CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026200090001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 15, 2016
• Document Release Date: May 4, 2004
• Sequence Number: 1
• Publication Date: March 2, 1974
• Content Type: REPORT

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Central Intelligence Bulletin
State Dept. review completed
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Top Secret
March 2, 1974
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March 2, 1974
Central Intelligence Bulletin
CONTENTS
EUROPEAN COMMUNITIES: Plans to explore cooperative
projects with Arab states proceed. (Page 1)
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ETHIOPIA: Situation has begun to stabilize. (Page 5)
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ITALY: Rumor trying to preserve his coalition. (Page
SPAIN: Complications in prime minister's efforts to
imp rove political climate. (Page 13)
WEST GERMANY: First of several state elections to
be held Sunday. (Page 14)
JAPAN: Central bank alters credit policy. (Page 15)
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IRAN-FRANCE:
(Page 19)
Tehran orders French-built patrol boats.
GUATEMALA: Ruling coalition candidate has best chance
to win close presidential election. (Page 20)
INDIA: Dry weather dims outlook for spring grain
harvest. (Page 22)
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EUROPEAN COMMUNITIES: The European Community
is proceeding with plans to explore prospects for
extensive cooperative projects with the Arab states,
despite the uncertainty created by shake-ups in a
number of EC governments and US dissatisfaction with
an independent EC approach to the Middle East. The
Nine have clearly demonstrated unanimity in support-
ing this move and are likely to give it their final
approval at a meeting of foreign ministers on March
4. If a new Labor government comes to power in Brit-
ain, however, it may request this meeting be post-
poned. The Nine point out that
--the European move would complement US policy;
--the practical effect of the Nine's efforts will,
in any case, be long term;
--the attempt is necessary to heal the rift with
France within the community.
Under the plan, the West Germans, who now hold
the chairmanship of community bodies, would initiate
talks with the Arab states to explore the possibili-
ties of cooperation in such fields as industry,
agriculture, energy, raw materials, science and tech-
nology, financial cooperation, and vocational train-
ing. This would be followed by the establishment of
joint commissions and a meeting of the EC and Arab
foreign ministers next fall.
At the same time, the EC governments participat-
ing in the follow-up work of the Washington energy
conference are responding cautiously to the agenda
proposed by the US at the first organizational meet-
ing of the Energy Coordinating Group earlier this
week. Reaction is tentatively favorable to the US
suggestion that the OECD High Level Group handle the
first three items--conservation and demand restraint,
Mar 2, 1974
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accelerated development of conventional energy re-
sources, and oil sharing. The Italians and Dutch
point out, however, that problems may arise because
some states which are included in the coordinating
group are not members of the High Level Group. The
French and Irish argue that all OECD members should
participate in the discussions.
The EC governments are still developing their
positions on the more controversial aspects of the
agenda. Proposals that ad hoc groups or the coordi-
nating group itself handle such matters as energy
research and development and producer-consumer rela-
tions will encounter objections from EC members who
are opposed to the establishment of new international
groups to handle the energy crisis. The next coordi-
nating group meeting is scheduled for Brussels on
March 13-14.
Meanwhile, French Foreign Minister Jobert told
a newspaperman in Paris that he planned to propose
a cooperative Franco-German enterprise on energy
during a visit to Bonn this week, but he did not give
any details.
Mar 2, 1974
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*ETHIOPIA: The situation in Ethiopia has begun}
to stabilize. The number of troops in Addis Ababa
has been reduced, army units guarding key points have
been replaced by police, and roadblocks have been
lifted.
Leaders of the military dissidents have decided
to enter into direct negotiation with Emperor Haile
Selassie. Their demands, which the Emperor reportedly
has already accepted, call for educational, economic,
and land reform and the prosecution of corrupt offi-
cials. These demands are for the most part not new,
but they were largely ignored by the former government.
Some of the dissidents pressed for the ouster of
Prime Minister Endalkatchew, but the majority favored
an accommodation. The demand for Endalkatchew's re-
moval could be renewed, however, if the new government
fails to carry out the promised reforms. Endalkatchew
has enhanced his position by taking a conciliatory
stance toward demands for reform and has promised to
take into consideration talent, youth, and experience
in appointing the rest of the cabinet.
The growing opposition of students, teachers, and
labor unions to the new prime minister, however, in-
troduced a new element into the situation. A major
demonstration yesterday by students opposing Endalkat-
chew was dispersed by army units wielding clubs. The
students had marched on Jubilee Palace, the Emperor's
residence, calling for Endalkatchew's ouster, land re-
Mar 2, 1974 Central Intelligence Bulletin
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form, free elections, and freedom of the press. An-
other demonstration was dispersed by police with tear
gas. The teachers' association then announced its
opposition to Endalkatchew. The teachers evidently
will resume their ten-day--old strike.
The US Embassy in Addis Ababa reports that the
Ethiopian labor federation shares the sentiments of
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the teachers and students.
*Because of the shortage of time for preparation of this item, the mIAN-tic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of- the Bureau of Intelligent e and
Research, Department of State.
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*ITALY: Leaders of Italy's four center-left
coalition parties will meet this weekend to deter-
mine whether Prime Minister Rumor's government can
be preserved. If these efforts fail, Rumor will
probably step down. According to one report, he may
do so today.
The Republican Party directorate yesterday en-
dorsed Treasury Minister La Malfa's withdrawal from
the government, but refused to accept his resignation
as party leader. Although the directorate stopped
short of promising to support the government in par-
liament, it indicated that the Republicans would
"act responsibly," a tactic used in 1971 to keep a
center-left coalition alive for almost a year after
a similar Republican withdrawal.
To keep the party's support Rumor will have to
mediate the long-festering dispute between the Re-
publicans and the Socialists over basic economic
policy that led to La Malfa's resignation.
So far, however, no one has suggested dissolving
parliament and holding new elections. Party leaders
reportedly fear the electoral repercussions of the
energy shortage, inflation, austerity measures, and
a simmering scandal involving alleged pay-offs to
politicians by the oil companies.
F
*BecZ)use of the shortage of tinie for preparation of this item, the analytic
interpretation presented here has been produced by the Central Intclli-
genceAgency without the participation of the Bureau of Intelligence and
Research, Department of State.
Mar 2, 1974 Central Intelligence Bulletin
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SPAIN: Prime Minister Arias' actions on two fronts
are likely to complicate his efforts to improve the pol-
itical climate.
Archbishop Anoveras of Bilbao has been placed under
house arrest following the reading of a pastoral letter
in all Basque province churches on February 24 callin
for "";test freedom" for the Basque people.
The government is also preparing to deal with
large-scale demonstrations to protest the execution of
a convicted anarchist. The Supreme Court of Military
Justice last week upheld the death sentence of Salvador
Puig Antich, who was convicted for killing a policeman
last September. The case is now before the cabinet for
confirmation or commutation. According to some sources,
the government has approved the death sentence and will
announce the decision after the cabinet meeting on
March 1.
The sentence must be carried out within 12 hours
after the announcement, although General Franco could
still intervene to commute the sentence. The latest
indi - - r.,..."' mr- -4 `' c"rcr f that he will not do
Mar 2, 1974
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WEST GERMANY: The first of several West German
state elections this year will be held in Hamburg
on Sunday. Local issues and personalities will pre-
dominate in each, but the outcomes could have larger
implications.
The Hamburg election--the first major test of
voter attitudes since the national election of Novem-
ber 1972--comes at a time when public support for
the Brandt government seems to be slipping. Although
the campaign has been practically devoid of national
issues, national party leaders will nevertheless be
watching Hamburg closely for signs of shifts in pub-
lic support for the major parties.
Aware of the risks involved in becoming too
closely identified with the Social Democratic Party
and its problems on the national level, the Hamburg
SPD has carefully restricted its campaign to local
issues, and the other parties have largely followed
suit. The governing Social Democrats are trying to
preserve their absolute majority and maintain their
long-established hold on city hall, Local party
leaders admit they are having to fight for every
vote. Led by Erik Blumenfeld, who is prominent on
both the state and national levels, the opposition
Christian Democrats have made a particularly strong
bid for popular support by exploiting SPD vulner-
ability on such local issues as the controversial
SPD patronage system, urban decay, and inflation.
The Free Democrats, on the other hand, are hoping
that the Hamburg vote will confirm the recent national
polls suggesting increased public support and have
tailored their campaign to attract the votes of dis-
enchanted SPD voters,
Whether the tactics of the two smaller parties
will pay off is open to question, The Social Demo-
crats are expected to retain their absolute major-
ity, although they may emerge two to three percent-
age points down from the 55.3 percent of the vote
they obtained in 1970. Public dissatisfaction with
some aspects of the local SPD government is expected
Mar 2, 1974
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to be more than offset by: the almost continuous
SPD record'in public office since the war; the Ham
burg voters' preoccupation with pragmatic questions
1c issues?
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of administration rather than larger po
and the strong sense of SPD voting tradition.
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JAPAN: The central bank has tightened credit
further on a selective basis, but the head of the
bank. hinted that the credit'squeeze may be eased soon.
On February 28, the central bank ordered major com-
mercial banks to cut lending $100 million below the
ceiling previously imposed for the first quarter,
leaving it 37 percent below the first quarter of 1973.
Moreover, the central bank stipulated that half the
cut be imposed on lending to ten large trading com-
panies and that banks not finance speculative activity.
The move was explained as an effort to clamp
down on pockets of excess liquidity. It also may be
designed to force firms to unload speculative stock-
piles and to allay mounting charges of government-
business collaboration. This measure coincided with
the release of government figures showing that gross
national product increased 24.5 percent,in calendar
year 1973, 11 percent in real terms, and the remain
der in higher prices. Real growth slowed at,year
end, but prices surged,
Monetary restraints may have to be relaxed soon
to avoid an excessive slowdown in economic activity.
Sharp January drops in orders for machine tools and
construction indicate that investment spending will
slow sharply. At the same time, consumer spending
is weakening, and the government is holding down
outlays for public works. Wholesale prices stabi-
lized in mid-February, a sign that inflation may have
rices
t
p
begun to slow. Sharply increased oil impor
will drain a large amount of purchasing power from
the economy over the remainder of the year, further
reducing domestic demand.
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IRAN-FRANCE: Iran has ordered six La Combattante
II missile-arme patrol boats from France, valued at
more than $100 million. The ships reportedly will
incorporate several Iranian Navy modifications, in-
cluding the installation of the US STANDARD/HARPOON
missile system, Italian OTO MELARA gun-mountings,
and a Dutch fire-control system.
The La Combattante II, similar to the Saar-class
missile boat sold by France to Israel, is both larger
and faster than the Soviet OSA-class patrol boat.
once in service, it will more than offset the threat
of Iraq's OSAs, as well as help protect Iran's off-
shore oil facilities. Because of the large number
of orders for this patrol boat, however, delivery to
Iran may not take place for two to three years.
The purchase of the patrol boats moves Iran a
step closer to the Shah's announced goal of quad-
rupling Iran's naval fleet by 1978. In the last two
years, Iran has purchased but not yet received from
the UK two guided-missile frigates, four missile-
armed Hovercraft, two multi-purpose support ships,
and a cruiser which can operate helicopters and
V/STOL aircraft. In addition, Iran has purchased
but not received three destroyers from the US and
two cargo/tanker logistic support ships from West
Germany.
Mar 2 , 1974 Central Intelligence Bulletin
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GUATEMALA: The governing coalition candidate,
General Kell Laugerud, has the best chance of win-
ning what is expected to be a close presidential
election on March 3. Laugerud's campaign managers,
led by President Carlos Arana, appear reasonably
confident that he will win a plurality, or at least
come close enough to permit them to rig the results
without being too obvious.
Laugerud's chief opponent is General Efrain
Rios of the leftist National Opposition Front. The
other contender is Colonel Ernesto Paiz of the cen-
trist Revolutionary Party. If, as seems likely, no
candidate wins a majority, the Congress must decide
between the top two vote-getters. On two occasions
in the recent past Congress picked the front runner,
but this is not mandatory. Should Laugerud come in
l
a c ose second to Rios, there would be consider-
able pressure on the government-controlled legisla-
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oo
Rios supporters are convinced that some fraud
will be used. If their candidate loses by a narrow
margin, they are likely to try to stage protest dem-
onstrations, and an unstable situation could develop.
Although senior army leaders are opposed to Rios,
they want no part of a blatantly fraudulent election.
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INDIA: The outlook for India's spring grain
harvest has been dimmed by abnormally dry weather dur-
ing January and February. Shortages of electrical
power and diesel fuel have hampered irrigation; wheat
rust, which has reduced the spring harvest in recent
years, has reappeared.
The US agricultural attache has modified downward
his estimate of the total 1973/74 grain crop to 108
million tons. Although this would approximate the
record output of 1970/71, it would be sufficient only
to sustain already low per capita consumption levels
and will not allow the government to rebuild buffer
stocks.
The deteriorating prospects for the spring har-
vest, the slow rate of progress in government procure-
ment of grain from last fall's bumper harvest, and
unexpected increases in wholesale prices between
September and December--when the harvest normally
brings a decline in prices--have prompted New Delhi
to purchase 100,000 tons of Australian wheat. This
is India's first foreign grain purchase since Moscow
agreed last October to loan two million tons.
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There is no firm indication that India is plan-
ning to buy US grain, although some US dealers antici-
pate Indian purchases by summer. New Delhi may be
waiting in the hope that prices in the US will fall
as the new crop is harvested. Although the delay also
would give India a better chance to assess its spring
harvest, it could result in the recurrence of food
F`~
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