CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A023400030001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 14, 2016
• Document Release Date: June 25, 2003
• Sequence Number: 1
• Publication Date: December 14, 1972
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 42
14 December 1972
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No. 0299/72
14 December 1972
Central Intelligence Bulletin
USSR-CHILE: Allende trip apparently has not changed
Moscow, s cautious aid policy. (Page 1)
FRANCE: Tough French stance on coming trade talks
indicated. (Page 3)
'UK: Economic growth rate slows. (Page 5)
MALAGASY REPUBLIC: Tribal rivalries unsettle gov-
ernment. 7Page 6)
SOUTH KOREA: Pak forms "rubber stamp" council
Page 8)
MALAYSIA: Sluggish economy and high unemployment
(Page 8
SRI LANKA - CHINA: Peking fulfills arms aid com-
mitment (Page 9)
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USSR-CHILE: President Allende's recent visit
to Moscow apparently did not result in any signifi-
cant change in Moscow's cautious policy toward eco-
nomic aid to Chile.
Allende was accorded the usual round of offi-
cial ceremonies and met on several occasions with
the top Soviet leaders. Before and during the
visit, lower level officials held intensive talks
on aid matters. The joint.communique issued on 10
December cited general areas of the Soviet aid com-
mitment, but gave no indication that hard currency
assistance would be forthcoming.
an economic eT-egafion
remai e e "concrete measures"
promised in the communique. This delegation report-
edly consists largely of Chilean Communist Party
members. The president of the Chilean Central Bank,
who accompanied Allende to Moscow, has said that a
program of permanent and definitive economic ex-
changes would be set up to make unspecified Chilean
economic sectors complementary with the Soviet
economy.
The Soviets' own current economic difficulties
will make it more difficult for them to meet Chilean
needs, particularly in the realm of hard currency
which Santiago urgently requires. The communique,
in fact, implies that the bulk of any "new" aid will
involve Chilean utilization of about $200 million
in project and commodity credits extended in earlier
agreements.
The generally bland communique did not contain
the standard invitation for a return visit by the
Soviet leadership. The Chileans reportedly opposed
including such an invitation for fear that it would
complicate Allende's already delicate domestic sit-
uation. The communique avoided specific criticism
of the US, relying instead on pro forma references
to "international monopolies" and national sovereign
rights in the exploitation of natural resources.
(continued)
14 Dec 72 Central Intelligence Bulletin 1
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The Chileans won last-minute inclusion in the
communique of a pledge to coordinate positions on
Law of the Sea matters for the UN-sponsored confer-
ence to commence in Santiago in 1974. The subject
was discussed at length because Chile and several
Latin American states claim a 200-mile offshore
limit. This conflicts with the Soviets' distant-
waters fishing interests.
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FRANCE: There is considerable sentiment in of-
ficial 'circles for a generally tough French stance
on the multilateral trade negotiations expected to
begin late next year under GATT auspices.
The comments of Jean-Pierre Brunet, director of
economic affairs in the Foreign Ministry, reflect
widely shared opinions, many of which run contrary
to US hopes for the negotiations. Brunet neverthe-
less emphasized that Paris had not yet focused on
all of the issues and that he was offering personal
views. As could be expected, these differed from US
positions most widely on agriculture. He noted that
France still tends to favor an international com-
modity agreement to deal with trade in grains and
that achieving this is the key to agreement on agri-
culture.
Even more troublesome may be Brunet's view of
the GATT negotiations which are to determine whether
outsiders are due compensation for the possible ad-
verse effects on them of the EC's enlargement.
Brunet believes that Paris will not want to make
any concessions in these negotiations, which are to
precede the multilateral trade talks. The community,
he said, could not be expected to reduce agricul-
tural protection in the first set of negotiations
and then be called on to liberalize further in the
subsequent bargaining.
Brunet reiterated the French view that "for
some years to come" the EC's common external tariff
would continue to be an indispensable element of
community cohesiveness and that Paris thus opposed
the complete elimination of industrial tariffs. He
did suggest that the community might eventually pro-
pose "harmonizing" the industrial tariffs on the
developed countries, possibly at three separate
levels: manufactured goods, semi-processed goods,
and raw materials.
(continued)
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Brunet remarked that, because of the complexity
of negotiating non-tariff barriers to trade, Paris
had thus far made no progress in determining its
policy in this area--which many consider the heart
of future trade liberalization efforts.
On the question of whether a failure of the US
to obtain a clear and precise negotiating mandate
from Congress would kill all prospects for the
multilateral negotiations, Brunet was less categor-
ical than other recently reported official remarks
had been. He, nevertheless, indicated there was
considerable French concern on this score and that
Paris still hopes for a strong congressional mandate.
F__ I
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UK: A leveling off of economic growth and a
weakening international payments position will
create major policy difficulties for London next
year.
After a rapid rise in the third quarter of
1972, economic growth has slowed to about four per-
cent, according to the prestigious National Insti-
tute for Economic and Social Research. In November,
the trade deficit rose to $190 million, ending a
steady improvement in the trade balance since the
end of the dock strike in August. With prices
rising at about eight percent annually, inflation
continues to threaten Britain's international com-
petitiveness.
The Heath government is focusing on the prob-
lems of inflation and its impact on the interna-
tional sector, and will probably opt for less
stimulus to the economy to slow the rise in prices
and improve the trade balance. Such action, how-
ever, could create domestic problems by slowing
growth and adding to the already difficult problem
of unemployment.
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MALAGASY REPUBLIC: General Ramanantsoa's
seven-month-old government is increasingly troubled
by rivalry between the island's two main tribal
groups.
A dispute over reforms in the educational sys-
tem is the most immediate cause of heightened ten-
sion between the wealthier, better educated Merina
of central Madagascar and the cotier (coastal)
tribes. The dispute has split the national student
coalition formed after the downfall of former pres-
ident Tsiranana, himself a cotier, last May.
Cotier students believe the reforms, designed to
reduce French influence, are working to the benefit
of the Merina. The cotiers particularly resent the
imposition of the Malagasy language, which is es-
sentially Merina, and they want Merina teachers
replaced by cotiers. The government has imposed
a curfew on the coastal city of Tamatave and sent
security reinforcements there following clashes
between Merina and cotier students. During the
rioting a large hotel was destroyed by fire and a
prison reportedly set afire. Cotier students in
other coastal towns are reported restless-.
Many cotiers, including some officials, be-
lieve the government is acquiring an increasingly
Merina complexion and will try to impose Merina
domination on the numerically larger and once po-
litically dominant cotiers. Ramanantsoa, a Merina,
is acutely aware of cotier sensitivity and appointed
members of both groups to his cabinet. The better
qualified Merina, however, hold almost all the key
ministries, and Ramanantsoa's close personal ad-
visers are Merina. Cotier fears are ready-made
for exploitation by ousted cotier officials of
the Tsiranana regime.
Ramanantsoa, in a radio address on 13 Decem-
ber, cautioned against too rapid educational re-
form and promised the creation of a new national
language synthesizing the major dialects. He
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faces a serious test in trying to hold the tribal
rivalries in check. While assuaging cotier fears,
he must also deal with dissatisfaction among radi-
cals, mostly Merina, who believe the government
carrying out its promised reforms too slowly. II 25X1
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SOUTH KOREA: The National Council for Unifi-
cation to be elected on 15 December will re-elect
President Pak next week and serve merely as a rub-
ber stamp for future regime policies. Candidates
for the 2,359 seats on the Council have been largely
handpicked by the government, and the closely con-
trolled campaign has generated little public enthu-
siasm. Regime confidence that it can carry out
this process with no difficulty has prompted it to
lift some security regulations and restore a few
democratic trappings. After reopening universities
early this month, the government on 14 December re-
scinded its two-month-old martial law decree and
announced that it will lift the ban on political
activity after the presidential inauguration on
27 December. Other extensive government controls
are to remain in force, however, and will continue
to forestall any active opposition.
MALAYSIA: The government's budget for 1973
is designed to stimulate the sluggish economy and
reduce the high unemployment rate. Malaysia's eco-
nomic growth rate fell drastically from about seven
percent annually during the late 1960s to only two
percent in 1971, but has recovered somewhat to al-
most four percent this year. The slowdown was due
largely to declining world prices for Malaysia's
major export commodities and stagnating private in-
vestment. The new budget offers several inducements
to encourage both domestic and foreign investment,
including a reduction of the minimum development
tax to aid small investors, a liberalization of tax
allowances on export sales, and provisions for cus-
toms-free warehouse facilities. By encouraging in-
dustrial development, Kuala Lumpur hopes to cut
into the high unemployment rate, which has been
running at about eight percent for the past several
years.
(continued)
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SRI LANKA - CHINA: Peking has fulfilled its
outstanding military aid commitments to Colombo
with the delivery of a fifth Shanghai II class mo-
tor gunboat. The boats, which are to be used as
coastal patrol craft, were promised to Colombo dur-
ing the insurrection in April 1971. Almost $1 mil-
lion worth of ground forces equipment also was of-
fered at that time but was not accepted by Colombo
until March 1972. Delivery of this equipment, in-
cluding 12 85-mm. field guns, was completed by
mid-year. In the future, Sri Lanka will seek to
obtain virtually all its military needs from tra-
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ditional Western sources.
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