(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R000600050069-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 12, 2016
• Document Release Date: February 12, 2001
• Sequence Number: 69
• Publication Date: November 16, 1973
• Content Type: CABLE

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r1LA BI'IEF 073.
ITEMS MARKED & HAVE BEEN COORDINATED WITH THE DEPARTMENTS
OF STATE AND DEFENSE.
1. ARAB STATES - ISRAEL: THE IMPLEMENTATION OF
THE CEASE-FIRE AGREEMENT BEGAN ON 15 NOVEMBER, WITH NO
SIGNIFICANT PROBLEMS DEVELOPING.
THE FIRST STAGE OF THE PRISONER-OF-WAR EXCHANGE
TOOK PLACE WITH THE TRANSFER OF 26 ISRAELI WOUNDED
PRISONERS AND OVER 400 EGYPTIANS. ACCORDING TO A
PRESS ACCOUNT, EGYPT WAS UNABLE TO ORGANIZE THE REPATRIATION
OF A LARGER NUMBER OF ISRAELI PRISONERS. NO ADVERSE ISRAELI
REACTION TO CAIRO'S DELAY WAS REPORTED.
CONTINGENTS OF THE UNITED NATIONS EMERGENCY
FORCE {UNEF} TOOK CONTROL OF THE ISRAELI CHECKPOINTS
AT KILOMETERS 101 AND 119. A UNEF PRESS SPOKESMAN
CLAIMED THAT THERE ARE NO OTHER ISRAELI CHECKPOINTS
ON THE CAIRO-SUEZ ROAD. TRUCKS CARRYING RELIEF SUP-
PLIES TO SUEZ CITY PASSED THROUGH THE CHECKPOINT AT
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KILOMETER 101 ON 15 NOVEMBER. AN INTERNATIONAL RED CROSS
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SPOKESMAN HAS ALSO ANNOUNCED THAT THE EVACUATION OF
MORE THAN 1,000 SICK AND WOUNDED EGYPTIAN CIVILIANS
FROM SUEZ CITY WILL BEGIN ON 16 "IOVEMBER.
ACCORDI-SIG-4-O-P-RESS._REP0RTS -- A?-bI--DEFENSE
MINISTER D-A-Y-AN--S-AID--THAT--TEI AWTU HAD MADE ^FAR -@FACHTNG.^.
PROP-OS At-S_-T 4-- -A. A s c U SI N C-L{}D-N.6-- A - E--Of- - PR I S Of4tR S'
AN-D---4F F FD TO -1- ,
D--E-IiI-n- -IANS_ FROM
NEWt*--C-AP-T:11RE4-"E-AS---9N? THE GO'LAi4'?HE-1GH1'S TO RETURN TO
THFTR HOMFC MF; AU"IL".-I.SRgELI -FORfl&N-_MIN.I.ST.ER...E0 AN AND
S EER E z~ v r c nl ~- Q w I I ;,'ri E-Iifi'7~T E`UN QYtt D- A--SfiE E I-A~__UQI N.Y O.
EGYPTIANS HAVE GENERALLY BEEN SATISFIED WITH
THE EGYPTIAN-SRAELI'DECISION OF WEDNESDAY TO PROCEED
WITH THE IMPLEMENTATION OF FOUR ELEMENTS OF THE SIX-
POINT AGREEMENT OF 11 NOVEMBER. THE NEW, BUT RESTRAINED
OPTIMISM ENDS A PERIOD OF GLOOM AND FRUSTRATION OVER WHAT
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EGYPTIANS CONSIDERED ISRAELI OBSTRUCTIONISM AND A
BREAKDOWN OF NEGOTIATIONS.
R - ' . `
//THE US INTERESTS SECTION BELIEVES THAT//THERE IS
NO REAL CHALLENGE TO SADAT'S LEADERSHIP AND//REPORTS
THAT//HIS POPULARITY APPEARS TO BE HIGH. SOME UN-
HAPPINESS EXISTS AMONG UNIVERSITY STUDENTS, AND THERE
IS MUTTERING BY VOUNGER OFFICERS, WHO COMPLAIN THAT
THE CEASE-FIRE WAS ENTERED INTO FOR POLITICAL, RATHER
THAN MILITARY REASONS. NEVERTHELESS, EGYPT APPEARS
READY TO GIVE SADAT'S POLITICAL AND DIPLOMATIC EF-
FORTS A CHANCE TO SUCCEED.
RADIO TRIPOLI ON 15 NOVEMBER CARRIED WHAT WAS DE-
SCRIBED AS A CABLE SENT BY PRESIDENT QADHAFI TO
PRESIDENT SADAT'DEALING WITH THE ARAB-ISRAELI WAR
AND ITS AFTERMATH. QADHAFI'S MESSAGE BITTERLY CON-
DEMNED SADAT'S ACCEPTANCE OF THE CEASE-FIRE; THE.
WAR, QADHAFI SAID, SHOULD HAVE BEEN CONTINUED "EVEN
IF IT DEVELOPED INTO HAND-TO-HAND FIGHTING."
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TITO-BREZHNEV TALKS IN KIEV BROKE NO NEW GROUND ON THE
MIDDLE EAST. BOTH LEADERS RECOGNIZED THE IMPORTANCE OF
OBTAINING A MIDPDLE EAST SETTLEMENT AND REAFFIRMED THEIR
READINESS TO MAKE EFFORTS IN THAT DIRECTION. THE COMMUNIQUE AC-
CUSED ISRAEL OF "CRUDE FLOUTING" OF THE UN CEASE-FIRE
RESOLUTIONS AND NOTED THE "DANGEROUS CONSEQUENCES" OF
ISRAEL'S "ADVENTUROUS ACTIONS." MEANWHILE, IN MOSCOW,
PREMIER KOSYGIN TOLD A GUINEAN DELEGATION THAT THE
SOVIETS WILL CONTINUE TO GIVE THE "UTMOST ASSISTANCE"
TO IMPLEMENT UN RESOLUTIONS ON THE MIDDLE EAST.
PRAVDA ALSO EMPHASIZED MOSCOW'S CONTINUING ROLE IN
ACHIEVING A MIDDLE EAST SETTLEMENT.// THE SOVIET WEEKLY
NEW TIMES TOUCHED ON THE SENSITIVE SUBJECT OF ARAB
FINANCIAL HOLDINGS IN THE WEST BY NOTING THAT SUBSTAN-
TIAL SUMS ARE HELD IN US AND WEST EUROPEAN BANKS. IT
SAID "IF THE ARABS WITHDREW ONLY HALF OF THEIR INVEST-
MENTS, IT WOULD LEAD TO A SERIOUS UPHEAVAL OF THE
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FINANCES OF MANY WEST EUROPEAN COUNTRIES." THE US
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WAS NOT EXPLICITLY MENTIONED IN THIS REGARD. ALTHOUGH
MOSCOW HAS ENDORSED THE USE OF ARAB OIL, IT HAS NOT
MADE SUCH EXPLICIT REFERENCE TO THE SIGNIFICANCE OF
ARAB FINANCIAL RESERVES.//
//THE FRENCH FOREIGN MINISTRY HAS REJECTED THE
INITIAL DRAFT OF THE EC'S PROPOSED JOINT DEMARCHE TO
THE ARABS. PRESUMABLY PARIS OBJECTED TO THE FIRST
PARAGRAPH OF THE PROPOSED TEXT, WHICH NOTED THAT
"RECENT MEASURES TAKEN BY ARAB STATES ARE OF SUCH A
NATURE AS TO AFFECT THE EUROPEAN COMMUNITY--AND CER-
TAIN OF ITS MEMBERS IN PARTICULAR--TO DISTURB PUBLIC
OPINION, AND TO HAVE A NEGATIVE EFFECT ON EUROPEAN-
ARAB RELATIONS." THE DRAFT WILL PROBABLY BE REVIEWED
AGAIN, AND MAY BE SOFTENED, AT THE EC FOREIGN MINIS-
TERS' MEETING SCHEDULED FOR 20 NOVEMBER IN COPENHAGEN.//
FURTHER PROGRESS HAS BEEN MADE AT THE UN IN
ASSEMBLING THE PEACEKEEPING FORCE. T-IE UN EMERGENCY
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FORCE NOW HAS APPROXIMATELY 2,200 TROOPS IN THE MID-
DLE EAST AND ENOUGH PLEDGES TO BRING IT CLOSE TO THE
71000-MAN GOAL. NEGOTIATIONS HAVE ALSO REACHED TENTA-
TIVE AGREEMENT ON A SPECIAL ASSESSMENT SCALE FOR THE
FINANCING OF THE EMERGENCY FORCE. UNEF, HOWEVER, IS
STILL WITHOUT ADEQUATE SUPPLIES OR LOGISTIC SUPPORT
FOR ITS RAPIDLY GROWING FORCES. {SECRET}
&2. SYRIA: INTENSE EFFORTS ARE UNDER WAY TO RE-
STORE SYRIA'S ELECTRIC POWER CAPACITY, ROUGHLY HALF
OF WHICH WAS KNOCKED OUT BY ISRAELI AIR STRIKES.
PRIORITY HAS APPARENTLY BEEN ASSIGNED TO REPAIRING
THE CZECH-BUILT POWERPLANT AT QATTINAH, THE COUNTRY'S
LARGEST POWER FACILITY. THIS PLANT SERVES THE IM-
PORTANT AREAS OF HIMS AND DAMASCUS. CZECH SPECIAL-
ISTS HAVE ARRIVED AT QATTINAH IN RESPONSE TO SYRIAN
APPEALS, AND DAMASCUS CLAIMS THAT THE PLANT WILL BE
FUNCTIONING BY ABOUT 18 NOVEMBER, ALTHOUGH PROBABLY
AT PARTIAL CAPACITY. PENDING REPAIR OF ITS MAJOR
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PLANTS, SYRIA HAS URGENTLY REQUESTED BOTH MOBILE AND
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STATIONARY DIESEL GENERATORS FROM CZECHOSLOVAKIA AND
EAST GERMANY. {SECRET}
3. SAUDI ARABIA: MOSCOW'S EFFUSIVE PRAISE OF KING
FAYSAL'S CONGRATULATORY MESSAGE ON THE OCCASION OF THE ANNIVERSARY
OF THE OCTOBER REVOLUTION--THE FIRST SUCH MESSAGE EVER FROM
FAYSAL--IS NOT LIKELY TO SOFTEN RIYADH'S BASICALLY HOSTILE VIEW
OF THE SOVIET UNION. THE UNATTRIBUTED COMMENTARY, CARRIED ON
MOSCOW RADIO TO THE ARAB WORLD ON 14 NOVEMBER, EXPRESSED THE
HOPE THAT THE "FRIENDLY MESSAGE" FROM THE SAUDI MONARCH
WOULD HELP TO "CONSOLIDATE ARAB-SOVIET RELATIONS."
//THE TIMING OF FAYSAL'S MESSAGE, COINCIDING WITH SECRETARY
KISSINGER`S VISIT TO SAUDI ARABIA LAST WEEK, SUGGESTS THAT IT
WAS INTENDED MORE AS A JIBE AT THE UNITED STATES THAN A SAUDI
INITIATIVE TO DEFROST SAUDI-SOVIET RELATIONS//DURING THE HEIGHT
OF THE MIDDLE 'EAST WAR, THERE WERE A FE!J REPORTS INDICATING THE
SAUDIS WERE CONSIDERING THE ESTABLISHMENT OF DIPLOMATIC RELATIONS
WITH THE USSR, BUT THERE HAVE BEEN NO SUCH REPORTS SINCE THE
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CEASE-FIRE. SOVIET SUPPORT OF THE ARABS DURING THE WAR IS UNILIKELY
TO HAVE MODIFIED FAYSAL'S VIEW THAT MARXISM AND ZIONISM ARE TWIN
THREADS OF THE SAME CONSPIRACY. {CONFIDENTIAL}
4. MOSCOW HAS ANNOUNCED THAT A PARTY-GOVERNMENT
DELEGATION FROM THE NEWLY PROCLAIMED REPUBLIC OF
GUINEA-BISSAU {PORTUGUESE GUINEA} WILL ARRIVE IN
MOSCOW ON AN "OFFICIAL" VISIT ON 19 NOVEMBER. THE
DELEGATION WILL BE LED BY LUIS CABRAL, LEADER OF THE
INSURGENT GROUP THAT HAS BEEN CHALLENGING PORTUGUESE
CONTROL AND HEAD OF THE NEW GOVERNMENT.
MOSCOW RECOGNIZED THE REBEL GOVERNMENT ON 1
OCTOBER, A FEW DAYS AFTER IT PROCLAIMED INDEPENDENCE.
THE VISIT WILL GIVE MOSCOW AN OPPORTUNITY TO DISPLAY
ITS ANTI-IMPERIALIST CREDENTIALS AND DEMONSTRATE
THAT DETENTE HAS NOT CAUSED IT TO LOSE ITS REVOLUTION-
ARY FERVOR. THE USSR HAS EXPRESSED ITS WILLINGNESS
TO ESTABLISH DIPLOMATIC TIES WITH THE NEW REPUBLIC,
AND THE VISIT MAY BE THE OCCASION FOR AN ANNOUNCE-
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MENT ON THIS SUBJECT. IN ADDITION, MILITARY AID
WILL PROBABLY BE DISCUSSED. THE USSR IS THE LARGEST
SOURCE OF MILITARY EQUIPMENT FOR THE INSURGENTS.
{CONFIDENTIAL} E-2 IMPDETH
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EAST ASIA BRIEF 1173.
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1. CHINA: CHINA IS DEMONSTRATING CONCERN OVER RISING TENSIONS
IN PAKISTAN, AFGHANISTAN, AND TO A LESSER EXTENT IRAN. THE NEW DAOUD
GOVERNMENT'S SUPPORT FOR AN INDEPENDENT STATE OF PUSHTUN HAS STRAINED
AFGHAN RELATIONS WITH PAKISTAN, AND DAOUD'S ENCOURAGEMENT OF DISSI-
DENT BALUCHI TRIBESMEN HAS CAUSED TROUBLE WITH IRAN. AS A RESULT OF
RECENT BORDER SKIRMISHING, BOTH AFGHANISTAN AND IRAN HAVE REINFORCED
THEIR FORCES ON THE AFGHAN-IRANIAN FRONTIER. PAKISTAN HAS MOVED
REGULAR TROOPS TO THE BORDER AND HAS'ALERTED ITS AIR FORCE/ KABUL
REPORTEDLY HAS ALSO INCREASED ITS MILITARY PREPAREDNESS.
CHINA HAS CLOSE TIES WITH PAKISTAN AND A WARMI1G FRIENDSHIP WITH
TEHRAN. PEKING MADE STRONG COMMITMENTS TO PAKISTANI TERRITORIAL IN-
TEGRITY FOLLOWING PAKISTAN'S DISMEMBERMENT IN LATE 1971, IN PART TO
DISCOURAGE EXTERNAL SUPPORT FOR TRIBAL SEPARATISTS.
CHINESE LEADERS APPEAR TO BE CONVINCED THAT TENSIONS IN THE RE-
GION ARE A DIRECT RESULT OF AN AGGRESSIVE SOVIET ATTEMPT TO IMPROVE
MOSCOW'S STRATEGIC POSITION IN SOUTH ASIA. THE CHINESE HAVE CATA-
L0G1JED THESE SOVIET SINS TO A LONG LIST OF FOREIGN OFFICIALS. CHINESE
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PEKING MAY WELL HAVE PRI'ItATELY WELCOMED THE ENTRY OF A US NAVAL TASK
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NEERED THE COUP IN AFGHANISTAN THIS SUMMER, AND THAT THEY ACTIVELY
SUPPORT SEPARATIST OPERATIONS. CHOU EN-LAI REPORTEDLY WENT SO-FAR AS
TO TELL RECENT CANADIAN VISITORS THAT MOSCOW INTENDS TO UNITE BALUCHI
TRIBESMEN LIVING IN CONTIGUOUS AREAS OF THE THREE COUNTRIES WITH THOSE
IN THE USSR TO FORM A NEW STATE DOMINATED BY MOSCOIII.
ALTHOUGH PEKINGS ASSETS IN THE REGION ARE LIMITED AND THE SIT-
UATION ALONG THE FRONTIERS SEEMS FAR SHORT OF OPEN CONFLICT, THE
CHINESE CONTINUE TO MAKE REPRESENTATIONS TO SENIOR FOREIGN DIPLOMATS
AND OFFICIALS AND TO URGE IRAN AND PAKISTAN TO ESTABLISH CLOSER
RELATIONS. PEKING ALSO IS SUPPORTING TEHRAN IN ITS AIMS TO CONSOLI-
DATE THE PRIMACY OF IRAN OVER THE PERSIAN GULF IN AN EFFORT TO CURB
SOVIET INFLUENCE. IN ADDITION, THE CHINESE MADE A QUITE FRIENDLY
GESTURE TO TURKEY WHEN CHOU HIMSELF RECENTLY ATTENDED A TURKISH NA-
TIONAL DAY RECEPTION IN PEKING.
IN THE INTEREST OF MAINTAINING A ROUGH REGIONAL POWER BALANCE,
OFFICIALS CLAIM THAT THE SOVIETS INTEND TO GAIN INFLUENCE IN THE AREA
AND ESTABLISH PERMANENT ACCESS TO THE ARABIAN SEA, THAT THEY ENGI-
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FORCE IN THE INDIAN OCEAN AREA AS A RESTRAINING INFLUENCE ON MOSCOW.
THE CHINESE PUBLIC REACTION WAS TEPID AND INDIRECT. IT AMOUNTED TO
REPLAYING A TANZANIAN PROTEST AND A CEYLONESE ARTICLE PROTESTING THE
PRESENCE OF BOTH SOVIET AND AMERICAN WARSHIPS IN THE INDIAN OCEAN.//
A REPORTED SOVIET ARMS GRANT TO KABUL COULD FURTHER COMPLICATE
PEKING.S POSITION. ALTHOUGH THE ILL-TRAINED AFGHAN ARMY WOULD BE
NO' MATCH FOR PAKISTAN, SUBSTANTIAL SOVIET ARMS SHIPMENTS COULD TRIGGER
A PAKISTANI REQUEST FOR AID THAT PEKING WOULD FIND DIFFICULT TO TURN
DOWN. A CHINESE GRANT TO PAKISTAN, IN TURN, COULD DAMAGE PROSPECTS FOR
AN EARLY CHINESE RAPPROCHEMENT WITH INDIA AND POSSIBLY LEAD TO AN
INDIAN REQUEST FOR MATCHING AID FROM MOSCOW. {CONFIDENTIAL}
2. CHINA - JAPAN: THE CHINESE ARE STILL PUSHING THE JAPANESE TO
CONCLUDE A CIVIL AVIATION AGREEMENT, THE MOST IMPORTANT AND MOST
TROUBLESOME OF THE FOUR BILATERAL AGREEMENTS NOW BEING NEGOTIATED.
AFTER MAKING TOUGH DEMANDS AT THE OUTSET OF THE NEGOTIATIONS EARLIER
THIS YEAR, PEKING HAS NOW REDUCED ITS REQUIREMENTS TO TWORI: THAT
TOKYO FORCE TAIPEI TO CHANGE THE NAME OF CHINA AIRLINES AND THAT THE
PLANES CEASE FLYING THE NATIONALIST FLAG. THE JAPANESE ARE PREPARED
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TO TAIWAN.
ACCEPTANCE OF THL:3E DEMANDS WOULD ALLOW THE SUBSTANCE OF JAPAN'S
LUCRATIVE AIR TRAFFIC TO CONTINUE, ALTERING ONLY THE FORM OF THE
INTERCHANGE. IN FACT, CHINA MAY BELIEVE ITS DEMANDS ARE SO REASONABLE
THAT TOKYO COULD REJECT THEM ONLY AT THE RISK OF APPEARING INFLEXIBLE.
THE JAPANESE HAVE GONE THROUGH THE MOTIONS OF ACCEPTING PEKING'S
PROPOSAL AND HAVE PRESENTED IT TO TAIPEI. HERE, OF COURSE, IS THE
STICKING POINT. TAIPEI REFUSES TO ACCEPT THIS ARRANGEMENT FOf THE
SAME REASON THAT IT APPEALS TO PEKING: TAIWAN'S INTERNATIONAL STATUS
WOULD BE REDUCED YET ANOTHER NOTCH. CONVINCED THAT TOKYO IS MORE IN-
TERESTED IN THE IMMEDIATE PROFITS FROM ITS AIR LINKS WITH TAIWAN THAN
ANY LONG-RANGE GAINS FROM NEW TIES WITH PEKING, THE NATIONALISTS HAVE
TOLD THE JAPANESE THAT.THEY WILL BREAK OFF ALL PRESENT FLIGHTS RATHER
THAN CHANGE THE NAME OF THEIR AIRLINE OR FLAG ON ITS PLANES.
THE TANAKA GOVERNMENT IS CONCERNED THAT IF IT TWISTS TAIPEI'S
ARM, THE PRO-TAIWAN FACTION IN THE RULING LIBERAL DEMOCRATIC PARTY
WOULD BE ROUSED TO ACTIVE OPPOSITION. GIVEN TANAKA'S MANY OTHER
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DOMESTIC PROBLEMS, HE IS UNWILLING TO GO ALL-OUT AT THIS TIME TO GET
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AN AIR AGREEMENT WITH PEKING. I FACT, THE JAPANESE HAVE ASKED PEKING
TO UNDERSTAND THEIR "DELICATE" POSITION, AND THE CHINESE HAVE NOT
PRESSED TOKYO.AS HARD AS THEY MIGHT HAVE-
THE RESULT IS CONTINUING STALEMATE. IN SEPTEMBER, PUKING PROPOSED
AN EXCHANGE OF VISITS BETWEEN JAPANESE AND CHINESE FOREIGN MINISTERS
BEFORE THE END.OF 1973. IN THE CIRCUMSTANCES, EVEN IF SUCH VISITS COME
OFF, IT IS DIFFICULT TO IMAGINE THAT AN AVIATION AGREEMENT COULD BE
CONCLUDED. IT IS MORE LIKELY THAT A TRADE AGREEMENT WOULD BE CONCLUDED.
THE LACK OF URGENCY IN SINO-JAPANESE NEGOTIATIONS IS IN LARGE
MEASURE A RESULT OF THE RELATIVE SATISFACTION OF BOTH SIDES WITH THE
PRESENT ARRANGEMENT. CHINAS KEY DIPLOMATIC GOAL WAS ACCOMPLISHED LAST
FALL WHEN TOKYO BROKE OFF AMBASSADORIAL RELATIONS WITH TAIWAN AND
RECOGNIZED PEKING. NEITHER PEKING NOR TOKYO IS DISPLEASED WITH THE
LEVEL OF ECONOMIC INTERCHANGE. DESPITE THE ABSENCE OF THE FORMAL
ACCORDS FORESEEN IN 1972, TRADE BETWEEN THE TWO COUNTRIES WILL EXPAND
TO OVER *2 BILLION IN 1973, OVER TWICE THE AMOUNT OF THE PREVIOUS
YEAR. {CONFII" NTIAL}
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3. JAPAN: A BALANCE-OF-PAYMENTS DEFICIT OF ''.MOST $11 BILLION
WAS REGISTERED IN OCTOBER AS THE TRADE SURPLUS CONTINUED TO SHRINK.
OVERALL IMPORTS WERE 7? PERCENT HIGHER THAN A YEAR AGO AND IMPORTS
FROM THE US GREW EVEN FASTER. AS A RESULT, THE MONTHLY JAPANESE
TRADE SURPLUS WITH THE US FELL TO $60 MILLION, COMPAR'"D TO $360
MILLION IN OCTOBER L972, AND TO ONLY $120 MILLION ON A GLOBAL BASIS-
LONG-TERM CAPITAL OUTFLOWS DECLINED IN OCTOBER, BUT STILL REMAINED
ABOVE $500 MILLION. JAPAN'S OVERALL BALANCE-OF-PAYMENTS DEFICIT SO
.FAR THIS YEAR AMOUNTS TO ABOUT $7 BILLION. {CONFIDENTIAL}
4. SOUTH KOREA: STUDENT UNREST CONTINUES UNABATED WITH DEMON-
STRATIONS ACCOMPANIED BY SOME ARRESTS OCCURRING AT SEVERAL SEOUL
-CAMPIUSES ON 16 NOVEMBER. KOREA UNIVERSITY H:;S SUSPENDED CLASSES FOR
A WEEK FOLLOWING A CLASH BETWEEN 21000 STUDENTS AND POLICE ON 15
NOVEMBER. {CONFIDENTIAL}
5. ARAB STATES - ISRAEL: THE IMPLEMENTATION OF THE CEASE-FIRE
AGREEMENT BEGAN ON 15 NOVEMBER, WITH NO SIGNIFICANT PROBLEMS DEVEL-
OPING.
THE: FIRST STAGE OF THE PRISONER-OF-WAR EXCHANGE TOOK PLACE WITH
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THE TRANSFER OF 26 ISRAELI WOUNDED PRISONERS AND OVER 400 EGYPTIANS.
ACCORDING TO A PRESS ACCOUNT, EGYPT WAS UNABLE TO ORGANIZE THE REPA-
TRIATION OF A LARGER NUMBER OF ISRAELI PRISONERS. NO ADVERSE ISRAELI
REACTION TO CAIRO'S DELAY WAS REPORTED.
CONTINGENTS OF THE UNITED NATIONS EMERGENCY FORCE {UNEF} TOOK
CONTROL OF THE ISRAELI CHECKPOINTS AT KILOMETERS 101 AND 119. A UNEF
PRESS SPOKESMAN CLAIMED THAT THERE ARE NO OTHER ISRAELI CHECKPOINTS
ON THE CAIRO-SUEZ ROAD. TRUCKS CARRYING RELIEF SUPPLIES TO SUEZ CITY
PASSED THROUGH THE CHECKPOINT AT KILOMETER 101 ON 15 NOVEMBER. AN
INTERNATIONAL RED CROSS SPOKESMAN HAS ALSO ANNOUNCED THAT THE EVACUA-
TION OF MORE THAN 1,000 SICK AND WOUNDED EGYPTIAN CIVILIANS FROM SUEZ
CITY WILL BEGIN ON 16 NOVEMBER.
ACCORDING TO PRESS REPORTS, ISRAELI DEFENSE MINISTER DAYAN SAID
THAT TEL AVIV HAD i1ADE "FAR REACHING" PROPOSALS TO DAMASCUS INCLUDING
AN EXCHANGE OF PRISONERS AND OFFERED TO ALLOW ABOUT 15,000 DISPLACED
CIVILIANS FROM NEWLY CAPTURED AREAS ON THE GOLAN HEIGHTS TO RETURN TO
THEIR HOMES. MEANWHILE, ISRAELI FOREIGN MINISTER EBAN AND SECRETARY-
GENERAL WALDHEIM AT THE UN AND A SPECIAL UN ENVOY IN DAMASCUS ARE
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EGYPTIANS HAVE GENERALLY BEEN SATISFIED WITH THE EGYPTIAN-ISRAELI
DECISION OF WEDNESDAY TO PROCEED WITH THE IMPLEMENTATION OF FOUR
ELEMENTS OF THE SIX-POINT AGREEMENT OF 11 NOVEMBER. THE NEW, BUT
RESTRAINED OPTIMISM ENDS A PERIOD OF GLOOM AND FRUSTRATION OVER WHAT
EGYPTIANS CONSIDERED ISRAELI OBSTRUCTIONISM AND A BREAKDOWN OF NE-
GOTIATIONS.
//THE US INTERESTS SECTION BELIEVES THAT//THERE IS NO REAL
CHALLENGE TO SADAT'S LEADERSHIP AND//REPORTS THAT//HIS POPULARITY
APPEARS TO BE HIGH. SOME UNHAPPINESS EXISTS AMONG UNIVERSITY STUDENTS,
AND THERE IS MUTTERING BY YOUNGER OFFICERS, WHO COMPLAIN THAT THE
CEASE-FIRE WAS ENTERED INTO FOR POLITICAL- RATHER THAN MILITARY
REASONS. NEVERTHELESS, EGYPT APPEARS READY TO GIVE SADAT'S POLITICAL
AND DIPLOMATIC EFFORTS A CHANCE TO SUCCEED.
RADIO TRIPOLI ON 15 NOVEMBER CARRIED WHAT WAS DESCRIBED AS A
CABLE SENT BY PRESIDENT' QADHAFI TO PRESIDENT SADAT DEALING WITH THE
ARAB-ISRAELI WAR AND ITS AFTERMATH. QADHAFI'S MESSAGE BITTERLY CON-
DEMNED SADAT'S ACCEPTANCE OF THE. CEASE-FIRE; THE WAR, QADHAFI SAID,
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SHOULD HAVE BEEN CONTINUED "EVEN IF IT DEVELOPED INTO HAND-TO-HAND
FIGHTING."
THE COMMUNIQUE ISSUED ON 15 NOVEMBER FOLLOWING THE TITO-BREZHNEV
TALKS IN KIEV BROKE NO NEW GROUND-ON THE MIDDLE EAST. BOTH LEADERS'
RECOGNIZED THE IMPORTANCE 'OF OBTAINING A MIDDLE EAST SETTLEMENT AND
REAFFIRMED THEIR READINESS TO, MAKE EFFORTS IN THAT DIRECTION. THE
COMMUNIQUE ACCUSED ISRAEL OF "CRUDE FLOUTING" OF THE UN CEASE-FIRE
RESOLUTIONS'AND NOTED THE "DANGEROUS CONSEQUENCE S^ OF ISRAEL'S
"ADVENTUROUS ACTIONS." MEANWHILE, IN MOSCOW, PREMIER KOSYGIN TOLD A
GUINEAN' DELEGATION THAT THE SOVIETS WILL CONTINUE TO GIVE THE "UTMOST
ASSISTANCE:" TO IMPLEMENT UN RESOLUTIONS ON THE MIDDLE EAST.
PRAVDA ALSO EMPHASIZED MOSCOW'S -CONTINUING ROLE IN ACHIEVING A'
MIDDLE EAST SETTLEMENT.//. THE SOVIET WEEKLY NEW TIMES TOUCHED ON THE
SENSITIVE SUBJECT OF ARAB FINANCIAL HOLDINGS IN THE WEST BY NOTING
THAT SUBSTANTIAL SUMS ARE HELD IN US AND WEST EUROPEAN BANKS. IT
SAID "IF THE ARABS WITHDREW ONLY HALF OF THEIR INVESTMENTS, IT WOULD
LEAD TO A SERIOUS UPHEAVAL- OF THE FINANCES OF MANY WEST EUROPEAN
COUNTRIES." THE US-WAS NOT EXPLICITLY MENTIONED IN THIS REGARD.
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NOVEMBER 197111113
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ITEMS MARKED & HAVE BEEN COORDINATED WITH THE DEPARTMENTS OF STATE
ANi DEFENSE.
&1.//ARGENTINA: PRESIDENT PERON HAS FAVORED THE RIGHT IN
REORGANIUZING HIS JUSTICIALIST PARTY.//
//PERON ANNOUNCED LAST WEEK THAT THE PERONIST MOVEMENT WAS
FORMALIZING ITS STRUCTURE AND HE OUTLINED THE NEW ORGANIZATIONAL
^UIHIERARCHY, NAMING TOP POLITICAL ADVISERS. MISSING FROM THE
LIST WR.S A PROMINENT PERONIST YOUTH LEADER, WHO APPARENTLY STILL
HOLDS THE EXECUTIVE POST OF LIAISON OFFICER BETWEEN THE GOVERN-
MENT AND VARIOUS POLITICAL PARTIES. PERON, UNDER PRESSURE FROM
RIGHTIST ELEMENTS WITHIN THE LABOR MOVEMENT, REPORTEDLY PURGED
HIM.FROM THE PARTY HIERARCHY.;/
//THIS MANEUVER MAY INTENSIFY THE ONGOING POWER STRUGGLE
WESTERN HEMISPHERE BRIEF 073.
BETWEEN LEFTIST AND C)NSERVATIVE LEADERS IN THE PARTY. MANY
YOUNG PERONISTS HAVE PROTESTED PUBLICLY, AND SECRETARY TO THE
PRESIDENCY SOLANO LIMA REPORTEDLY IS LOOKING FOR A WAY FOR
PERON TO BALANCE THIS MOVE TO HEAD OFF ^MORE SERIOUS DISSENSION.
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MEANWHILE, VICE PRESIDENT MARIA ESTELA DE PERON AND PRESIDENTIAL
NOVEMBER TO MOBILIZE SUPPORT FOR THE RIGHT W.'.NG OF THE JUSTI
CONFIDANT LOPEZ REGA ARE PLANNING A MASS PERONIST RALLY FOR 16
CIALIST,PARTY.//
LATEST MOVE, HOWEVER, IS IN LINE WITH HIS LONG-RANGE STRATEGY
//SO FAR PERON, IN HIS OWN ENIGMATIC FASHION, HAS REFUSED
OPEN SUPPORT FOR ANY SPECIFIC GROUP WITHIN THE MOVEMENT. PERON'S
TO SEPARATE OUT EXTREME LEFTISTS, WHILL. RETAINING THE SUPPORT
OF THE MAJORITY OF THE YOUTH. {SECRET}//-
2. CHILE: THE JUNTA GOVERNMENT BROKE RELATIONS WITH CUBA
IMMEDIATELY AFTER THE COUP, BUT HAS OTHERWISE BEEN TRYING TO
AVOID DIPLOMATIC ISOLATION AND UPHOLD CH::LE'S STANDING AS A
MEMBER OF THE "NONALIGNED" GROUP. THE EFFORT TO MAINTAIN DIPLO-'
MATIC TIES WITH AS MANY NATIONS AS POSSIBLE HAS EVEN EXTENUDED
TO SOME NON-NATIONS WITH WHOM CHILE ESTABLISHED RIUELATIONS
UNDER ALLENDE. CHILE THUS CONTINUES TO RECOGNIZE THE PROVISIONAL
REVOLUTIONARY GOVERNMENT OF SOUTH VIETNAM {EVEN THOUGH THE
PRGSVN HAS CLOSED ITS MISSION IN SANTIAGO}, AND CAMBODIAN
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PRINCE SIHANIIIOUK'S DRUNK {WHICH STILL MAINTAINS AN AMBASSADOR
IN THE CHILEAN CAPITAL}. THE NEW CHILEAN GOVERNMENT FAILED TO
VOTE IN FAVOR OF THE KHMER REPUBLIC'S CREDENTIALS AT A UNESCO
CONFERENCE LAST MONTH, DESPITE A KHMER VOTE IN FAVOR OF CHILE.
A FOREIGN MINISTRY OFFICIAL RECENTLY INFORMED THE US CHARGE
THAT CHILE WILL OPPOSE EFFORTS TO INVITE THE PRG AND GRUNK TO
THE UPCOMING LAW OF THE.SEA CONFERENCE, HOWEVER. REFLECTION ON
THE IMPLICATIONS OF RECOGNIZING ENTITIES SUCH AS THE PRG AND
GRUNK WHEN THE JUNTA COULD EVENTUALLY FIND ITS OWN LEGITIMACY
CHALLENGED BY A LEFTIST GOVERNMENT IN EXILE, AND SOME LOBBYING
BY THE US MAY HAVE COMBINED TO CONVINCE THE JUNTA THAT NO STATE
SHOULD BE REPRESENTED BY MORE THAN ONE GOVERNMENT. {CONFIDENTIAL}
3. CUBA. A PANEL DISCUSSION ON HAVANA DOMESTIC RADIO
EARLIER THIS WEEK DEMONSTRATED CONTINUED CUBAN ANXIETY OVER
DEVELOPMENTS IN ARGENTINA. THE CUBAN LEADERSHIP, ALREADY CON-
CERNED.OVER PERON'S ANTI-MARXIST CAMPAIGN, IS NOW FRETTING OVER
THE IMPLICATIONS OF THE RECENT VISIT OF BOLIVIA'S PRESIDENT
BANZER TO ARGENTINA AND PERON'S IMPENDING TRIP TO THE US.
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TWO WEEKS AGO, A RADIO COMMENTARY DESCRIBED PERON'S
"CAUTIOUS COURSE" AS OPPOSED TO THE "RADICAL REFORMS" DEMANDED
BY THE "OVERWHELMING MAJORITY OF ARGENTINE PEOPLE" WHO VOTED FOR
HIM. HAVANA HAS NOW GONE ONE STEP FURTHER BY DESCRIBING PERON'S
ACTIONS ASA SHIFT TO THE RIGHT. ONE PANELIST ADDED THAT IT
APPEARS THAT PERONI1II "WILL CARRY OUT COUNTER-REFORMS TOO, IN
THE SENSE OF REPRESSING THE LEFT.."
THIS IS UNJUSTIFIED IN HAVANA'S OPINION, BECAUSE PERON
REGAINED POLITICAL CONTROL IN ARGENTINA AFTER GUERRILLA GROUPS
AND THE RADICAL LEFT CREATED AN'UNTENABLE SITUATION FOR THE
MILITARY REGIME. THE PROGRAM CONCLUDED WITH A WARNING TO PERON
THAT AN ALLIANCE WITH THE RIGHT. WOULD UPSET THE POLITICAL BAL-
ANCE IN ARGENTINA AND AN IMPLIED REMINDER THAT THE LEFT CA'N ALSO
MAKE THINGS AS DIFFICULT FOR PERON.AS IT DID FOR THE PREVIOUS
MILITARY GOVERNMENTS.
.THE CONTENT OF THE BROADCAST REFLECTS THE GENUINE CONCERN
OF THE CUBAN LEADERSHIP, BUT,THERE. APPEARS TO BE SOME HOPE THAT
PERON'S RECENT. ACTIONS WILL ONLY BE TEMPORARY. SINCE THE
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COMMENTARY WAS t.ARRIED ON A DOMESTIC BROADCAST, HAVANA'S MAIN
PURPOSE IS PROBABLY TO PREPARE ITS CUBAN AUDIENCE FOR MORE BAD
NEWS FROM SOUTH AMERICA. {CONFIDENTIAL}
4. REPORT THAT CUBANS WHO
ARE ADVISING PANAMANIAN LITTLE LEAGUE TEAMS ARE USING THEIR 25X1C
25X1 C
SPORTS ACTIVITIES AS COVER FOR INTELLIGENCE COLLECTION.
OFFICIALS OF THE CUBAN GENERAL DIRECTORATE OF
INTELLIGENCE WHO WERE IN PANAMA WITH THE KNOWLEDGE AND APPROVAL
OF THE TORRIJOS GOVERNMENT. THE CUBANS PROBABLY USE SPORTS
PROGRAMS AS COVER FOR INTELLIGENCE COLLECTION ACTIVITIES BE-
CAUSE THEY HAVE NO DIPLOMATIC REPRESENTATION IS PANAMA.//
//WHEN REPORTERS ASK HIM ABOUT THE POSSIBILITY OF THE ES-
TABLISHMENT OF-FULL DIPLOMATIC TIES WITH THE CASTRO GOVERN-
MENT, TORRIJOS USUALLY REPLIES THAT THE TWO COUNTRIES HAVE
BROAD CULTURAL AND SOME TRADE LINKS AND THAT HE FEELS UNDER NO
PRESSURE TO SET UP DIPLOMATIC RELATION. HE FINDS FRIENDSHIP
WITH HAVANA USEFUL IN PROMOTING HIS "REVOLUTIONARY" IMAGE AND
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IN DEMONSTRATING A MEASURE OF INDEPENDENCE FROM THE US33L IT IS
RELUCTANT TO MOVE TOO MUCH CLOSER TO AN ANTAGONIST OF THE US AS
LONG AS HE THINKS HE HAS A CHANCE OF OBTAINING AN ACCEPTABLE
CANAL TREATY PACKAGE FROM WASHINGTON. IF, ON THE OTHER HAND,HE
COMES TO BELIEVE HE HAS. NO CHANCE FOR A NEGOTIATED "VICTORY"
HE MIGHT DECIDE THAT DIPLOMATIC TIES WITH HAVANA WOULD BE
ADVANTAGEOUS. {CONFIDENTIAL}//
5. ARAB STATES-ISRAEL: THE IMPLEMENTATION OF THE CEASE-
FIRE AGREEMENT BEGAN ON 15 NOVEMBER, WITH NO SIGNIFICANT PROBI-
LEMS DEVELOPING.
THE FIRST STAGE OF THE PRISONER-OF-WAR EXCHANGE TOOK PLACE
WITH THE TRANSFER OF 26 ISRAELI WOUNDED PRISONERS AND OVER 400
EGYPTIANS. ACCORDING TO A PRESS ACCOUNT, EGYPT WIAS UNABLE TO
ORGANIZE THE REPATRIATION OF A LARGER NUMBER OF ISRAELI.PRISON-
ERS? NO ADVERSE ISRAELI REACTION TO CAIRO'S,DEL AY WAS REPORTED.
CONTINGENTS OF THE UNITED NATIONS EMERGENCY FORCE U{UNEF}
TOOK CONTROL OF THE ISRAELI CHECKPOINTS AT KILOMETERS 101 AND
119. A UNEF PRESS SPOKESMAN CLAIMED THAT'THERE ARE NO OTHER
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ISRAELI CHECKPOINTS ON THE CAIRO-SUEZ ROAD. TRUCKS CARRYING
RELIEF SUPPLIES TO SUEZ CITY PASSED THROUGH THE CHECKPOINT AT
KILOMETER 101 ON 15 NOVEMBER. AN INTERNATIONAL RED CROSS
SPOKESMAN HAS ALSO ANNOUNCED THAT THE EVACUATION OF MORE THAN
:b,000 SICK AND WOUNDED EGYPTIAN CIVILIANS FROM SUEZ CITY WILL
BEGIN ON 16 NOVEMBER.
ACCORDING TO PRESS REPORTS, ISRAELI DEFENSE MINISTER DAYAN
SAID THAT TEL AVIV HAD MADE "FAR REACHING" PROPOSALS TO DAMASCUS
INCLUDING AN EXCHANGE OF PRISONERS AND OFFERED TO ALLOW ADOUT
15,000 DISPLACED CIVILIANS FROM NEWLY CAPTURED AREAS ON THE
GOLAN HEIGHTS TO RETURN TO THEIR HOMES. MEANWHILE, ISRAELI
FOREIGN MINISTER EBAN AND SECRETARY-GENERAL WALDHEIM AT THE UN
AND A SPECIAL UN ENVOY IN DAMASCUS ARE SEEKING WAYS TO RESOLVE
THE ISRAELI-SYRIAN PRISONER ISSUE.
EGYPTIANS HAVE GENERALLY BEEN SATISFIED WITH THE EUGYPTIAN-
ISRAELI DECISION OF WEDNESDAY TO PROCEED WITH THE IMPLEMENTATION
OF-FOUR ELEMENTS OF THE SIX-POINT AGREEMENT OF 11 NUOVEMBER.
THE NEW, BUT RESTRAINED OPTIMISM ENDS A PERIOD OF GLOOM AND
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FRUSTRATION OVER WHAT EGYPTIANS CONSIDERED ISRAELI OBSTRUCTION-
ISM AND A BREAKDOWN OF NEGOTIATIONS.
//THE US INTERESTS SECTION BELIEVES THAT//THERE IS NO REAL
CHALLENGE TO SADAT'S LEADERSHIP AND//REPORTS THAT//HIS POPULARITY
APPEARS TO BE HIGH. SOME UNHAPPINESS EXISTS AMONG UNIVERSITY
STUDENTS, AND THERE IS MUTTERING BY YOUNGER OFFICERS, WHO COM-
PLAIN THAT THE CEASE-FIRE WAS ENTERED INTO FOR POLITICAL, RATHER
THAN MILITARY REASONS. NEVERTHELESS, EGYPT'APPEARS READY TO
GIVE SADAT'S POLITICAL AND DIPLOMATIC EFFORTS A CHANCE TO SUCCEED.
RADIO TRIPOLI ON 15 NOVEMBER CARRIED WHAT WAS DESCRIBED AS
A CABLE SENT BY PRESIDENT QADHAFI TO PRESIDIENT SADAT DEALING
WITH THE ARAB-ISRAELI WAR AND ITS AFTERMATH. QADHAFI'S MESSAGE
BITTERLY CONDEMNED SADAT'S ACCEPTANCE OF THE CEASE-FIRE; THE
WAR, QADHAFI SAID, SHOULD HAVE BEEN CONTINUED "EVEN IF IT DE-
VELOPED INTO HAND-TO-HAND FIGHTING."
THE COMMUNIQUE ISSUED ON 15 NOVEMBER FOLLOWING THE TITO-
BREZHNEV TALKS IN KIEV BROKE NO NEW GROUND ON THE MIDDLE EAST.
uUlihuluuIUIuIU^lulIluIUIU
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BOTH LEADERS RECOGNIZED THE .. IMPORTANCE 'OF- OBTAINING 'A MIDDLE EAST
SETTLEMENT AND REAFFIRMED THEIR-READINESS TO MAKE EFFORTS-IN
THAT DIRECTION. THE COMMUNIQUE ACCUSED ISRAEL OF "CRUDE-FLOUTING"
OF THE UN CEASE-FIRE RESOLUTIONS AND NOTED' THE."DANGEROUS CONSE-
QUENCES" OF ISRAEL'S "ADVENTUROUS-AC.TIONS." MEANWHILE, IN MOS-
COW,.-PREMIER KOSYGIN TOLD A GUINEAN DELEGATION THAT THE SOVIETS
WILL CONTINUE-TO GIVE THE "UTMOST ASSIST-ANCEr TO IMPLEMENT UN
RESOLUTIONS ON THE MIDDLE EAST.' 'PRAVDA'ALSO'EMPHASIZED MOS.COW'S
CONTINUING ROLE IN ACHIEVING A MIDDLE EAST SETTLEMENT., //THE
SOVIET WEEKLY NEW TIMES TOUCHED ON THE SENSITIVE SUBJECT OF ARAB
FINANCIAL HOLDINGS IN THE WEST BY NOTING THAT SUBSTANTIAL SUMS
ARE HELD IN US AND WEST EUROPEAN BANKS. IT SAID "IF THE ARABS
WITHDREW ONLY HALF OF THEIR INVESTMENTS, IT WOULD LEAD TO A
SERIOUS UPHEAVAL' OF THE FINANCES OF MANY WEST-EUROPEAN COUNTRIES."
THE US WAS NOT EXPLICITLY MENTIONED IN THIS REGARD. ALTHOUGH
MOSCOW HAS ENDORSED THE USE. OF ARAB OIL, IT HAS NOT MADE SUCH
EXPLICIT REFERENCE TO THE SIGNIFICANCE OF ARAB FINANCIAL
RESERVES.//
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//THE FRENCH FOREIGN MINISTRY HAS'REJECTED THE INITIAL
DRAFT OF THE EC'S PROPOSED JOINT DEMARCHE TO THE ARABS.- PRE-
SUMABLY PARIS OBJECTED ^TQ THE FIRST PARAGRAPH OF THE PROPOSED
TEXT, WHICH NOTED THAT "RECENT MEASURES TAKEN BY ARAB STATES
ARE OF SUCH A NATURE AS TO AFFECT THE EUROPEAN COMMUNITY--AND
CERTAIN OF ITS MEMBERS IN PARTICULAR--TO DISTURB PUBLIC OPINION1
AND TO HAVE A NEGATIVE EFFECT ON EUROPEAN-ARAB RELATIONS."
^IITHE DRAFT WILL PROBABLY BE REVIEWED AGAIN, AND MAY BE SOFTENED,
AT THE EC FOREIGN MINISTERS' MEETING SCHEDULED FOR 20 NOVEMBER
IN COPENHAGEN.//
FURTHER PROGRESS HAS BEEN MADE AT THE UN IN ASSEMBLING THE
PEACEKEEPING FORCE. THE UN EMERGENCY FORCE NOW HAS APPROXI-
MATELY 21200 TROOPS IN THE MIDDLE EAST AND ENOUGH PLEDGES TO
BRING IT CLOSE TO THE 7,000-MAN GOAL. -NEGOTIATIONS HAVE ALSO
REACHED TENTATIVE AGREEMENT ON A SPECIAL ASSESSMENT SCALE FOR
THE FINANCING OF THE EMERGENCY FORCE. UNEF, HOWEVER,'IS STILL
WITHOUT ADEQUATE SUPPLIES OR LOGISTIC SUPPORT FOR ITS RAPIDLY
GROWING FORCES. {SECRET} E-21MPDET.H
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EUROPEAN BRIEF 073.
PER _#
ITEMS MARKED & HAVE BEEN COORDINATED WITH THE DEPARTMENTS
OF STATE AND DEFENSE.
&1?//EC: THE COUNCIL OF FINANCE MINISTERS AGREED LAST WEEK
TO TRY TO FORMULATE A JOINT ANTI-INFLATION OROCkAM AND TO CON-
SIDER STEPS TO RENEW PROGRESS TOWARD ECONOMIC AND MONETARY UNION
BEFORE YEAR'S END.//
//FOLLOWING APPROVAL OF THE COMMISSION'S ANNUAL ECONOMIC
REPORT HIGHLIGHTING THE INFLATION PROBLEM, FRENCH FINANCE MINISTER
GISCARD D'ESTAING SUGGESTED A NEW COMMUNITY APPROACH TO COMBAT
INFLATION. THE SIX PROPOSALS INCLUDE: LIMITING THE GROWTH OF
MONEY SUPPLIES; LIBERALIZING IMPORT QUOTAS, PARTICULARLY ON
PROCESSED AGRICULTURAL PRODUCTS; AND INCOME CONTROLS. SOME
COUNTRIES--NOTABLY WEST GERMANY--BELIEVE THEY HAVE ALREADY TAKEN
ADEQUATE MEASURES AND OPPOSE WAGE AND PRICE CONTROLS. NONEITHELESS,
THE COUNCIL GENERALLY FAVORED THESE PROPOSALS AND ORDERED THE
COMMISSI"N TO PREPARE A SPECIFIC ANTI-INFLATION PROGRAM FOR COUNCIL
DISCUSSION ON 3-4 DECEMBER. THE IMPACT OF ANY SUCH PROGRAM
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PROBABLY WILL BE SLIGHT; EVEN THE RELIATIVELY WEAK MEASURES OF
PAST COMMUNITY EFFORTS HAVE BEEN OFTEN IGNORED BY MEMBER STATES.//
//THE DECISION TO CONSIDER NEW STEPS TOWARD ECONOMIC AND
MONETARY UNION WERE FORCED BY A BOLD COMMISISION INITIATIVE DURING
THE MEETING. IN A SURPRISE MOVE, THE COMMISSION CALLED ON THE
COUNCIL TO STRENGTHEN THE INSTITUTIONAL FRAMEWORK FOR MOVING TOWARD
ECONOMIC AND MONETARY UNION AND ANNOUNCED THAT IT WILL SHORTULY
SUBMIT PROPOSALS FOR THE NEXT STEP"'. THE EC HEADS OF STATE, AT
LAST YEAR'S SUMMIT, SET 1 JANUARY 1974 AS THE TARGET FOR THE SECOND
STAGE OF ECONOMIC AND MONETARY UNION. THE FIRST STAGE HAS BEEN
UNSATISFACTORY, HOWEVER. THE UK, IRELAND, AND ITALY ARE NOT IN THE
JOINT CURRENCY FLOAT, INTRA-EC ECONOMIC POLICY COORDINATION HAS
NOT ADVANCED VERY MUCH, AND THE SECOND STAGE HAS NOT YET BEEN
DEFINED. SEVERAL MEMBERS HAVE FAVORED FORMAL. POSTPONEMENT OF THE.
SECOND STAGE UNTIL THESE AND OTHER PROBLEMS ARE OVERCOME. LAST
WEEK, HOWEVER, THE MINISTERS APPEARED READY TO CIRCUMVENT FORMAL
SCHEDULE DECISIONS AND TO MOVE ON NEW PRACTICAL PROPOSALS. EVEN THE
FRENCH NOW ISEEM TO FAVOR CLOSER ECONOMIC COORDINATION WHICH
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FORMERLY THEY HAD RESISTED BECAUSE THEY CLAIMED TT WOULD COMPROMISE
THEIR SOVEREIG14TY . //
//DESPITE THIS APPARENT CHANGE IN ATTITUDES, PROGRESS TOWARD
ECONOMIC AND MONETIARY UNION WILL CONTINUE TO BE SL.OW. A REGIONAL
FUND--FAVORED BY THE UK, IRELAND, AND ITALY--MIGHT BE ADOPTED BY
THC END OF THE YEAR, BUT WEST GERMANY, THE MAJOR CONTRIBUTOR, WILL
INSIST THAT THE FUND'S SIZE BE SMALL. SHORT-TERM MONETARY SUPPORT
FOR THE JOINT FLOAT UCOULD BE INCREASED BEFORE THE YEAR IS OUT,
BUT ADDITUIONAL CREDITS--SWAP ARRANGEMENTS, FOR EXAMPLE--WILL BE
LESS AUTOMATIC THAN THE COMMISSION WOULD LIKE. RESERVE POOLING,
EXCEPT ON A TOKEN BASIS, AND ADOPTION OF A UNIFIED POSITION ON
INTERNATIONAL MONETARY REFORM, BOTH STRONGLY FAVORED BY THE
COMMISSION, WILL NOT BE APPROVED ^UNTIL ADEQUATE COMMUNITY POLITICAL
INSTITUTIONS ARE ESTABLISHED.//
//LAST WEEK'S MEETING WAS DESIGNED TO GET THE EC MOVING AGAIN
TOWARD THE ESTABLISHMENT OF AN ECONOMIC AND MONETARY UNION BY THE
1980 DEADLINE. IN CONTRAST WITH THE LACK OF PROGRESS AT EARLIER
FINANCE MINISTERS' MEETINGS, NATIONAL REPRESENTATIVES AT THIS
DATE :
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SESSION SHOWED SUFFICIENT POLITICAL WILL TO HOLD OUT HOPE FOR
THEIR UNITY GOALS. {CONFIDENTIAL}//
&2.//WEST GERMANY: BONN REGISTERED A $1.6-BILLION
TRADE SURPLUS IN SEPTEMBER, RAISING THE CUMULATIVE
SURPLUS FOR THE FIRST NINE MONTHS OF 1973 TO $8.7
BILLION. THIS IS MORE THAN DOUBLE THE LEVEL FOR THE
COMPARABLE PERIOD OF 1972. TRADE DECLINED IN AUGUST
AS A RESULT OF SEASONAL FACTORS, BUT REBOUNDED IN
SEPTEMBER WHEN EXPORTS WERE UP 63 PERCENT AND IM-
PORTS UP 40 PERCENT, COMPARED WITH SEPTEMBER- 1972?
EXPORTS PROBABLY WILL CONTINUE AT HIGH LEVELS IN
THE REMAINING MONTHS OF THE YEAR, CONTRIBUTING TO
AN ANNUAL TRADE SURPLUS THAT IS LIKELY TO REACH A
RECORD LEVEL OF AT LEAST $12 BILLION.
A SURPLUS OF $250 MILLION IN TRADE WITH THE
US ACCOUNTED FOR ONE SIXTH OF WEST GERMANY'S TOTAL
SURPLUS IN SEPTEMBER. THE NINE-MONTH SURPLUS WITH
THE US REACHED NEARLY $1 BILLION AND IS LIKELY TO
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0 IPFILESAPPROACH $] .5 BILLION FOR THL ENTIRE YEAR. ALTHOUGH
US SALES OF AGRICULTURAL COMMODITIES HAVE RISEN
DRAMATICALLY THIS YEAR, THESE GAINS HAVE BEEN MORE
THAN OFFSET BY INCREASED US IMPORTS OF INTERMEDIATE.
GOODS AND MANUFACTURES, PARTICULARLY TRANSPORT
EQUIPMENT. {CONFIDENTIAL}//
3. ROMANIA: THE ARAB DISREGARD OF A ROMANIAN INVITATION
TO MEET WITH ISRAELI FOREIGN MINISTER EBAN IN BUCHAREST LAST WEEK
HAS APPARENTL;" LEFT UNDAUNTED CEAUSESCU'S DESIRE TO PLAY THE
ROLE OF "HONEST BROKER" IN THE MID-EAST CRISIS. BUCHAREST'S
LATEST STEP HAS BEEN THE DISPATCH OF "PRESIDENTIAL REPRESENTATIVES"
TO CONFER WITH ARAB LEADERS? FORMER FOREIGN MINISTER-CORNELIU
MANESCU MET WITH SADAT SOON AFTER ^HIS ARRIVAL IN CAIRO ON
NOVEMBER 14 AND HAS GONE ON TO RABAT AND KHARTOUM FOREIGN AFFAIRS
ADVISOR.MIRCEA MALITA WAS RECEIVED PROMPTLY BY ASAD IN DAMASCUS
AND IS EN ROUTE TO BAGHDAD. THE ROMANIAN EINVOYS MAY BE CARRYING
A NEW PEACE PROPOSAL BASED ON LAST WEEK'S ROMANIAN-ISRAELI
TALKS. {CONFIDENTIAL}
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4. ARAB STATES - ISRAEL: THE IMPLEMENTATION OF
THE CEASE-FIRE AGREEMENT BEGAN ON 15 NOVEMBER, WITH NO
SIGNIFICANT PROBLEMS DEVELOPING.
THE FIRST STAGE OF THE PRISONER-OF-WAR EXCHANGE
TOOK PLACE WITH THE TRANSFER OF 26 ISRAELI WOUNDED
PRISONERS AND OVER 400 EGYPTIANS. ACCORDING TO A
PRESS ACCOUNT, EGYPT WAS UNABLE TO ORGANIZE THE REPATRIATION
OF A LARGER NUMBER OF ISRAELI PRISONERS. NO ADVERSr ISRAELI
REACTION TO CAIRO'S DELAY WAS REPORTED.
CONTINGENTS OF THE UNITED NATIONS EMERGENCY
FORCE {UNEF} TOOK CONTROL OF THE ISRAELI CHECKPOINTS
AT KILOMETERS 101 AND 119. A UNEF PRESS SPOKESMAN
CLAIMED THAT THERE ARE NO OTHER ISRAELI CHECKPOINTS
ON THE CAIRO-SUEZ ROAD. TRUCKS CARRYING RELIEF SUP-
PLIES TO SUEZ CITY PASSED THROUGH THE CHECKPOINT AT
KILOMETER 101 ON 15 NOVEMBER. AN INTERNATIONAL RED CROSS
SPOKESMAN HAS ALSO ANNOUNCED THAT THE EVACUATION OF
MORE THAN 1,000 SICK AND WOUNDED EGYPTIAN' CIVILIANS
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FROM SUEZ CITY WILL BEGIN ON 16 NOVEMBER.
8
MESSAGE REFERENCE NUMEER
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ACCORDING TO PRESS REPORTS, ISRAELI DEFENSE
MINISTER DAYAN SAID THAT TEL AVIV HAD'MADE "FAR REACHING"
PROPOSALS TO DAMASCUS INCLUDING AN EXCHANGE OF PRISONERS
AND OFFERED TO ALLOW ABOUT 151000 DISFLACED CIVILIANS FROM
NEWLY CAPTURED AREAS ON.THE GOLAN HEIGHTS TO RETURN TO
THEIR HOMES. MEANWHILE, ISRAELI FOREIGN MINISTER EBAN AND
.SECRETARY-GENERAL WALDHEIM AT THE UN AND A SPECIAL UN ENVO","-
IN DAMASCUS ARE SEEKING WAYS TO RESOLVE THE ISRAELI-
SYRIAN PRISONER ISSUE.
EGYPTIANS HAVE GENERALLY BEEN SATISFIED WITH
THE EGYPTIAN-ISRAELI DECISION OF WEDNESDAY TO PROCEED
WITH THE IMPLEMENTATION OF FOUR ELEMENTS OF THE SIX-
POINT AGREEMENT OF 11 NOVEMBER. THE NEW, BUT RESTRAINED
OPTIMISM ENDS A PERIOD OF GLOOM AND FRUSTRATION OVER WHAT
EGYPTIANS CONSIDERED ISRAELI OBSTRUCTIONISM AND A
BREAKDOWN OF NEGOTIATIONS.
//THE'US INTERESTS SECTION BELIEVES THAT//THERE IS
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NO REAL CHALLENGE TO SADAT'S.LEADERSHIP AND//REPORTS
THAT//HIS POPULARITY APPEARS TO BE HIGH. SOME UN-
HAPPINESS EXISTS AMONG UNIVERSITY STUDENTS,,AND THERE
IS MUTTERING BY YOUNGER OFFICERS, WHO COMPLAIN THAT
THE CEASE-FIRE WAS ENTERED INTO FOR POLITICAL, RATHER
THAN MILITARY REASONS. NEVERTHELESS, EGYPT APPEARS
READY TO GIVE SADAT'S POLITICAL AND DIPLOMATIC EF-
FORTS A CHANCE TO SUCCEED.
RADIO TRIPOLI ON 15 NOVEMBER CARRIED WHAT WAS DE-
SCRIBED AS A CABLE SENT BY PRESIDENT QADHAFI TO
PRESIDENT SADAT DEALING WITH THE ARAB-ISRAELI WAR
AND ITS AFTERMATH. QADHAFI'S MESSAGE BITTERLY CON-
DEMNED S,&DAT'S ACCEPTANCE OF THE CEASE-FIRE; THE
WAR, QADHAFI SAID, SHOULD HAVE BEEN CONTINUED "EVEN
IF IT DEVELOPED INTO HAND-TO-F;,AND FIGHTING."
THE COMMUNIQUE ISSUED ON 15 NOVEMBER FOLLOWING THE
TITO-BREZHNEV TALKS IN KIEV BROKE NO NEW GROUND ON THE
MIDDLE EAST. BOTH LEADERS RECOGNIZED THE IMPORTANCE OF
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READINESS TO MAKE EFFORTS IN THAT DIRECTION. THE COMMUNIQUE AC-
CUSED ISRAEL OF "CRUDE FLOUTING" OF THE UN CEASE-FIRE
RESOLUTIONS AND NOTED THE "DANGEROUS CONSEQUENCES" OF
ISRAEL'S "ADVENTUROUS ACTIONS." MEANWHILE, IN MOSCOW,
PREMIER KOSYGIN TOLD. A GUINEAN DELEGATION THAT THE
SOVIETS WILL CONTINUE TO GIVE THE "UTMOST ASSISTANCE"
TO IMPLEMENT UN RESOLUTIONS ON THE MIDDLE EAST.
PRAVDA ALSO EMPHASIZED MOSCOW'S CONTINUING ROLE IN
ACHIEVING A MIDDLE'EAST SETTLEMENT.// THE SOVIET WEEKLY
NEW TIMES TOUCHED ON THE SENSITIVE SUBJECT OF ARAB
FINANCIAL HOLDINGS IN THE WEST BY NOTING THAT SUBSTAN-
TIAL SUMS ARE HELD IN US AND WEST EUROPEAN BANKS. 11'
SAID "IF THE ARABS WITHDREW ONLY HALF OF THEIR INVEST-
MENTS, IT WOULD LEAD TO A SERIOUS UPHEAVAL OF THE
F1.iANCES OF MANY WEST EUROPEAN COUNTRIES." THE US
WAS NOT EXPLICITLY MENTIONED IN THIS REGARD. ALTHOUGH
MOSCOW HAS ENDORSED THE USE OF ARAB OIL, IT HAS NOT
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MADE SUCH EXPLICIT REFERENCE TO THE SIGNIFICANCE OF
PER #.
ARAB FINANCIAL RESERVES.//
//THE FRENCH FOREIGN MINISTRY HAS REJECTED THE
INITIAL DRAFT O' THE EC'S PROPOSED JOINT DEMARCHE TO
THE BS. PRESUMABLY PARIS OBJECTED TO THE FIRST
PARAGRAPH OF THE PROPOSED TEXT, WHICH NOTED THAT
"RECENT MEASURES TAKEN BY ARAB STATES-ARE OF SUCH A
NATURE AS TO AFFECT THE EUROPEAN COMMUNITY--AND CER-
TAIN OF ITS MEMBERS IN PARTICULAR--TO DISTURB PUBLIC
OPINION, AND TO HAVE A NEGATIVE EFFECT ON EUROPEAN-
ARAB RELATIONS." THE DRAFT WILL PROBABLY BE REVIEWED
AGAIN, AND MAY BE SOFTENED, AT THE EC FOREIGN MINIS-
TERS' MEETING SCHEDULED FOR 20 NOVEMBER IN COPENHAGEN.//
FURTHER PROGRESS HAS BEEN MADE AT THE UN IN
ASSEMBLING THE PEACEKEEPING FORCE. THE UN EMERGENCY
FORCE NOW HAS APPROXIMATELY 2,200 TROOPS IN THE MID-
DLE EAST AND ENOUGH PLEDGES.TO.BRING.IT CLOSE TO THE ,
7,000-MAN GOAL. NEGOTIATIONS HAVE ALSO REACHED TENTA-
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TIVE AGREEMENT ON A SPECIAL ASSESSMENT SCALE FOR THE
FINANCING OF THE EMERGENCY FORCE. UNEF, HOWEVER, IS
STILL WITHOUT ADEQUATE SUPPLIES OR LOGISTIC SUPPORT
FOR ITS RAPIDLY GROWING FORCES. {SECRETIE-2 IMPDETH.
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