CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R000800010032-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 19, 2016
• Document Release Date: November 30, 2001
• Sequence Number: 32
• Publication Date: September 30, 1971
• Content Type: BULL

 011C/ .. / '/\
~AVpf?ved 7pp,R7leas e 2p95106/09: CA- 85Tp~~75R00080001A0322- Secret
4lI ~
rro Treign Dhrem
DIRECTORATE OF
INTELLIGENCE
Central In tellz~en ce Bulletin
Slate, DIA declassification & release instructions on file
Secret
Ne 545
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Secret
'I'lle (;h;N'l'N.A 1, /N'I'h;IJ,I(:h;N(:I? I{ULLI 'I lilt is produces) by the
Director of Central Intellitcrtce to nuucl his responsibilities for providing
cnrrcnt iulelligencc bearing on Issues of national security to (Its I'residenl,
the National Security Council, ;ltd olhcr senior f;otrrnnwnt officials. It,
is produced ill consultation with the I)cp;u'lricnts of Slate and Uclcnse.
\Vllcrt, becaltse of (Its lime factor, aclcvluate consultation ?xith the clcpart-
tnenl of prinnvy concern is not feasible, ilen1s or portions lltcrcof ;it.(. pro-
docecl by CIA and enclosed in brackets.
Interpretations of intelligence infornuttiotl in this Inlitlic;;lion represent
immediate and hrclintillary Views which an, snbjcct to modification ?n the
light of further information and Ita1re cootplete analysis.
C:crtain inlclligellcc items ill this Imhlicatioll 1111W be designated specifically
for Ito Inrlher clissclnimtlioll. Other intelligrnco items Inay be dissenninaled
fnrlher, but only )It a need-to-know basis.
WARNING
This cloctIntent contains infornutlion affecting the national
defense of the United States, within the nccalling of 'h'ide
18, sections 793 and 791, of, tine US Code, as amended.
Its trall lnissiou or l-evc atioll of, its contents to or rc-
ccipt by all tlnattthorized person is probibited by late.
GROUP 1
Excluded from automalie
downgrading and
declassification
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SI CRF'1.'
No. 0234/71
30 September 1971
Central Intellzgence Bulletin
COMMUNIST CHINA: Political situation apparently is
still far from being resolved. (Page 1)
USSR-INDIA: Prime Minister Gandhi's visit to Moscow.
(Page 3
CHILE: Allende ready to risk showdown over compen-
sation for expropriated copper companies. (Page 5)
CEYLON: Insurgency may be renewed. (Page 8)
25X6
INDIA: Government loses Italian firm's bid to move
plant to India (Page 10)
ITALY: Government tactics on price freeze (Page 10)
25X1 C
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COMMUN:I:S'.l' CMINA: 'i'he eievenLh-hour decision to
cancel this ' - eveningrs National Day banquet suggests
that the current political situation is still far
from being resolved.
According to press reports, a Ministry of For-
eign Affairs spokesman announced that the banquet,
which usually features a speech by Premier Chou En-
lai and is well attended by the ruling politburo
members based in Peking, will be replaced by a one-
and-a-half hour reception sponsored by the Foreign
Ministry. The spokesman reportedly was unable to
affirm that Chou would speak at the reception; but
even if he does speak, it seems clear that Peking
may be departing from previous practice in order to
rationalize what, may be only a limited turnout of
top leaders. Since the banquet has not been at-
tended by either Mao Tse-tung or Defense Minister
Lin Piao for some years, Peking may be seeking to
conceal recent significant changes in the politburo
below the level ci Mao, Lin, and Chou.
Try impression that the prolonged power struggle
between moderate and radical forces on the politburo
has produced further breaks within the leadership
has been reinforced by Jack Chen, a regime publicist
in Hong Kong who recently circulated Peking's offi-
cial version of the current campaign against the
extremist "May 16 Corps." According to the US con-
sulate general, Chen is advising Western journalists
to focus on the possibility of leadership changes as
the cause for the unusual developments in China
rather than speculating on the death of Mao. Al-
though Chen's knowledge of current developments in
Peking is unconfirmed, his remarks, taken with the
continued public absence of several ranking military
leaders, an accumulation of rumors regarding inter-
necine quarreling at the top, and the cancellation
of tonight's banquet, all suggest that the power
struggle in Peking has entered a new and more seri-
ous phase which probably centers on the political
futures of China's top-ranking military leaders.
(continued)
30 Sep 71
Central Intelligence Bulletin
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 Whether this struggle has been precipitated by
the illness or sharp decline in the health or polit-
ical strength of Mao or heir-designate Lin Piao is
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25X1 C
25X1 C
Preparations are going forward foi low-key Na-
tional Day celebrations in Peking tomorrow.
Since mid-September, the Soviet press has been
cautious and noncommittal in treating internal af-
fairs in China. A brief TASS item on 25 September
indirectly refuted speculation that events in Peking
are somehow related to Sino-Soviet tensions. At a
public lecture in Moscow on 28 September, the Soviet
speaker conveyed the impression that the position of
the extremists in Peking has been weakened. (SECRET)
30 Sep 71
Centrel Intelligence Bulletin
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USSR-INDIA: Prime Minister Gandhi's visit to
the USSR seems to have been fairly successful.
She was accorded the unusual honor of being
housed in the Kremlin and of having the top three
Soviet leaders take part in the discussions. There
is still no conclusive explanation for the unusual
activity that surrounded the beginning of her visit
or for the inclusion of Brezhnev and Podgorny in
talks that were originally to have involved only
Kosygin. It may be that the Soviet leaders wanted
to present a united front to Mrs. Gandhi in order
to underscore their message on the need for re-
straint.
The main topic of discussion during the visit
was clearly the unsettled situation on the subcon-
tinent. As Kosygin's luncheon speech and the final
communique indicate, the Soviets, although taking
the Indian side, clearly have not abandoned their
policy of trying to prevent another Indo-Pakistani
war. Kosygin, for example, was quite harsh in his
criticism of West Pakistan's actions in the East
wing and placed most of the onus for easing the ref-
ugee problem on West Pakistan. He was equally firm,
however, in his opposition to another Indo-Pakistani
war, maintaining that the USSR would do its utmost
to prevent another conflict.
Mrs. Gandhi, for her part, took a somewhat
different tack. She reiterated India's opposition
to war as a means of resolving the refugee problem
and pleaded for concerted international assistance
to help India cope with the influx. She went on,
however, to express the hope that Soviet efforts to
encourage the Pakistanis to work for a political
solution would bear fruit and reminded her audience
that "peace cannot be obtained by waiting and
hoping."
In the communique the Indians joined with Mos-
cow in "demanding" that the West Pakistanis take
"urgent measures to reach a political solution" to
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their problem with East Bengal. The language is
virtually identical with the appeal to Yahya made
by Soviet President Podgorny last April, however,
and consequently cannot have been especially en-
couraging to the Indians. The Indians also agreed
that all problems at issue in relations between
countries should be settled by "peaceful means."
Both parties agreed to further exchanges of views
on the East Bengal problem.
Another important topic on the agenda doubtless
was China. Just prior to Mrs. Gandhi's visit to the
USSR, Moscow sent a special envoy to New Delhi to
discuss future Soviet and Indian strategy at the UN.
Moscow is particularly interested in securing India's
cooperation against China should Peking gain admit-
tance to the UN and in getting a better reading of
recent Indian moves to improve Sino-Indian relations.
The communique indicates that the two sides
also discussed Indian Ocec.n matters. The Soviets
agreed with the Indians to study the question of
declaring the Indian Ocean "a zone of peace." The
two sides also agreed to establish a joint commis-
sion for economic, scientific, and technical coopera-
tion. Both Brezhnev and Kosygin accepted Mrs.
Gandhi's invitation to visit India, but no date was
fixed. (CONFIDENTIAL)
30 Sep 71
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CHILE: President Allende's very hard stand on
expropriated Kennecott and Anaconda copper operations
in Chile indicates that he is prepared to risk a
showdown with the US Government over compensation.
Allende's charge on 28 September that the com-
panies owe Chile $774 million in "excessive profits"
ensures a substantial negative indemnification bal-
ance when added to his government's excessive claim
of about $1 billion already made against the compa-
nies for alleged equipment deficiencies and mine
damage., The companies' remaining 49-percent inter-
est in their extensive Chilean copper operations was
taken over in July under a constitutional reform,
but Allende's promise to negotiate compensation has
not been kept.
The final reckoning will be announced on 15
October when the Chilean controller general, nomi-
nally a political independent, reveals his calcula-
tion of the net worth of the companies' Chilean
holdings. The announced claims will leave a nega-
tive balance that would more than cancel debts still
due the companies for the purchase of their first
51-percent interest during the Fr--' _? 1,linistration.
Such a balance could also be used by Ail`nde to
justify reneging on his promise that Chile would
honor foreign debts incurred by the companies in
extensive copper production expansion programs only
recently completed. Finally, it could trigger claims
for extensive insurance the companies hold with the
Overseas Private Investment Corporation.
The Cerro Corporation probably will receive
compensation for its mine that started producing a
few months ago, as a gesture to indicate to poten-
tial sources of international credits that the Al-
lende government is reasonable and selective in its
dealings with investors. The $56-million compensa-
tion--already negotiated but not signed--would be a
small price for Chile to pay for Cerro's agreement
to serve as purchasing agent for equiprent necessary
to maintain the larger companies' expropriated prop-
erties.
(continued)
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Allende has successfully nurtured substdntial
international cordiality toward his government as a
"worthy socialist experiment," although this has not
brought Chile the credits so desperately needed to
bail it out of increasing economic difficulties.
Allende apparently has decided that a h