WEEKLY REPORT PREPARED EXCLUSIVELY FOR THE SENIOR INTERDEPARTMENTAL GROUP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A002900300001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 14, 2016
• Document Release Date: March 11, 2003
• Sequence Number: 1
• Publication Date: November 20, 1967
• Content Type: IR

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DIRECTORATE OF
INTELLIGENCE
Intelligence Report
Weekly Report
Prepared Exclusively for the
Senior Interdepartmental Group
Secret
STATE review(s) completed.
20 November 1967
No. 0437/67
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WARNING
This document, contains information affectizt tilt, national
defense of the Uni'tcd States, within the nic pining of Title
18, sections 793 and 794, of the US Codc> as amended.
Its transmission or revelation of its contr rats to or re-
ceipt by an unauthorized person is prohi' itvd by law.
8OM -'_'lJMAI:C
~Af~fN C. ANI7
... R'Ir"A Yrf ~tl
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Cyprus . . . . . . . . . . . . . . . .
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Thailand . . . . . . . . . . . . . . .
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India . . . . . . . . . . . . . . . .
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Peru-Chile . . . . . . . . . . . . . .
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UNCTAD . . . . . . . . . . . o I ? . .
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The intensity of the immediate crisis over
Cyprus is likely to stimulate initiatives look-
ing toward a new modus vivendi among the parties,
although the prospects of any fundamental solution
are still dim.
Turkey believes that it is under severe pres-
sure to extract the maximum concessions from the
Greeks, using the US as an intermediary. Ankara has
suggested to the US ambassador that the removal of
the "illegal" Greek presence on the island--some
5,000 to 12,000 military personnel--and restitution
for the damage from the most recent fighting would
be a useful first step. Following this, the
broader aspects of the whole problem could be con-
sidered. Ankara has further asserted that in any
event it cannot condone further Greek or Greek Cyp-
riot attacks on the Turkish Cypriot community.
Athens' present position is not clear. While
it tends to blame General Grivas for the crisis,
it is clear that Grivas' initial moves, at least,
were coordinated with the Greek military. The Greek
Government will certainly regard its removal of
Grivas from the island and the promises Makarios
has made to give relief to the ravaged villages as
having gone far in meeting the Turkish demands.
Athens, however, will find it very difficult
to agree to remove the Greek "illegals," particu-
larly if this demand is put in the form of an ul-
timatum. Moreover, there is no reason to believe
that the junta can easily be sold any solution
short of some form of enosis (union) with Greece.
Makarios' position probably is in some disar-
ray. He may now be agreeable to gestures that
would calm the current tensions, but he is un-
likely to agree to any plan that would basically
alter the political status quo on the island.
His basic objective still appears to be to main-
tain a large measure of autonomy, if not outright
independence, for his government while retaining
Greek mainland support to hold off Turkish pres-
sure.
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2. THAILAND
Bangkok is taking a tough line in negotiating
a status-of-forces agreement with the US.
The chief Thai negotiator recently suspended
further discussions until the US agreed to Thai
wording on several draft articles. He told US
officials that the criminal jurisdiction issue
was the key problem, and stated that his govern-
ment would not grant the broad authority the US
enjoyed in other countries.
He also said that Bangkok would prefer no
agreement at all to protracted negotiations or
to a treaty which did not reflect the "unique"
relationship between the US and Thailand. He
stated that if a satisfactory solution was not
reached soon, the Thai Government would begin to
exercise jurisdiction over US military personnel
in many types of cases in which it has heretofore
waived responsibility.
This unyielding position reflects the tradi-
tional sensitivity of the Thais to anything which
they view as impinging on their sovereignty. Bangkok
leaders have consistently taken the position that the
US military presence in Thailand differs from that
in other countries and that any formal status-of-
forces agreement must not imply that the US has
a legal right to maintain military bases there.
The Thai negotiator, for example, has argued that
the US forces were not "invited" into the country
but were there as a result of Thai acquiescence.
The Thai position is also motivated by a desire
to undercut domestic criticism that the Bangkok
leadership is not sufficiently solicitous of
Thai national interests in relations with the US.
Increased domestic political activity in prepara-
tion for elections expected next year will put
further strains on US-Thai relations in the coming
months.
20 November 1967
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3. INDIA
Despite the fact that Indian military ex-
penditures have remained within previously planned
budgetary limits, there is growing concern about
the increased pace of Soviet military aid deliver-
ies to New Delhi.
The USSR has agreed to provide India with
about $675 million worth of military equipment,
of which $525 million has been contracted for since
1964. In so doing the USSR has become India's
major supplier of arms. This relationship, which
began in 1960 with the purchase of some transport
aircraft and helicopters, subsequently expanded
to include such items as tanks, MIG-21 jet fight-
ers and factories to produce them, and surface-
to air missiles. Arms purchases from Western
sources, meanwhile, have dropped below the planned
level as a result of the US-UK embargo on the
supply of lethal military equipment to the sub-
continent following the 1965 Indo-Pak war.
The hard currency expenditure for the mili-
tary budget originally envisioned under the Five-
Year Defense Plan (1964-69) has not in fact been
realized even though some additional arms pur-
chases have been necessitated by the lag in in-
digenous arms production programs. India re-
cently announced the purchase of 127 SU-7 Fitter
fighter bombers and 12 SU-7 trainers from the
USSR, billing them as substitutes for aircraft
unavailable from the lagging HF-24 aircraft produc-
tion program. These new purchases will be paid
for in rupees over a ten-year period, thus spread-
ing out payments beyond the plan period. Repay-
ments on the total Soviet military aid debt are
expected to amount to about $70 million annually
in 1968-69.
-3- 20 November 1967
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Recent political developments in Chile and
Peru may cause US investors to shy away from these
countries.
Chilean President Frei may be forced to ask
the US-owned copper companies to invest locally
the profits they have made as a result of high
copper prices or pay their taxes in advance. Al-
though such action would run counter to the cop-
per agreements signed last year and thus reduce
Chile's attractiveness to new investors, it is
the price some politicians are asking for support
of the President's controversial 1968 wage-price
policy. Frei considers the legislation vital to
his stabilization program, which is aimed at cur-
tailing the inflation that has plagued Chile for
more than 50 years.
In Peru, the government has decided to take
the International Petroleum Company (IPC)--a sub-
sidiary of Standard Oil--to court in an attempt
to collect taxes on IPC profits for the last 15
years. The government also wants the company to
pay taxes it alleges the company has owed since
1959.
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5. UNCTAD
Underdeveloped countries are unlikely to be
satisfied with the proposals to be presented in
February at the second plenary session of the
United Nations Conference on Trade and Development
(UNCTAD) in New Delhi.
At this session the developed countries will
offer preferential tariff treatment for products
manufactured in underdeveloped countries--goods
which account for about 10 percent of the latters'
exports. Manufactured goods constitute the poor
countries' fastest growing segment of exports, but
their share of world trade in these products has
shrunk because of their inability to keep pace
with competition from industrial countries. The
proposed tariff concession is offset to some ex-
tent by import quotas. For example, textiles, the
largest single manufactured export item from less-
developed countries, are almost universally subject
to quantitive import restrictions.
The underdeveloped countries will push hard
for commodity agreements to support and stabilize
declining prices of raw materials and agricultural
products that comprise most of their foreign trade.
Some progress is being achieved in this field, but
such agreements often are self defeating, driving
importers to seek less-expensive substitutes or
to encourage domestic production.
The growing burden of debt service which cuts
into the capacity of disadvantaged countries to
import goods for sustaining economic progress also
will be brought up at New Delhi. At the present
rate of foreign lending to underdeveloped countries
and corresponding repayments, net lending will be
zero in just a few years. No developed country
currently proposes to expand foreign aid, and the
poor countries are certain to remind the conference
that few have met UNCTAD's goal of providing one per-
cent of national income as aid to underdevelo ed
countries.
-5- 20 November 1967
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