CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A018900110001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 14, 2016
• Document Release Date: July 28, 2003
• Sequence Number: 1
• Publication Date: May 6, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
State Department review completed
Secret
N2 040
6 May 19 71
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No. 0108/71
6 May 1971
Central Intelligence Bulletin
CONTENTS
COMMUNIST CHINA,- US: Trade and travel. (Page 1)
CEYLON: Many insurgents have surrendered, but a
substantial force remains. (Page 2)
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INTERNATIONAL MONETARY SITUATION: Suspension of
dollar trading. (Page 6)
IRAQ: Demands to oil companies. (Page 8)
NATO: Troublesome questions for the ministerial
meeting next month. (Page 9)
SOMALIA: Two high-ranking officers have been ar-
rested. (Page 10)
SOUTH AFRICA - ZAMBIA: Pub:Lic disclosure of govern-
ment contacts has generated little reaction. (Page 11)
ECUADOR: A cabinet resignation has shaken the gov-
ernment. (Page 13)
LATIN AMERICA - USSR - UN: Russian trade technicians
Page
ALBANIA-GREECE: Diplomatic relations (Page 14)
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COMMUNIST CHINA - US: Peking continues to show
interest in responding to US initiatives easing
trade and travel restrictions.
The Chinese for the first time are permitting
foreign representatives of American subsidiary firms
to attend the current Canton trade fair, and they
have also made tentative inquiries about the possi-
bility of buying certain products directly from US
companies in the future. Although the Chinese still
have refrained from dealing directly with American
businessmen, these developments nevertheless reflect
a policy shift on the part of Peking and suggest
that the Chinese are poised to make further responses.
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Peking has shown no inclination to backpedal
its response to US initiatives in spite of its re-
cent, harsh propaganda attacks on remarks by the
State Department's press spokesman concerning the
"unsettled" question of Taiwan's sovereignty. Pe-
king's reaction followed by three days Taipei's
official demarche on the subject. By contrasting
the US position on Taiwan with recent US "gestures
to improve relations with China," Peking is attempt-
ing to focus on the outstanding problem in Sino-US
relations without rejecting these gestures.
6 May 71
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CEYLON: Many insurgents surrendered during
the government's truce period, but a substantial
force is thought to remain in the field.
At the end of the four-day truce period Tues-
day, an official spokesman put the number of insur-
gents who had surrendered at just under 4,000. This
figure is probably exaggerated somewhat, however.
Moreover, many of those who surrendered are probably
not dedicated insurgents but rather individuals
pressed into service by the rebels at the height of
the uprising. Many rebels, on the other hand, have
probably deserted their cause and returned home
quietly rather than surrender or face the protracted
jungle fighting that apparently lies ahead.
Earlier estimates of rebel strength--ranging
up to 20,000--now appear to have been too high.
There may still be as many as 3,000 hard-core in-
surgents, however, plus an unknown number of less-
committed supporters or sympathizers. The rebels
are continuing to carry out scattered attacks, often
directing them against civilians as well as security
patrols. Government forces now intend to step up
operations into areas of rebel strength, but it is
doubtful that they have the capability to carry out
an effective campaign.
6 May 71 Central Intelligence Bulletin 2
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*INTERNATIONAL MONETARY SITUATION: Most West
European central banks suspended trading in dollars
yesterday in an attempt to stem the inflow of dollar
funds, which had reached levels considered by many
officials to be intolerable.
Immediately prior to the suspension the German
Bundesbank took in $1 billion, bringing the total
inflow to more than $2 billion since Monday's an-
nouncement by five German re-search institutes recom-
mending upward change in the mark parity. The Swiss
National Bank took in a further $600 million yester-
day.
The Bundesbank was the first to act. Most
other central banks followed the German lead, in
some cases suspending trading in many European cur-
rencies as well as in dollars. The French continued
accepting dollars but suspended trading in other cur-
rencies. Free market gold prices continued to rise,
although not to the extent that some observers ex-
pected.
Bundesbank President Karl Klasen has announced
that German official foreign exchange markets would
be closed until Monday. Unofficial foreign exchange
trading will continue, but without official support
the mark will float. Undoubtedly many other Euro-
pean currencies will also be allowed to float for
the remainder of the week while Europeans await the
results of a German cabinet meeting scheduled for
Friday. Given the suddenness of this most recent
monetary disruption, the decision to allow the mark
to float for a period of time, as was done in 1969,
seems the most prudent course for the German cabinet
to follow.
A revaluation of several European currencies
relative to the dollar would help the US balance of
payments, although resentment against US policies
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would continue. At the same time it would generate
new problems within the European Community. The Com-
munity members had previously agreed to closer mone-
tary cooperation, in particular to narrowing the al-
lowable fluctuations around official exchange pari-
ties, beginning on 15 June.
*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 Defense Intelligence
Agency, Department of Defense.
6 May 71
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IRAQ: The government has given the oil com--
panies-until today to respond to a long list of
demands concerned mainly with retroactive payments,
increased production, and greater investment.
Iraqi Vice President Ammash specified that
neither adjustment of the method of calculating
the value of Iraqi oil exported by pipeline to the
eastern Mediterranean nor a provision for future
upward price adjustment was negotiable. Using
tactics similar to those of the recent Tehran and
Tripoli negotiations, he threatened to legislate
demands not accepted by the companies. He also
threatened nationalization if the companies refused
to abide by the legislation.
Iraq can ill afford the financial loss of an
interruption of its oil flow for very long. More-
over, Baghdad is not likely to get the active sup-
port of other major oil producing countries. The
oil company negotiators are scheduled to return to
Baghdad today but are not expected to go very far
toward meeting Iraq's demands. The talks are
likely to drag on for some time; Iraq appears deter-
mined to play one-upmanship with, its Arab brethren.
6 May 71 Central Intelligence Bulletin
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NATO: The troublesome: questions of Portugal's
policy in Africa and the undemocratic nature of the
Greek regime are likely to be raised at the ministe-
rial meeting in Lisbon next month.
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Norwegian Foreign Minister Cappelen told Ambas-
sador Crowe earlier this week that he intends to
raise both the Portuguese and Greek questions. The
Labor government in Oslo is committed to increase
pressure on the two regimes and hopes that its ex-
hortations in NATO will he:Lp satisfy the activists
in Labor's left wing.
Neither the Italians nor the Norwegians want
to precipitate a major debate with the Portuguese
and the Greeks. Most of the other Allies would
also like to avoid any acrimonious discussion.
Some Allies were initially reluctant to meet in
Lisbon at all. In addition, West German defense
officials have considered the idea of providing
military assistance to Greece and Portugal through
multilateral channels to help deflect criticism of
aid to the two governments.
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SOMALIA: Two high-ranking officers of the
Supreme Revolutionary Council (SRC) have been ar-
rested, allegedly for plotting against the regime.
Whether or not there was an actual plot, SRC
member General Salad Gaveire has long been known as
a leading opponent and potential rival of General
Siad, the head of the council. For some time fol-
lowing the coup of October 1969, Gaveire was report-
edly involved in plotting, but apparently ceased
this activity in early 1970.
marcn or i.s year, Gaveire was dropped
as a ense minister when another SRC officer, who
was his principal supporter, was purged from the
council.
Little is known of the recent activities of
SRC Vice President Mohamed Ainanshe, the other vic-
tim of what is probably a power play within the
council. General Ainanshe may have been under some
suspicion last year when he was given a number of
assignments that required extensive foreign travel.
Several other officers and civilians have also been
arrested, according to Mogadiscio radio, but their
identity is not known.
Gaveire's arrest is a sharp setback for the
anti-Siad clique within the SRC and is a further
indication that Siad is slowly strengthening his
hand. The departure of the two officers has now
reduced the SRC's original total of 25 members to
21, two other been purged earlier.
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SOUTH AFRICA - ZAMBIA: Prime Minister Vor-
ster's public disclosure of his private contacts
with President Kaunda over the past three years has
generated little reaction outside the two countries.
Last month, Vorster announced in Parliament
that he had been in communication. with Kaunda through
envoys and correspondence since mid-1968. His mo-
tives for this disclosure are unclear, but certainly
one was to discredit Kaunda, one of the most militant
exponents of diplomatic and economic sanctions
against South Africa. In rebuttal, the Zambian Gov-
ernment has contended that Kaunda was only trying
to determine if South Africa could be dissuaded
from supporting the rebel regime in Rhodesia and
that he never had any intention of establishing a
formal relationship with Pretoria. To support its
position, Lusaka has released the text of the let-
ters between the two leaders.
Press coverage in both countries has been ex-
tensive. Most of the South African press has sup-
ported what it sees as a sincere effort by Vorster
to improve relations with Zambia, despite Kaunda's
known antagonisms toward Pretoria and his support
of anti - South African guerrilla groups. The
Zambian press in turn has emphasized Kaunda's be-
lief that fundamental differences between Zambian
and South African philosophies on human rights pre-
cluded any dialogue that would encourage the growth
of trade or diplomatic relations. Among most other
black states, however, the incident appears to have
received only passing notice,.
It is still too early to determine whether
Vorster will profit from his disclosure in any
significant way. The revelation of supposedly se-
cret contacts could frighten away other moderate
black African states that might be interested in
establishing private contacts with Pretoria. On
the other hand, Vorster presumably believed that
if he could damage Kaunda's credibility, this would
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help clear the way for moderates to respond to
South Africa's call for a dialogue and would more
than justify the potential disadvantages. To demon-
strate to moderates that it can be discreet, South
African officials have pointed out on occasion that
Pretoria refrains from publishing a breakdown of
trade statistics between South African and individ-
ual African countries "out of respect for sensibil-
ities of black African states."
6 May 71 Central. Intelligence Bulletin 12
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ECUADOR: A cabinet resignation has shaken the
Velasco government.
Minister of Government Galo Martinez resigned
on Tuesday in protest to President Velasco's accusa-
tion that he had been involved in the clandestine
return from exile of former Guayas prefect Assad
Bucaram. Rumors. that Bucaram, who is one of the
President's most bitter critics, had returned have
been circulating for several weeks. His first pub-
lic appearance was by video tape played on TV sta-
tions in Quito and Guayaquil on Tuesday.
Martinez, one of the President's most loyal
friends and lieutenants, is the third prominent
presidential follower to :Leave the scene in past
months. Although Martinez appears to have been out-
raged at the President's accusations, he is a shrewd
politician and may believe that the time has come
to leave the government.
If Bucaram is allowed free movement it would
indicate that Velasco has lost support from the
military, increasing the :Likelihood that he will
soon leave office.
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NOTES
LATIN AMERICA - USSR - UN: Two Russian trade
technicians will soon join the staff of the UN Eco-
nomic Commission for Latin America (ECLA) under an
arrangement in which the USSR will pay part of their
salaries. The two will work in ECLA's trade policy
division, which is studying expanded Latin American
commerce with Communist countries. The Soviet Em-
bassy in Santiago has for some years included an
official whose chief duty is liaison with ECLA,
which has its headquarters in Chile.
ALBANIA-GREECE: The Greek Government is sched-
uled to announce today that after 31 years it has
decided to re-establish diplomatic relations with
Albania. Agreement was reached. despite the fact
that the two countries technically are still at
war because no peace treaty has been concluded fol-
lowing World War II.
an a -sa-ff or
will a sent to irana as soon as possible.
The Greek Government believes the move will
benefit its general posture in the Balkans and may
help eventually lay to rest the historical dispute
over the territory of northern Epirus (now part of
Albania). For Albania, the move fits in with its
nearly two-year-old drive to normalize relations
with its neighbors, and establish relations with
the states of the Mediterranean Basin and Western.
Europe.
6 May 71 Central Intelligence Bulletin
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