CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026200190001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 22
• Document Creation Date: December 15, 2016
• Document Release Date: March 30, 2004
• Sequence Number: 1
• Publication Date: March 14, 1974
• Content Type: REPORT

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Central Intelligence Bulletin
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c
March 14, 1974
DIA and DOS review(s) completed.
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Central Intelligence Bulletin
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LAOS - NORTH VIETNAM: Hanoi signals its support for
coalition government and its satisfaction with effec-
tiveness of cease-fire. (Page 2)
PORTUGAL: State of alert lifted. (Page 3)
OIL: Arab oil ministers' conference recesses. (Page 5)
VENEZUELA: President wants new arrangements with
foreign-owned oil companies. (Page 6)
ECUADOR: Tough oil policy discourages new explora-
tion. (Page 7)
CHILE: Junta reaffirms plans for major changes prior
to resumption of civilian rule. (Page 8)
CHILE: Government and nationalized copper company
reach agreement on compensation. (Page 10)
WESTERN EUROPEAN UNION: French rebuffed at meeting
this week. (Page 11)
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FRANCE: Efforts made to extend life of aging stra-
tegic bomber force. (Page 15)
USSR-JAPAN: Progress made toward completion of joint
coal-mining project. (Page 17)
SPAIN: Government to stimulate economy. (Page 18)
FOR THE RECORD: (Page 19)
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LAOS - NORTH VIETNAM: The surprise return of
North Vietnamese Ambassador Le Van Hien to Vientiane
yesterday after an effective absence of nearly ten
years is a further manifestation of Hanoi's support
for a coalition government and of its satisfaction
with the results of the Laos cease-fire.
Hien's presence should buoy the spirits of
Prime Minister Souvanna, who has been discouraged
over the recent lack of movement toward forming the
new government. Soviet Ambassador Vdovin told the
US ambassador earlier this week that Hien's arrival
is linked to the early establishment of a coalition.
The North Vietnamese have supported the Vien-
tiane peace agreement
Despite e ovie Ambassador's comments,
however, Hanoi probably sees little reason to pres-
sure the Pathet Lao to move more briskly in the ne-
gotiations over implementation of the agreement.
Hanoi seems to have judged it prudent to permit
the Pathet Lao to move at their own measured pace
toward a coalition because the North Vietnamese al-
ready have gained a number of advantages through
the cease-fire agreement that they do not wish to
see jeopardized. These include an unchallenged
buffer zone contiguous to North Vietnam and unim-
peded use of the eastern Lao panhandle for logistic
activity.
Mar 14, 1974
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*PORTUGAL: The state of alert in Portugal,
during which troops were confined to their barracks,
has been lifted.
There are indications, however, that younger
officers who sympathize with General Spinola, an
advocate of greater autonomy for the overseas ter-
ritories, are being quietly posted as far away from
Lisbon as possible. The US defense attache reports
This dispersal of officers suggests that right-
ists are attempting to undercut Spinola's support in
the military. Once this is achieved, they may feel
more secure about disposing of Spinola himself.
The reaction from Angola, one of the overseas
territories, is mixed. Most civilian and military
leaders seem relieved that Spinola's suggestion
about self-determination has run into trouble.
Some officials, concerned about a regression to the
Salazar era, say that Portugal's African policy can
never be the same, now that Spinola has spoken out.
The media in Angola have supported Prime Minister
Caetano's handling of the affair, although one edi-
torial criticized the National Assembly for endorsing
Caetano without having fully debated the issues.
A communique issued after a cabinet meeting on
Tuesday emphasized the country's economic problems
and did not even mention the disruptive dispute over
Mar 14, 1974
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the overseas territories. There have been rumors,
but no confirmation, that a decision to revamp key
cabinet ministries was made at the meeting. The
government's reluctance to announce any such changes
may be attributable to its concern that the informa-
tion would increase tensions between the militar
and the government.
*Because of the shortage of time for preparation of this item, the analytic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of the Bureau of Intelligence and
Research, Department of State.
Mar 14 , 1974 Central Intelligence Bulletin
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*OIL: The Arab oil minister's' conference in
Tripoli recessed Wednesday evening without making
any announcement about the oil embargo or future
oil-production levels. It will reconvene on Sunday
in Vienna, where the Organization of Petroleum Ex-
porting Countries will be meeting to discuss oil
prices. The official reason given for postponement:
was to allow time for the ministers to consult with
their governments.
According to a report from the US Embassy in
Tripoli, the conference ended apparently in a dead-
lock. There appeared to be a chance for an agree-
ment up until the last moment, when Libya and Syria
decided to hold out against lifting the embargo. A
high Libyan official, however, told the press after
the conference that the ministers had, in fact, de-
cided to end the embargo.
Nine of the ten member-nations of the Organiza-
tion of Arab Petroleum Exporting Countries were rep-
resented at the Ti oli meeting. Ira boycotted
.the conference.
*Because of the shortage of time for preparation of this item, the analytic
interpretation presented here has been produced by the Central.Intelli-
gence Agency without the participation of the Bureau ol' Intelligence and
Reseutrch, Department of State.
Mar 14, 1974
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VENEZUELA: President Carlos Andres Perez told
a visiting US official this week that his administra-
tion is planning to work out a new arrangement with
the foreign-owned oil companies operating in Venezuela.
Perez said it would be impossible to continue
the present concessionary arrangements until they be-
gin to expire in ten years, and that some change would
be necessary. Nevertheless, he expressed hope that
the oil companies would make the first move by pre-
senting their ideas on the subject, and he promised
that his administration would respond.
Perez' remarks--in private as well as during the
campaign and in his inaugural speech this week--indi-
cate that he intends to proceed at a deliberate pace,
disregarding leftist and nationalist calls for imme-
diate nationalization., He appears willing to con-
sider recommendations of the oil companies as well as
advice from a broadly based commission that he in-
tends to set up to advise the government on possible
alternatives for operating the oil industry. Once he
has these recommendations, Perez is expected to draw
up legislation to take over the industry.
The President has set no timetable, but he
clearly does not intend to allow the talks with the
oil companies to continue indefinitely.
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ECUADOR: Only two foreign firms have,bid for
new oil-exploration rights in Ecuador. The-lack of
interest among other companies is one of the dis-
couraging effects of Quito's highly nationalistic
petroleum policy, which the companies feel overly,
restricts foreign investors. It may forebode the
political eclipse of Gustavo Jarrin, the influential
minister of natural resources and author of the mil-
itary government's oil policy.
Because of the high prices for petroleum, Quito
had expected keen competition in the bidding, but of
the 35 firms that had expressed interest, only the
Argentine and Polish state oil. companies actually
submitted bids. The other companies apparently con-
cluded that the areas offered for exploration did
not have the potential to justify acceptance of.
Quito's terms. The terms are stiffer than those for
Texaco-Gulf, the only current producer in Oriente,
the eastern region of Ecuador. Last August, Texaco-
Gulf signed a 20-year contract which, in accordance
with the 1972 hydrocarbons law, provides that all
oil company property, including machinery and equip-
ment, will revert to the state at no cost when the
contract expires.
Since the Rodriguez government took power in
1972, Quito has dramatically increased its control
over the petroleum industry. During ..this period,
little additional petroleum of commercial quantity
or quality has been discovered. In addition to
Texaco-Gulf, other foreign-owned companies. are ex-
ploring in Oriente, but only one is likely to enter
production--and only on a modest scale--within the
next few years. .
A sharp increase in petroleum revenues--esti-
mated at over $600 million for 1974--will ease pres-
sure for immediate changes in the government's na-
tionalistic policies. Even without further oil de-
velopment, total government revenues this year could
be two and a half times those of 1972. Nevertheless,
the low turnout of bidders will contribute to an
eventual modification of exploration policy.
Mar 14, 1974
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*CHILE: Pronouncements marking six months of
government by the armed forces and carabineros
strongly reiterate the regime's determination to re-
structure Chile's political, economic, and social
systems before allowing a return to civilian rule.
These statements outline the regime's plans for
the creation of a "social democracy" free of the
partisan politics of the past. The military and
police will eschew reliance on any organized polit-
ical group and attempt to create their own base of
mass popular support through a highly structured
chain of command extending from the junta to neigh-
borhood councils. Participation will be compulsory.
Junta President Pinochet emphasized the regime's
sympathy with the low-income groups that are bearing
the brunt of the economic recovery program. He de-
clared that further privations lie ahead, but he
promised that "the same generation will reap the
fruits of these sacrifices." Pinochet also noted
that new taxes will spread the burden more evenly
and warned "those who seek only their own profits
and ignore their social duties" that drastic penal-
ties will be imposed for violations of economic
regulations.
Former Christian Democratic Party head Eduardo
Frei was the only living ex-president not present
to hear Pinochet's speech. He reportedly had planned
to attend but changed his mind following publication
of the social development paper, a portion of which
strongly attacked his party,
(continued)
Mar 14, 19 74 Central Intelligence Bulletin
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Nevertheless, yesterday's press confirmed that
the document did not come from the junta. This pub-
lic disclaimer seems to represent a significant ges-
ture toward the Christian Democrats on the part of
the government.
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*B CC,[ ISC of the shortage 01' time for prep ration of tilis item, t I I C analytic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of' the Bureau of Irltclligcnce and
Research, Department of' State.
Mar 14, 1974
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CHILE: Santiago has signed a $41.8-million com-
pensation agreement with Cerro Corporation for copper
investments nationalized by the Allende government in
1971. The Allende government had agreed to compensate
Cerro but was ousted before a settlement could be con-
cluded.
A cash payment of $3.2 million was made to Cerro
at the signing on March 12, and the remaining $38.6
million is to be paid within 17 years. Santiago
agreed to Cerro's request that payments be free from
Chilean taxes. Cerro has managed the nationalized
mines since expropriation, and plans to continue this
relationship.
Talks continue with two other US copper firms,
Anaconda and Kennecott, whose properties were also
nationalized. The two firms value their assets at
around $600 million, but Santiago reportedly is of-
fering far less. Negotiations are likely to be more
protracted than those with Cerro, because there are
substantially larger sums involved and the issues
are more complicated. A timely settlement would pave
the way for renewed activity by Anaconda in the
Chilean copper industry through technical assistance
and management contracts. Kennecott, on the other
hand, has evinced no interest in returning to Chile.
The accord with Cerro should encourage new for-
eign investments and credits. It will also reassure
major Western creditors as March 25, the date the
Paris Club members are to sign a draft accord on
Chilean debt reschedulin , draws near.
Mar 14, 1974
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WESTERN EUROPEAN UNION: The French failed at
the annual foreign-ministers' session of the seven-
nation Western European Union this week to win ap-
proval for reactivation of the moribund Standing
Armaments Committee. The participants decided to
refer the French proposal to the union's permanent
council for further study. The French wish to share
in the lucrative European arms market but want joint
European arms procurement to be discussed in the
union rather than in the NATO Eurogroup, from which
Paris has excluded itself.
The other six members of the union supported
armaments cooperation in the Eurogroup, with only
Italy showing any sympathy for the French position.
The French contended that it was politically impos-
sible for them to cooperate in the Eurogroup because
of its close link to NATO. The others chose not to
discuss a proposal made by Belgium at a previous
meeting to use French interest in the European arms
market to edge Paris toward some linkage between
the union and Eurogroup. Despite its formal status
as a meeting of foreign ministers, the only partici-
pants of ministerial rank who were present were Dutch
Foreign Minister van der Stoel, the host, and Luxem-
bourg Foreign Minister Thorn.
A West German Foreign Office official has in-
dicated that Bonn takes a somber view of the pros-
pects for European defense cooperation. The West
Germans see the armaments field as the most promising
area for progress toward defense cooperation. De-
spite French attempts to persuade the other six to
deal with arms questions in the union rather than
in the Eurogroup, the West Germans plan to continue
pressing forward in the latter arena. In order to
prevent the isolation of France, however, Bonn plans
to continue to examine the possibility of armaments
cooperation between the Eurogrou and the union's
Standing Armaments Committee.
F
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FRANCE: The French may modify their aging
Mirage IV strategic bomber force to extend the serv-
ice life of these aircraft to about 1985. According
to recent press reporting, the government has asked
the air force general staff to study how the bomber
fleet can be kept in service until that date. Pres-
ent plans ca 1 for the aircraft to remain in service
until 19 80 .
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The first Mirage IV squadron entered service
some ten years ago, and the entire fleet is suffering
from maintenance and aging problems. Four bombers
crashed. during a seven-month period last year; at
least two of the accidents were attributed to mechan-
ical failure. In addition, the bombers have been
subjected to greater stress than planned because of
a change in mission-flight profile. The Mirage IV,
which was designed for high-altitude use, has been
flown as a low-altitude attack bomber since 1969,
with resulting strain on the aircraft structure. The.
change in flight profile was required in order to de-
crease the bombers' vulnerability to Soviet air de-
fenses.
The French apparently. have no plans for a fol-
low-on strategic bomber, although they expect to have
a multipurpose tactical fighter with a deep-strike
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capabilitV operational by the of this decade.
Mar 14, 1974
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Japanese Interested In Siberian Resources
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USSR-JAPAN: The USSR and Japan initialed a
document last week that could pave the way for one
of their biggest economic deals.
If final agreement is reached, the Japanese
will provide $400 million to help finance a coal-
mining project in Yakutsk. In return, Japan will
get more than 5 million tons of coking coal annually
for 16 years, beginning in 1983. The terms of the
Japanese credit and the price of the coal are among
the important details that have to be worked out at
negotiations in Tokyo later this month. The Japa-
nese, who found the Soviets more disposed to nego-
tiate than before, are confident that an agreement
will soon be reached.
The Yakutsk project thus seems closer to getting
off the ground than the other prospective projects
in Siberia. The outlook is not so favorable for
joint development of oil, gas, or timber.
The project with the next best chance of suc-
cess involves exploration for Sakhalin oil. Soviet
trade and banking officials are expected in Tokyo
soon to.discuss Japanese loans for this project.
The USSR has been asking for $200 million; the
Japanese have been offering substantially less.
The preliminary agreement on the Yakutsk coal
project is the first tangible sign that the long
deadlock between the USSR and Japan over exploration
of Siberian resources may have ended. Just before
the Japanese delegation arrived in Moscow to nego-
tiate the coal agreement, General Secretary Brezhnev
sent Prime Minister Tanaka a message urging joint
development in Siberia. Their desire to press ahead
also suggests the Soviets are concerned that Tokyo's
relations with Moscow are taking a back seat to its
relations with Washington and Peking.
Serious obstacles nevertheless remain. The
Japanese need US equipment to undertake the Yakutsk
oil and gas project, but US participation is threat-
ened by restrictions on Export-Import Bank financing
for the USSR. The Soviets, for their part, think
that because Japan has been hit hard by the energy
crisis it will eventually have to meet Moscow's
terms.
Mar 14 , 1974 Central Intelligence Bulletin 17
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SPAIN: Spain stands almost alone among West
European countries in its decision to stimulate the
economy in order to counter the adverse effect of
high petroleum prices on demand. Madrid hopes to
lift the growth rate this year above 5 percent, one
of the most ambitious targets in Western Europe.
The shift in Madrid's policy will cause a sub-
stantial budget deficit instead of the small surplus
anticipated earlier. The government will spend an
additional $500 million to subsidize petroleum pro-
ducts as a means of shielding the private sector from
the effects of price increases. On the tax side, the
government will reintroduce the investment tax credit
that was used successfully in 1971 to stimulate the
economy.
Monetary policy will also become more expansion-
ary. The growth rate of bank credit--extremely high
last year--will probably be increased again this year.
A more effective export-financing program designed to
help reduce the trade deficit and boost the domestic
economy is also planned.
Although the new, expansionary measures will
lift the growth rate, they will also add pressure to
the rate of inflation, already among the highest on
the continent. Moreover, a high growth rate will
stimulate imports, thus worsening the balance-of-pay-
ments deficit. Madrid apparently expects to meet
this problem by borrowing abroad and drawing down is
substantial foreign reserves.
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German : The two German governments today
will sign the protocol authorizing the exchange
of permanent missions. Bonn's mission will pro-
vide full consular services for West Berliners.
Mar 14, 1974
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