CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A021400010001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 8
• Document Creation Date: December 14, 2016
• Document Release Date: June 23, 2003
• Sequence Number: 1
• Publication Date: March 7, 1972
• Content Type: REPORT

Approved Fo'elease 2003/08/05: CIA-RDP79T0090214(SeC1et2
DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 41
7 March 1972
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No. 0057/72
7 March 1972
Central Intelligence Bulletin
CONTENTS
MALTA-UK: Gap narrowed on most issues. (Page 1)
CYPRUS: Pressure mounts on Makarios. (Page 2)
URUGUAY: Government devalues currency and estab-
isshhes dual exchange rate. (Page 3)
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CELILLTA-UK: The London talks narrowed the gap
on almost all issues, but some financial questions
remain unsettled.
The meeting yesterday between Prime Ministers
Mintoff and Heath resulted in progress on crucial
bilateral issues. Mintoff accepted new and more
generous British proposals that call for a gradual
phasing down of the number of Maltese employed by
UK forces. In addition, both sides appear to have
come close to an understanding on the key question
of pay for Maltese serving in the British armed
forces.
The chief remaining bilateral problems concern
Mintoff's demands that Britain stand by its offer
to the previous Maltese government of $7.8 million
in aid for improving the Malta drydocks, and that
UK forces no longer be granted exemptions from
certain import duties. In a reversal of its earlier
position, London proposed splitting the difference
on what Mintoff was demanding, but the Maltese
leader rejected the compromise offer.
Mintoff is also continuing to insist on an ad-
ditional, one-time payment of $13 million beyond
the final UK-NATO offer of $36.4 million annually.
NATO Secretary-General Luns was present during some
of the negotiating sessions and will report today
to the North Atlantic Council on the results of the
talks.
Mintoff will return to Valletta today for con-
sultations with his supporters on the current state
of play of the talks. The Maltese parliament has
been adjourned until 20 March, thus giving Mintoff
additional freedom of action in bargaining with
London. Prime Minister Heath reminded Mintoff that
time is short and if the British completed their
withdrawal an "entirely new situation" would be
created. No further meetings have been scheduled
and British Defense Secretary Lord Carrington said
that the next move was up to Mintoff.
Mar 72 Central Intelligence Bulletin
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CYPRUS: Archbishop Makarios may choose to
resign soon in the face of mounting pressure from
Athens and the Bishops of the Cypriot Church.
Athens has reiterated its demands of 11 Feb-
ruary that Makarios turn over the controversial
Czechoslovak arms to the UN forces and form a new
government, excluding leftists and Communists--
"anti-nationalist" elements. Makarios has not for-
mally replied to these demands, but he has hinted
at a willingness to compromise on the arms issue.
The Greeks, however, are wary of the Archbishop's
delaying tactics, and the new note reflects Athens'
desire that Makarios respond quickly.
The day after the new note was delivered, two
of the three Bishops insisted again that Makarios
resign as president or face the consequence of
being stripped''of all ecclesiastical power. They
argue that the church's prestige is damaged by the
Archbishop's dispute with Athens. Massive demon-
strations have underscored Makarios' popularity,
but in the face of the Bishops' pressure, which
has been supported indirectly by the most powerful
Greek Orthodox leaders, he may choose to resign.
He is probably convinced, despite the lack of hard
evidence, that Athens is behind the Bishops' actions.
Makarios may have believed that he could out-
wit the Greeks as long as the problem was one be-
tween himself and the mainland. Now that the rift
threatens church-state relations, the Archbishop
may fear a civil war that could easily involve the
Turkish Cypriot community and result in Greek or
Turkish intervention. If he does resign, however,
he may chance calling elections immediately in the
hope of being returned triumphantly as secular and
religious leader of the Greek C riot community.
7 Mar 72
Central Intelligence Bulletin 2
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URUGUAY: The new government has acted to com-
bat the country's long-standing economic ills by
formally devaluing the peso and establishing a dual
exchange rate system.
The formal devaluation of the trade rate is
50 percent, but additional fees previously charged
make the effective devaluation about 35 percent.
A floating rate for other transactions is intended
further to relieve pressure on the peso. The new
foreign trade rate will be changed frequently, in
contrast to the previous practice of avoiding de-
valuation because of anticipated political reper-
cussions. The government also will try to refinance
the country's large foreign debt.
An attempt will be made to revive economic
growth by raising public investment expenditures
and encouraging private investments through tax
incentives, technical assistance, and redirected
credit. Efforts to cut the inflation rate through
wage and price controls and budget balancing will
be delayed for about six months while wages and
prices are adjusted to compensate for the effects
of devaluation. A private sector wage increase
is to be granted on 1 April to match an increase
already granted public sector employees. More-
over, prices of public services will be raised to
reflect real costs, thereby reducing the need for
government subsidies.
The decline in export earnings last year helped
to produce a balance-of-payments deficit that sharply
reduced foreign exchange reserves. Although the de-
valuation initially will help boost exports, severe
inflationary pressures are likely to continue and
sustained bens it will depend on frequent currency
7 Mar 72 Central Intelligence Bulletin
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