CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026400240001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 24
• Document Creation Date: December 22, 2016
• Document Release Date: November 3, 2010
• Sequence Number: 1
• Publication Date: May 23, 1974
• Content Type: REPORT

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Top Secret
Central Intelligence Bulletin
Top Secret
May 23, 1974
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May 23, 1974
Central Intelligence Bulletin
CONTENTS
INDIA: Nuclear program depends on foreign help.
(Page 3)
PORTUGUESE AFRICA: Officials express reservations
about future of Mozambique. (Page 5)
SOUTH VIETNAM: Survey of Communist military action.
(Page 11)
INTERNATIONAL MONETARY DEVELOPMENTS: Decline of dol-
lar may be ending. (Page 15)
NETHERLANDS-NATO: Negative reaction to Dutch pro-
posal. (Page 16)
UNITED KINGDOM: London reportedly prepared to ap-
prove plans for US base at Diego Garcia. (Page 17)
INDIA: Government breaks rail strike. (Page 18)
CHINA: Chou Not Well, But Still in Charge. (Page 19)
FOR THE RECORD: (Page 24)
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INDIA: Although the device exploded in the
Indian nuclear test last Saturday was indigenously
produced, New Delhi was able to build it only by tak-
ing advantage of technology and materials provided
by Canada and, to a lesser degree, the US and the
USSR. The nuclear material itself almost certainly
came from the Canadian-built CIRUS research reactor
at the Bhaba. Atomic Research Center at Trombay.
The CIRUS reactor, which has been in operation
since 1960, has used heavy water provided by the US
to slow the flow of neutrons. Some of India's heavy
water requirements have also been filled by imports
from the USSR. The CIRUS reactor uses natural ura-
nium that comes from Indian mines.
Since the early 1960s, the Indians have been
producing weapons-grade plutonium from the irradiated
fuel used to power the reactor. This work has been
done at an Indian-built chemical separation plant
also located at Trombay.
The only reactor safeguard agreed to by New
Delhi was a written statement to the Canadians that
the reactor and its products would be used only for
peaceful purposes. Canada has long held that any
explosion would be a violation of this agreement,
but India has never accepted this interpretation.
A Canadian official said yesterday that Ottawa for
the present is suspending all shipments of nuclear
equipment and material to India and is ending all
exchanges on nuclear technology.
May 23, 1974 Central Intelligence Bulletin
(continued)
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PORTUGUESE AFRICA: :Portuguese authorities are
optimistic about relatively peaceful political settle-
ments in Angola and Portuguese Guinea, but they are
expressing grave reservations about the future of
Mozambique.
In a private discussion with the US ambassador
in Lisbon on May 20, General Costa Gomes, the number-
two man in the junta, expressed fear that a referendum
on self-determination in Mozambique would result in
a vote for independence and would be followed by civil
war. He based his fears on the rapid deterioration
in relations between Mozambique's blacks and whites in
recent years and the bitter ethnic rivalries within
the territory's African majority. Costa Gomes also
expressed concern that should the insurgents win
political control in Mozambique, Chinese influence
over the insurgents would preclude any future ties
between Lisbon and the territory.
Costa Gomes is more optimistic about the future
of Angola and Portuguese Guinea, where there is less
racial and ethnic antagonism. In Angola, none of the
three competing liberation groups is politically or
militarily capable of pressuring Lisbon into negotiat-
ing independence on its terms.
The prospects for ending the war in Portuguese
Guinea are good. The two sides will begin cease-
fire negotiations in London on May 25. Lisbon rec-
ognizes that the insurgents form the only organiza-
tion of any consequence there, and the Portuguese,
therefore, might be willing to recognize their claim
to the territory.
Costa Gomes' views are probably shared by many
other officials in the provisional government. De-
spite his reservations, he reiterated his belief that
the government must follow through in its commitment
to give the territories' inhabitants a free choice in
deciding their future. His scenario for Mozambique
may be unduly bleak, particularly with regard to his
May 23, 1974
Central Intelligence Bulletin
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estimate of Chinese influence. His comments on ra-
cial and ethnic tensions, however, are close to the
mark, and these tensions presage a dangerous political
situation for the territory.
The provisional government's commitment to self-
determination for the territories, including the op-
tion of independence, was emphasized publicly this
week by Interterritorial Minister Santos in a press
conference in Lourenco Marques. Santos expressed
the belief that Mozambique would opt for independ-
ence and that a black government would come into
being in the territory. His statements came as
dramatic news to his listeners, but were really only
a restatement of the provisional government's basic
position on self-determination for the territories.
May 23, 1974 Central Intelligence Bulletin
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THAILAND
LAO5\
k a ,.:::Qian9Nyai
A~rfier~i ~~
5 7NrLJM
Bi NH
HINH.: TFr (UAN,
VIETNAM
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SOUTH.VIETNAM: Increased Communist military
action is continuing in the northern provinces but
falling off in most other areas. The latest actions,
consisting largely of rocket and mortar shellings,
have been directed at the provincial capital of Tam
Ky, the Quang Ngai airfield, and several other mili-
tary and civilian targets in the northern coastal
area. Only scattered ground contacts have been re-
ported in this region., however, since elements of
the South Vietnamese 2nd Division on May 20 abandoned
their efforts to retake lost territory in southern
Quang Tin Province.
Communist attacks have decreased significantly
in the central provinces, but Route 1--the only north-
south land link--remains blocked because of the de-
struction of three bridges by Communist sappers.
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Percent Change Since January 2, 1973
in the Value of Selected Foreign Currencies
Relative to the US Dollar
50 r
- 20 l l 1 1 1 1 _I_-_ I I __ I
4 1 6 3 7 5 2 7 4 1 1 5 3 17
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
1973 1974
'Relative to 16 major currencies.
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INTERNATIONAL MONETARY DEVELOPMENTS: The dollar?s
e xten a ec.ine ?w Ic ates 5 to m d-January--
may finally be over.
--US interest rates have been rising in recent
weeks, and this has encouraged dollar purchases.
--A general consensus has apparently emerged
in the market that the dollar's decline has
gone too far, considering the relatively favor-
able outlook for the US current account.
--Participants in the market also believe
that central banks are now prepared to inter-
vene to prevent a decline in the dollar.
Press reports of a central bank agreement to halt
the dollar?s decline helped push it up sharply last
week. The dollar gained about 3 percent against the
German mark, the Dutch guilder, and the Swiss franc
in the six trading days following the reports.
Smaller gains were recorded against most other major
currencies.
The impact of the reported agreement in Basel on
May 14 among the US, Swiss, and West German central
banks to support the dollar has so far been largely
psychological. Token dollar purchases by the West
German central, bank, coupled with inaccurate press
reports of US and Swiss intervention, convinced the
market that the authorities would force up the ex-
change rate of the dollar.
May 23, 1974 Central Intelligence Bulletin
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NETHERLANDS-NATO: The initial NATO response to
the Netherlands' draft ten-year defense plan, which
would significantly reduce active Dutch military
forces, has been overwhelmingly negative.
The Belgian representative at the NATO Defense
Planning Committee meeting on May 21 was particularly
incensed. Branding the Dutch plan "disastrous" and
"brutal," he said it was a breach of the Netherlands'
commitments to NATO and raised doubts about Alliance
solidarity. He pointed out that the proposed Dutch
reductions would increase the defense burdens of the
other member countries, and added that the request
for a formal NATO reply in one month represented
questionable consultation procedure. He also ex-
pressed fear that the Dutch proposals would set a
precedent that might be contagious.
The US, UK, and West German representatives
associated themselves with the remarks of their
Belgian colleague. The chairman of NATO's Military
Committee summed up the opposition when he stated
that the Dutch proposals went beyond the point where
quality could substitute for quantity.
Adverse NATO reaction has been anticipated--even
counted on--by Dutch opponents of the plan. The De-
fense White Paper has only provisional approval of
the Dutch cabinet and Prime Minister den Uyl's five-
party coalition is deeply divided, for the first time
on a major issue, over the cutbacks. The left wing
of the coalition, including members of Den Uyl's own
Labor Party, does not feel that the reductions go far
enough, while the two centrist Christian Democratic
parties have warned the government that drastic re-
ductions are "unacceptable." Defense Minister
Vredeing and Foreign Minister van der Stoel are
adamantly opposed to Dutch defense efforts' falling
below a certain level and are reportedly prepared to
resign over the issue.
May 23, 1974 Central Intelligence Bulletin 1.6
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A final cabinet decision is scheduled for June
21, but NATO has asked that it be postponed at least
until June 24. Should NATO voice strong formal op-
position, Vredeling and Van der Stoel, backed by the
Christian Democrats, would almost certainly demand
that the defense paper be reconsidered. Any conces-
sions by Den Uyl could split his own party and drive
the leftist Radical Party from the coalition.
A cabinet crisis cannot be ruled out, but two
factors militate against it. None of the five coali-
tion parties appears anxious for an election now, and
there is no alternative government leader of Den Uyl's
stature in sight. Den Uyl, however, is known to be
frustrated by his government's slow progress on im-
plementing social reforms. He is aware that recent
opinion polls show that support for NATO is rapidly
.diminishing in the Netherlands, and he is also mind-
ful of his party's election promises to reduce de-
fense expenditures. He may become even less amenable
to compromise if his party does well in the nation-
wide municipal elections on May 29.
UNITED KINGDOM: London is prepared to approve
plans for a US naval and. air base on Diego Garcia,
according to a high-ranking official in the British
Foreign Office. The assurance: was conveyed on May 17
to the US ambassador to India,who is visiting London.
The remarks of the British official appear to
remove any doubt about the Labor government's will-
ingness to conclude a base agreement. Former Prime
Minister Heath's Conservative government had reached
an agreement in principle with the US, but the base
agreement appeared to run counter to the Labor gov-
ernment's expressed interest in supporting various
international moves to create a zone of peace in the
Indian Ocean.
May 23, 1974
Central Intelligence Bulletin 17
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INDIA: Firm government action has broken the
nationwide rail strike that began on May 8. Although
the strike has not ended officially, rail employees
are returning to work in increasing numbers, and
train schedules are approaching normal.
Prime Minister Gandhi still refuses to resume
negotiations with the rail unions until the strike
is called off. The government, emboldened by the
success of its hard line, may be unwilling to grant
any significant concessions, or even agree to an of-
ficial settlement of the strike. Union leaders,
meanwhile, are divided over whether to fight on or
accept defeat.
Although industrial production has declined be-
cause of transport disruptions, the overall economic
effects of the strike are less severe than were an-
ticipated. Industrialized eastern India has been
hardest hit, but steel production there reportedly
had fallen off even before the strike went into ef-
fect on a nationwide basis. In most urban centers,
food prices are rising, but adequate supplies of
basic commodities have been maintained.
The government's success in refusing to be in-
timidated by the nation's largest single group of
employees may help to cool other discontented govern-
ment and quasi-government employee groups. It is
unlikely, however, to have any significant impact
on labor in the private sector, which accounts for
80 percent of the country's industrial production.
May 23, 1974
Central Intelligence Bulletin
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CHINA: Chou Not Well, But Still in Charge
Age has finally caught up with China's 76-year-
old premier, Chou En-lai., forcing a change--probably
permanent--in his operating style. He has cut down
on his onerous protocol functions in order to concen-
trate on important matters. He seems still very much
the man in charge of running China.
Chou's health could, of course, continue to de-
cline and force a further curtailment in his activi-
ties. Such a contingency could present dangers in
that Chou has been instrumental in keeping domestic
affairs on a relatively even keel and in executing
Mao's policies toward the US.
Beginning this month, a new pattern has emerged
in Chou's dealings with visiting foreign dignitaries.
The premier has skipped the physically taxing and
time-consuming aspects of these visits--airport re-
ceptions and send-offs and state banquets. He has
met the visitors at the state guest house, accompanied
them to meetings with Mao, and conducted the opening
round of talks, leaving the follow-up discussions to
vice premiers Li Hsien-riien and Teng Hsiao-ping.
Chinese officials have attributed the change en-
tirely to old age rather- than to any specific illness,
and have suggested that Chou'::, lighter workload would
allow him to concentrate on more important matters.
Politburo member Chi Tenq-kuei said the party
Central Committee had agreed to reduce Chou's proto-
col responsibilities and that with a reduced workload,
health would not prevent him from working "normally"
on "other matters." Chi. added that Chou is still very
much in control of day-to-day affairs.
Anti-Confucius Campaign
Foremost among the "other matters" demanding
Chou's attention is almost certainly the anti-Confu-
cius campaign, now in its tenth month. The premier
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has undoubtedly been deeply involved in the repeated
and only partially successful attempts from the cen-
ter to keep the campaign from getting out of hand.
Central Committee directives setting strict limita-
tions are finally having some impact in the provinces.
Political wall posters have been removed from unau-
thorized areas, and provincial media have in some
cases called for obeying party instructions to the
letter."
There is still much to do. At least some of the
attacks on provincial leaders may not have official
party sanction, and factionalism, including armed
conflict, remains a problem in a number of places.
Although the students, who were disruptive in the
early stages of the campaign, are not finding the
propaganda support they once had,
to many schools.
calm has not yet been restore
The resolution of the campaign, which probably
will include the fall of certain top party leaders,
is still in the future. Chou's lower public profile
has led to speculation outside China that the pre-
mier is on the losing end of the anti-Confucius cam-
paign and has been pushed into the background by his
political opponents, led by Mao's wife Chiang Ching.
Tt is far more likely that pressure from his op-
ponents kept Chou in a more active role for longer
than he originally intended. In order to provide
visible evidence of his continuing political health,
he did not begin to reduce his public appearances
until he had the situation in hand. Vice Premier
Teng Hsiao-ping reportedly said last January that
Chou would not be meeting as often with foreign visi-
tors because of his old age.
Chianq_China's Challenge
in February, Chiang Ching and her supporters
made a strong bid to gain control of the anti-Confu-
cius campaign, launching a savage attack in the cul-
tural sphere that seemed aimed at a top party official.
(continued)
May 23, 1974
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Chiang and her backers also brought pressure on the
moderates led by Chou to adopt a stiffer propaganda
line on certain foreign :policy questions like Taiwan.
Chou did not alter his public activities until
after he seemed to have successfully weathered Chiang
Ching's challenge. Her cultural attacks have not
claimed a high-level victim, and PRC media have not
repeated the line of last February that seemed to al-
low for a military liberation of Taiwan.
There also is speculation that Chou is preparing
to resign. Recent photographs showing Teng Hsiao-ping
in Chou's usual seat to Mao's right with Chou on Mao's
left suggest that Teng, for now at least, is the front
runner to replace the premier when the time comes.
Barring Chou's death or incapacitation, that time will
probably not come soon.
The party theoretical journal Red Flag ran an
article last November--and it has been republished
this month--that speaks disapprovingly of an ancient
prime minister who resigned under political pressure,
using ill health as a pretext. The article notes
that the reformist programs of the prime minister,
policies that closely resemble Chou's, had to be
abandoned because the prime minister was more concerned
with his "personal safety" and. "family fortune" than
with outmaneuvering his opponents in order to preserve
his reform.
Chou Will Not Give Up
Chou has survived decades of political infight-
ing and is not very likely to abandon the struggle
now, especially because the policies now at issue will
affect China well after his, and Mao's, death. Among
these is Sino-US detente, referred to in the Red Flag
article as "making friends with distant states."
Because Chou, like Mao, is deeply committed to
this and other policies, the message Red Flag is con-
veying seems to be that the resignation of the ancient
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prime minister was a bad mistake and ought not be
repeated. Indeed, the article implies in another
historical account that the anti-Confucius campaign
is necessary to protect current "Chouist" reforms,
domestic and international, and that the resigna-
tion of the premier would be a disaster to China.
For a quarter of a century, Chou has thrived on
a backbreaking schedule unmatched by any of his col-
leagues. Even with a reduced workload, Chou's bur-
dens are qreater than those of other Chinese leaders.
In recent years he has done everything from approving
editorials in the party newspaper People's Daily to
persuading Mao to upgrade academic standards in the
universities and complaining about the performance of
the foreign trade ministry.
in addition, he has always functioned as his own
foreign minister, a task that has increased dramati-
cally with China's expanding diplomatic contacts.
Sharing the Burden
From the start of the Cultural Revolution in
1966, Chou has until lately had only one major helper,
Vice Premier Li Hsien-nien, an economic. specialist
and perhaps Chou's closest personal associate in the
leadership. With the political rehabilitation a year
ago of Teng Hsiao-ping, the premier began to transfer
more responsibility to both Li and Tenq.
Either would be a logical successor, but Teng
has been given more prominence recently and, as a
former secretary general of the party, is the more
politically experienced of the two. Both have been
careful to mention Chou when they have stood in for
him in the last two weeks, and they will probably
continue to defer to him.
Should Chou depart, both men would want to con-
tinue present policies, but lacking power bases of
their own and the close working relationship with
Mao that Chou has, they would probably be less suc-
cessful than Chou in resisting leftist pressures.
;continued)
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Following the reduction in his protocol burdens,
Chou has been mentioned in the Chinese media more
frequently than he would have been if he had not re-
duced his protocol activities. At least two foreign
visitors have been officially described as visiting
China at Chou's invitation, an unusual formulation.
The Chinese have been at obvious pains to quell any
rumors from within China or without of Chou's polit-
ical demise.
This concession to public opinion may eventually
be abandoned as the world gets used to seeing less
of Chou. But if, as seems the case, Chou's political
influence remains undiminished, the premier does not
have to be seen in order to be effective.
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Ecuador: Limited oil reserves and inflationary
trends caused by the rapid inflow of revenue have
prompted the government to curtail production. The
Texaco-Gulf consortium, which accounts for 98 percent
of Ecuador's approximately 240,000-bpd output, may
have to be cut back to 200,000 bpd. Quito indicates
that it expects higher prices in the future.
Sudan: The trial of the Black September terror-
ists charged with murdering two US diplomats in March
x__973 is expected to begin in Khartoum early next
month. The Sudanese minister of interior informed the
IS embassy this week that pre-trial preparations are
tearly complete and that he does not anticipate a
[urther delay. A public announcement, however, is
unlikely until after May 25, the fifth anniversary
?)f the coup that brought President Numayri to power.
May 23, 1974 Central Intelligence Bulletin
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