian "interests" to Palestinian "rights."
He implied it is not necessary that these rights be
spelled out.
If the US will not comply, Farra said, the Palestin-
ians will seek a broader resolution that would include a
declaration that the Palestine Liberation Organization is
the "sole" representative of the Palestinian people.
He believes that a resolution embodying maximum Palestin-
ian demands would be backed by at least 70 member states.
the Arabs have not set-
tled on a UN strategy, and probably will not until the
Arab summit, now scheduled for late October. This sug-
gests that Farra is exploring the possibility of a
bargain: an Arab resolution designed to create as few
problems as possible for the US in return for US support.
The position of PLO chairman Yasir Arafat will be
strengthened by UN debate on the Palestinian question,
whatever the content of a final resolution. He hopes
to keep international attention focused on the Palestin-
ian problem in hopes of obtaining an invitation for the
Palestinians to attend the Geneva peace talks.
Arafat will portray any change in the US position,
however slight, as a major victory. He will use it to
demonstrate the value of his relatively conciliatory
approach as opposed to the obstructionist tactics of
Palestinian radicals.
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0
MILES
PORTUGALf SP*AIN
Madrid
Rabat
Casablanca
MOROCCO
Marrakech 10
) Agadir
ITALY
0
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National Intelligence Bulletin September 18, 1974
King Hassan called yesterday for international ad-
judication of the dispute over the future of Spanish
Sahara. This latest move in the King's campaign to take
over the territory is aimed at circumventing the refer-
endum on self-determination promised by Madrid.
According to a preliminary account of his press
conference in Rabat, Hassan proposed that Spain and the
UN refer the subject of "occupied Moroccan Sahara" to
the International Court of Justice. Last month, Hassan
implied he would accept arbitration of the dispute be-
tween Spain and Morocco. Hassan hopes this process will
lead to a simple transfer of the territory to Morocco
and thereby avoid the risk of holding a referendum that
could go against Moroccan interests. The timing of his
proposal was clearly intended to curtail discussion of
Spanish Sahara in the UN General Assembly, which has
passed a number of resolutions since 1965 calling for
a referendum on self-determination.
Spain, however, reaffirmed yesterday its intention
to hold a UN-supervised referendum in Spanish Sahara
next year. The Spanish ambassador to the UN indicated
his government was already organizing the referendum.
Algeria and Mauritania, the other two parties to
the dispute, are unlikely to support Hassan's proposal.
Although Algiers has carefully avoided taking a public
stand, it has privately indicated that it continues to
support a. referendum solution to the problem. As pres-
ident of the General Assembly this fall, Algerian For-
eign Minister Bouteflika will be in a position to give
important support to a resolution that calls for a refer-
endum in the Spanish territory.
Mauritania, for its part, recently indicated it
would accept international arbitration, although it
would undoubtedly insist that it be a party to any nego-
tiations and that its own claims to the territory be
considered.
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National Intelligence Bulletin
September 18, 1974
Indicators of Spain's growing military preoccupa-
tion with the situation in Spanish Sahara continue to
be provided by US defense attache sources in Rabat and
Madrid. A Moroccan source reported that Spanish F-5s
and F-4s are making regular reconnaissance flights along
the.Morocco - Spanish Sahara border. The US defense
attache in Madrid has confirmed. that 18 F-5s -plus addi-
tional crews--departed from their base at Moron to the
Canary Islands during mid-August, but he can not verify
the report that F-4s are located in the region.. A
Spanish source told the attache! that F-5s also are now
staging out of El Aaiun.
Madrid recently canceled a. joint US navy and Spanish
air force exercise, which was tentatively scheduled for
early November. The reasons cited for the cancellation
were the unavailability of F-5s due to "precautionary
dispersal" and "the African situation."
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National Intelligence Bulletin September 18, 1974
The US defense attache also notes that three army
generals have visited Spanish-controlled territories
adjacent to Morocco during the past month. The military
reportedly is considering reinforcing or relocating
ground forces in the Sahara in the face of Moroccan troop
relocations. There is no evidence that Spain has decided
to send significant reinforcements, although the attache
in Madrid thinks the Spanish may already have sent an
additional company of airborne troops to the Canaries.
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National Intelligence Bulletin September 18, 1974
MOZAMBIQUE
A :Large delegation from the Front for the Liberation
of Mozambique has arrived in Lourenco marques from the
front's headquarters in Dar es Salaam to prepare for the
swearing-in of Mozambique's transitional government. Ac-
cording to one press report, the new regime will be in-
stalled Friday.
The delegation, consisting of 72 front leaders, was
headed by Joaquim Chissano, the front's defense minister
and third-ranking official. Others in the group included
the front's deputy information director, and Janet Mond-
lane, the widow of the front's founder. They are all ex-
pected to be named to positions in the transitional gov-
ernment.
Front President Samora Machel and Vice President dos
Santos did not accompany the delegation. Their absence
has spurred speculation among diplomatic observers in
Dar es Salaam and Lourenco Marques that neither man will
take a direct part in the transitional government, and
that Chissano will be named prime minister. If Machel
and dos Santos remain behind the scenes, they will still
exercise strong influence during the important transi-
tional period.
The arrival of the delegation, was accompanied by
tight security measures, set up both by Portuguese forces
and troops of the front who arrived in Lourenco Marques
last: weekend. Authorities wished to avoid any repetition
of the violence that spread through the city last week,
following protests against the dominant position Lisbon
conceded to the front in the transitional government.
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National Intelligence Bulletin September 18, 1974
THAILAND
Thailand?s pace toward establishing a constitutional
government has again quickened after several delays. The
appointed national legislative assembly finished its
second reading of the draft constitution last weekend
and will probably complete the pro-forma third reading
at an early date. The constitution should be ready for
promulgation before October 14, one year after the ouster
of Thanom?s military government. The speed-up reflects
in part a desire to head off possible demonstrations in
connection with commemorative ceremonies scheduled for
the first anniversary of that event.
In a surprise move, the assembly increased the wait-
ing time between promulgation of the constitution and
elections to 120 days from the earlier anticipated 90
days. The prospect now is for elections to be held next
February for Thailand's first popularly elected govern-
ment since 1946.
The interim is likely to bring a burst of political
activity, with new political parties solidifying around
key prime ministerial aspirants. One such figure could
be Assembly Speaker Khukrit Prarmot, who is considered
close to the King.
Prime Minister Sanya is reluctant to serve again,
but he might be prevailed upon to run should no candi-
date emerge with a clear mandate from the elected as-
sembly. His more aggressive leadership of recent months
has strengthened his image as a hedge against the return
t
of military rule and has sparked some popular interes
in his continuing in office.
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National Intelligence Bulletin
INDIA-PAKISTAN
September 18, 1974
India and Pakistan have successfully completed an-
other round of talks designed to normalize relations be-
tween the two countries.
Following three days of negotiations in Islamabad,
the two sides last weekend signed agreements restoring
postal, travel, and telecommunications facilities sus-
pended since the Indo-Pakistani war of 1971, According
to an Indian official, the two countries also reached an
unannounced agreement to reduce hostile propaganda against
each other.
Both governments agreed to hold further talks to ex-
plore the possibility of establishing scientific, cul-
tural, and trade links, and resuming air travel and over-
flight rights. No dates were set for these discussions,
nor was there any mention of restoring diplomatic rela-
tions, also broken in 1971. Pakistan is ready to resume
diplomatic ties, but India first wants further progress
on other issues.
The effort to ease problems through negotiations
between the two countries began with a meeting two years
ago between Prime Ministers Gandhi and Bhutto in Simla,
India, and has resulted in several agreements. The
latest agreements demonstrate that both countries are
willing to continue negotiations, despite deeply ingrained
mutual suspicions and differences on a variety of issues.
Current sources of tension include:
--India's nuclear intentions;
--Pakistan's recent proposal at the UN for a South
Asia nuclear-weapons-free zone;
--India's efforts to reach an agreement with Kash-
miri leaders that. would further solidify Kashmir's
status as an Indian state;
--Pakistan's critical stance toward India's recent
tightening of its control over Sikkim;
--Islamabad's long-standing suspicion that there is
a Soviet-Indian-Afahan "flonspiracy" against Pakistan.
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National Intelligence Bulletin September 18, 1974
CHINA
The Chinese are building a modern integrated circuit
plant in Sian in central China,
The new plant will be the first integrated
circuit manufacturing facility in China with a complete
environmental and production control system. The Chinese
plan to supply the plant with production equipment from
Japan,.
The Chinese currently produce integrated circuits
in laboratories and departments of institutes, factories,
and universities but not in commercial quantities. The
presence of clean room facilities--an important feature
of modern semiconductor manufacturing facilities in the
West--would enable the Sian plant to produce integrated
circuits of a higher quality and more advanced design.
This capability, while not up to the latest Western
levels, would be a significant advance in China's current
production techniques. The Sian plant could become the
primary supplier of advanced integrated circuits in China,
serving both civilian and military requirements.
The Chinese may have already acquired specialized
production equipment from Japan to equip the plant. Auto-
mated testing equipment and fabrication devices have been
imported since 1970. Equipment used in the materials
processing stage of integrated circuit production was
imported earlier from Japan and has since been copied
by the Chinese.
Acquiring equipment for the plant on a piece-by-
piece basis, however, would still leave the Chinese with
some serious problems. The use of a mixture of domestic
and imported equipment will cause difficulties. In ad-
dition, integrated circuit production technology is ex-
tremely complex and the Chinese will encounter some major
obstacles in this area if outside assistance is not ob-
tained.
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National Intelligence Bulletin September 18, 1974
Egypt's Objectives in the Persian Gulf Area
Cairo has set in train a long-range strategy for
increasing its influence in the Arabian Peninsula -
Persian Gulf area.
President Sadat is coordinating his new diplomatic
moves with Saudi Arabia and, in most instances, seems
to have at least the promise of active Saudi cooperation.
Specifically, Sadat has begun to:
--Improve a long-hostile relationship with Iraq,
on the understanding that seemingly irreconcilable
political differences over Sadat's pursuit of a
negotiated settlement with Israel can be submerged
in the interest of economic cooperation.
--Establish an inter-Arab military force to sup-
plant or at least augment Iranian forces engaged
in Oman's guerrilla war against South Yemeni -
supported insurgents without sacrificing Egypt's
good relationship with Tehran.
-.-Improve relations with South Yemen, with a view
to diminishing Soviet influence there and estab-
lishing an Egyptian economic and military presence.
The military presence would be intended to maintain
Egyptian control over the southern approaches to
the Suez Canal.
Sadat's motivation for embarking on this project
at this time appears to be a dual one. For the near
term, he is interested in limiting Arab opposition to
his efforts to achieve an Arab-Israeli peace settlement;
this is particularly true with regard to Iraq. More im-
portantly, his strategy arises from a longer range con-
cern that Arab cohesion and Egyptian political strength
could be dissipated once a settlement is achieved.
Rather than a diversion from peace settlement efforts,
the strategy for southern Arabia is a supplemental ef-
fort to take out insurance for the post-settlement pe-
riod.
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Peace with Israel would remove a major unifying
force among the Arabs and thus one of the few guarantees
that Egypt could either retain its political dominance
in the Arab world or command substantial financial aid
from its neighbors. Sadat has some reason to fear that
the Arab center of gravity might shift from Egypt to the
oil. states of the Arabian Peninsula and that, without
a common enemy, few Arabs would look to Cairo as a polit-
ical leader and fewer still as a bulwark deserving eco-
noiTLi c sustenance.
By seeking an expanded Egyptian role in Arabian
Peninsula affairs and an enhanced degree of cooperation
with oil-wealthy states, Sadat may thus be attempting
to assure Egypt's continued importance in the Arab world.
Saudi involvement in the venture is an integral part of
Sadat's attempt to guarantee that Egypt can share a po-
sition of political preeminence with the Arab's finan-
cial giants.
At the same time, a future peace with Israel would
not be :Likely to alter what Sadat---and King Faysal to
an even greater extent--believe is the spread of Soviet-
inspired radical influences in the Arabian Peninsula.
In this area Egypt believes it can benefit both itself
and Saudi Arabia by providing not only a moderating in-
fluence, but in some cases a military force to contain
radicalism. Both are services the Saudis are less able
to provide.
Sadat is thus aiming for the political neutraliza-
tion of Iraq and South Yemen, both exporters of subver-
sion in the Persian Gulf. He hopes to accomplish this
through a program of economic and technical cooperation.
Its durability would be assured by the need of both
countries for the technical expertise Egypt can provide
and the financial backing Saudi Arabia might be per-
suaded to put forth.
At the same time, Egypt views the inter-Arab mili-
tary force it is proposing for Oman as a signal to Iraq,
and particularly to South Yemen, that Egypt means to
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back with tangible military moves its interest in a non-
radical southern Arabia. Cairo's desire to introduce an
Egyptian military contingent on Perim Island at the mouth
of the Red Sea and possibly to lease the Yemeni-owned
island has similar ends. More immediately, this move
would also improve Egypt's ability to control the ap-
proaches to the Suez Canal.
In this context, Sadat's efforts to induce the even-
tual removal of the Iranian presence in Oman are meant
as added insurance for the stability of any peace settle-
ment that might be reached there. Traditional Arab-
Persian antipathy virtually guarantees that a lingering
Iranian presence on the Arab side of the Persian Gulf
would itself be a spur to further subversive efforts by
radical Arabs.
Sadat cannot be blind to the difficulties he will
encounter in pursuit of this strategy. Its success, in
fact, depends on a number of preconditions that Sadat
himself cannot fully control.
The plan assumes, for instance, a resolution of the
Arab-Israeli conflict that would permit the necessary
diversion of Egyptian resources from what is now the
main battlefront. It also assumes the willingness of
other Arab states to look well beyond the immediate
horizon--a concept foreign to the Arab psychology--and
cooperate with Egypt in providing for long-term consid-
erations.
Iranian and Omani acquiescence in Sadat's plans for
Oman, as well as a degree of Soviet forebearance, are
also essential but particularly undependable ingredients
for the success of Sadat's strategy. Moscow will see
Sadat's moves in Iraq and South Yemen as aimed primarily
at. undermining Soviet influence there rather than chiefly
at. benefiting Egypt.
Conscious of the debacle caused by Nasir's inter-
vention in Yemen in the 1960s, Sadat intends not to con-
vert or subvert other Arab states but to seek coopera-
tion with them on a mutually beneficial basis. He does
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National Intelligence Bulletin September 18, 1974
not expect, for instance, that either Iraq or South Yemen
will perceptibly change its political color. Although
his present aim is to wean them away from overriding
Soviet influence, he may in the end come to consider
that a significant diminution in Moscow's role is neither
possible nor necessary to his strategy.
By the same token, his aims in Oman may ultimately
require not a displacement of the Iranians, but an aug-
mentation by an Arab force capable of imposing limits
on any further Iranian ambitions.
Sadat is prepared to make adjustments to differences
in political outlook, seeking instead--with both Arabs
and Soviets--non-political areas in which cooperation
could be fostered. The success of his strategy will thus
depend in large measure on his ability to encourage Arab
and Soviet understanding of this concept.
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National Intelligence Bulletin
September 18, 1974
Laos: US civilian contract pilot Emmet Kay, the only
American prisoner the Pathet Lao have admitted holding,
was released today after more than 16 months incarceration.
Kay was flown from Communist headquarters in Sam Neua via
British embassy aircraft to Vientiane where he was turned
over to US authorities. Kay's release sets the stage for
tomorrow's implementation of the first phase of prisoner
exchanges called for by the 1973 Lao accords. The initial
exchange will take place in Communist-controlled territory
on the Plaine des Jarres in north Laos. According to co-
alition government spokesmen, the non-Communist side will
hand over 7 Lao nationals and 173 North Vietnamese prison-
ers. For their part, the Pathet Lao will release 20 Lao
nationals (C)
South Korea: South Korean President Pak has reshuf-
f led 'his cabinet, replacing 9 of the 20 ministers. The
national construction minister was among those replaced--
he and a number of other officials have been implicated
publicly in a jewel-smuggling scandal. President Pak,
angered that the scandal has surfaced in the midst of
the current dispute with Japan, apparently hopes that
cabinet changes now will head off opposition plans to
make corruption an issue in the next national assembly
session.
:Lmprovement in the balance of payments, should stabilize
the yen over the next few months. According to press re-
ports, the loan would be redeposited in Japanese commer-
cial banks for a five-year period to help pay for imports.
An additional loan may be in the offing after November.
Japan: The yen strengthened markedly yesterday on
news of the $1-billion loan in Arab oil dollars to the
Bank of Japan. The currency closed at 296 to the dollar,
compared with the range of 301 to 303 in recent weeks.
The yen had fallen nearly 10 percent against the dollar
between May and late August as a result of higher oil
payments. The loan, plus the likelihood of a continuing
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National Intelligence Bulletin
September 18, 1974
France: France yesterday launched its fourth nuclear--
powered ballistic missile submarine--the Indomitable--at
Cherbourg shipyard. It is expected to loin the opera-
tional fleet in 1976,
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