CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A018300100001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 14, 2016
• Document Release Date: July 28, 2003
• Sequence Number: 1
• Publication Date: February 25, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
NL 41
25 February 1971
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No. 0048/71
25 February 1971
Central Intelligence Bulletin
CONTENTS
CAMBODIA: Phnom Penh's oil reserves are being re-
p le' nni ed. (Page 1)
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USSR-CHINA-UN: Moscow evidently hopes China's UN
ad.mis,51on will be delayed at least until 1972.
(Page 3)
NATIONALIST CHINA: Newspapers are challenging Tai-
pei's foreign and domestic policies. (Page 4)
BERLIN: Stoph has proposed negotiations with the
Senat on visits by west Berliners. (Page 5)
AUSTRIA: The government may provoke a vote of con-
fidence over the army reform issue. (Page 7)
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NIGERIA: The government is moving to increase its
oii revenues. (Page 10)
ALGERIA-FRANCE: Oil nationalization (Page 11)
CHILE: Pressure on banks (Page 11)
USSR-JAPAN: Trade trouble (Page 12)
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CAMBODIA: Phnom Penh's petroleum reserves are
gradually being replenished.
Recent deliveries of an estimated 18,000 metric
tons of petroleum supplies from South Vietnam via a
series of armed convoys on the Mekong River have
eased the oil crisis. There are now enough stocks
in the city's petroleum depots to meet essential
military and civilian requirements for at least
three weeks.
Some petroleum has also been trucked into Phnom
Penh from Cambodia's only refinery at Kompong Som,
as well as from Saigon and Thailand. Such shipments
have amounted to less than a thousand metric tons of
petroleum since last December, however, because of
the continuing insecurity of key highways.
Shipments from Kompong Som to Phnom Penh over
Route 4 since it was reopened in late January have
been disappointingly small, primarily because of
enemy ambushes that have destroyed or damaged a
score of trucks. As an alternative to the use of
Route 4, the Cambodians are planning soon to start
regular petroleum deliveries from Kompong Som to
Phnom Penh by sea and the Mekong River, in small,
recently chartered tankers.
Phnom Penh's longer range petroleum situation
remains precarious, however. The Cambodians have
not as yet followed through on plans to purchase
petroleum transport vessels of their own. Moreover,
their Mekong supply route is maintained by foreign
vessels and crews, which could suddenly abandon
this service if the Communists increase their har-
assing attacks. The hazards of the Mekong passage
were again emphasized on 22 February, when enemy
fire struck six of nine commercial vessels in the
convoy, sinking one.
25 Feb 71 Central Intelligence Bulletin
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USSR-CHINA-UN: Soviet officials evidently view
China's UN admission as inevitable but hope that it
will be delayed at least until 1972.
The Soviet Foreign Ministry's chief China
watcher, Mikhail Kapitsa, told US Ambassador Beam
on 23 February that it was quite clear that China
was definitely interested in UN membership. As an
indicator of this, he claimed that Peking had "dis-
cussed" developments in last year's General Assembly
session with Moscow. Other Soviet officials have
recently publicly and privately predicted that Peking
will gain UN admission in either 1971 or 1972.
Kapitsa pointedly noted, however, that he was
"absolutely convinced" Peking will not abandon its
demand that Taiwan be ejected from all UN organs
as a condition of Peking's membership. A Soviet UN
diplomat who spoke to a US official on 22 February
added that Peking would also reject UN membership
if Taiwan was not expelled from all UN-related
agencies. Moscow may be hoping that Western resist-
ance to Taiwan's expulsion will delay Peking's ad-
mission this year.
Soviet diplomats, including Kapitsa,have made
it clear that Moscow will not drop its public--
albeit half-hearted--support for Peking's entry.
Despite this public posture, Moscow remains unhappy
with the prospect of Peking's presence in the UN,
fearing the Chinese will use the body as a forum to
voice anti-Soviet policies and could undercut Mos-
cow's appeal to the large third world contingent.
Nevertheless, it is unlikely that the Soviets
will risk upsetting their somewhat improved rela-
tions with Peking by becoming openly identified with
efforts to delay its admission. Moscow, however,
will continue to be attentive to opportunities for
engaging in backstage efforts to forestall Peking's
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NATIONALIST CHINA: Over the past four weeks a
series of unusually forthright articles in Taiwan's
most widely circulated newspapers has challenged
Taipei's foreign and domestic policies.
One article deplored Taipei's use of "obsolete
slogans" to characterize a changing situation, add-
ing that the nation's policies are "extremely rotten
hallucinations," another termed them "foolish." The
papers called for a realistic, flexible response to
international issues, particularly by dealing with
states having other social systems, and to domestic
problems by going all out to modernize the country.
In discussing US actions, two other articles pointed
out that Washington will be governed not only by a
desire to preserve Taipei's position, but also by
its own interests and needs, which may not coincide
with those of the Nationalists.
Such articles would not continue in Taiwan's
controlled press without government acquiescence.
They echo the wide-ranging discussions on these
topics now occurring at all levels and reflect a
growing realism among many Nationalists. There is
no sign, however, that Chiang Kai-shek, who will
make the decisions, has been convinced that the sit-
uation warrants alteration of policies, although he
may be amenable to face-lifting surface measures.
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BERLIN: East German Premier Stoph has proposed
negotiations with the West Berlin Senat on an agree-
ment regulating the visits of West Berliners to East
Germany and East Berlin.
There has been no permanent agreement on this
matter since the Berlin wall went up in 1961. Stoph
envisages an agreement by Easter, but failing this,
also proposed passes for the Easter holidays, so that
West Berliners might be able to visit their rela-
tives in the East during this popular spring travel
period.
It is too soon to say whether this is more than
an attempt to influence the course of the West Berlin
elections in March, but Stoph's letter leaves a num-
ber of loopholes through which East Germany could
evade an agreement by April. For example, West Ber-
liners would be required to enter East Germany "in
the same fashion" as other visitors, which suggests
that they might have to get visas, a condition prob-
ably unacceptable to Bonn. Stoph also conditioned
his proposal by adding that an agreement can be re-
alized, if accords over "other questions touching
West Berlin...are put into effect." This suggests
that success in the four-power talks or the East -
West German negotiations may be posed as precondi-
tions.
There is even a precondition to a temporary
agreement at Eastertime, to the effect that West
Berlin authorities would "prevent unnecessary com-
plications in the situation of the city" during the
negotiation period. If this condition were accepted,
it would be up to Pankow to define "complications"
in whatever manner it wished and thus exercise a
veto whenever it appeared convenient.
West Berlin Mayor Schuetz would like to respond
positively to Stoph, but within the framework of the
four-power negotiations, where the issue of the
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Senat's role in inter-Berlin relations has been
raised but not yet resolved. Schuetz's proposed re-
sponse is now under study in Bonn. Over the decade
the Senat has negotiated temporary agreements for
intercity travel, with Bonn's a
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AUSTRIA: Chancellor Kreisky's minority Social-
ist government may ultimately provoke a vote of con-
fidence following the breakdown last week of three-
party talks on army reform.
Kreisky's reform plan, arising out of a Social-
ist campaign promise made for the March 1970 elec-
tion, is aimed at reducing the term of compulsory
military service from nine to six months. The plan
could possibly become the most divisive national is-
sue to have faced the Austrian Government in over a
decade and is opposed by the military establishment
as well as the opposition People's Party and to a
lesser extent the Liberal (Freedom) Party. Oppo-
nents of Kreisky's plan fear that it would weaken
the army. There are also indications of Swiss and
West German concern and reservations about the Aus-
trian plan.
Kreisky plans to discuss with his cabinet this
week a draft bill embodying his army plan to be sub-
mitted to parliament in May. The chancellor appears
to be confident that the small Liberal Party will
support him when the chips are down rather than
stand with the People's Party to secure his defeat.
Under the present government, the Liberals have
gained influence beyond their numbers by giving
Kreisky the majority he needs in parliament. The
chancellor, if defeated on the army reform issue in
May, probably would call for new elections, which
recent polls indicate would result in a clear-cut
Socialist majority.
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NIGERIA: The government is moving to increase
er
its oil revenues as well as to secure greater con-
trol of the country's rich oil resources.
Shell-BP, by far the 'Largest producer in Ni-
geria, is slated to begin negotiations on 8 March
to revise the price of crude oil exported from Ni-
geria and on other aspects of its operations in the
country. The government will probably demand terms
from producing companies at least as favorable as
those recently extended to Persian Gulf members of
the Organization of Petroleum Exporting Countries
(OPEC) as well as any concessions granted to Libya.
Although Nigeria is not now a member of OPEC, it is
considering joining.
The government also has demanded at least 51-
percent participation in the offshore oil conces-
sions that were tentatively awarded last July. The
five companies involved, none of which is a major
American or international producer, are all newcomers
to Nigerian exploration. Although Nigerian insist-
ence on majority ownership had been expected, several
new conditions were outlined last week.
The government has stated it intends to partic-
ipate fully in management, technical, and financial
decisions, but there are indications that it will
not insist on majority decision-making power for it-
self. When oil is found in commercial quantities,
the government's share of exploration costs is ex-
pected to become an interest-free loan from the
company involved. In addition, the government has
requested bonuses based on future production levels,
donations for educational purposes, and offers of as-
sistance for student and teacher exchange. Although
some of the terms are somewhat stiffer than expected,
at least one of the companies appears ready to ac-
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ALGERIA-FRANCE: Irked by French delay in re-
suming oil negotiations, the government unilaterally
took over 51-percent ownership of the French-owned
oil company assets in Algeria. Compensation for the
nationalized French holdings, which produce more
than one third of Algerian crude oil, will be nego-
tiated. This action increases the production capa-
bility of Sonatrach, the Algerian state oil company,
to more than two thirds of Algerian output.
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CHILE: Private commercial banks whose share-
holders have refused to sell out to the Allende re-
gime are being heavily fined for alleged violations
of regulations. Two banks must pay large fines
within ten days, and an additional four banks will
also be fined according to the Superintendent of
Banks. Thus far the regime has acquired control of
four of Chile's 27 private commercial banks. In
another development, RCA has agreed to sell Chile
an additional 18-percent interest in its electronics
manufacturing subsidiary, giving Chile control with
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51-percent ownership.
(continued)
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USSR-JAPAN: Negotiations on a ten-year, $350-
million deal to barter Japanese equipment for Soviet
wood chips have broken down over price differences.
This is the latest in a series of proposed long-term
economic development projects in Siberia to encounter
difficult negotiations. According to a press report,
the Soviets rejected the Japanese proposal which of-
fered higher than world prices for imports of Soviet
wood chips, a $45-million credit for construction of
a wood chip factory, and the supply of other machin-
ery and equipment. The Soviets may only be attempt-
ing to drive a hard bargain but the Japanese claim
they will not resume negotiations unless the Soviets
accept the present offer. The Soviets may be will-
ing to gamble because they are aware that the ar-
rangement would not generate much in the way of ex-
ports before 1975.
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