CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A024700100001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 9
• Document Creation Date: December 14, 2016
• Document Release Date: August 18, 2003
• Sequence Number: 1
• Publication Date: June 19, 1973
• Content Type: REPORT

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Central Intelligence Bulletin
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No. 0146/73
19 June 1973
Central Intelligence Bulletin
CONTENTS
INTERNATIONAL MONETARY DEVELOPMENTS: Dollar continues
to drop on European markets. Page 1)
BRAZIL: President Medici names retired general as
successor. (Page 2)
ITALY: New prime minister will negotiate to bring
Socialists back into government. (Page 3)
JAPAN: Tokyo will reverse policy of restricting
rice production. (Page 5)
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INTERNATIONAL MONETARY DEVELOPMENTS: Following
the release of the annual report of the Bank of In-
ternational Settlements (BIS), which presented a
pessimistic view of short-term prospects, the dollar
reached record lows yesterday in Frankfurt, Amster-
dam, and Copenhagen, and moved lower on all other
major European exchange markets. The Bundesbank was
forced to intervene to support the Dutch guilder
after the mark's more rapid appreciation relative
to the dollar left the guilder at its floor against
the mark within the narrow European currency band.
The amount of required intervention, however, was
small. Italian officials are considering steps to
halt the recent decline in the lira. Trading on
most markets was relatively light. The price of
gold rose $2.50 an ounce in London to $122.50 at
the close of the trading day.
The dollar's decline is due to continuing un-
certainty about the adequacy of the new US anti-
inflationary program and the pessimistic atmosphere
prevailing at the BIS annual meeting in Basle.
Central bankers tend to agree with the BIS assess-
ment that the short-term international economic out-
look is bleak, and that the present high rate of
world inflation will continue for some time, despite
recent increases in interest rates in Belgium,
Canada, the Netherlands, West Germany, and Japan.
There reportedly was strong opposition to the US
proposals for exchange adjustment on the basis of
objective criteria, increasing doubts about the
likelihood of agreement on monetary reform before
the meeting of the International Monetary Fund in
Nairobi in September.
19 Jun 73 Central Intelligence Bulletin
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BRAZIL: President Medici's long-expected naming
of Ernesto Geisel to succeed him when his term ends
in March 1974 will ensure that Brazil's basic policy
directions remain largely the same.
Geisel, a retired four-star
general who has held high-level non-military govern-
ment posts, is highly regarded by most senior offi-
cers. No problems should arise over his nomination.
Geisel's name has been the most consistently men-
tioned since succession speculation began many months
ago. In fact, no viable rival candidates ever
emerged.
Geisel will be formally elected in January 1974
by an electoral college composed of Congress and
other delegates chosen from each of the states.
While basic policy will not change, Geisel's style
and the composition of his government team will
differ from those of Medici. Some Brazilian observ-
ers suggest that the new president may be disposed
to a slight loosening of the restrictions on politi-
cal activity.
19 Jun 73 Central Intelligence Bulletin
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ITALY: Hard bargaining on the terms for a new
government will begin tomorrow when President Leone
is expected to name a prime minister - designate.
Interior Minister Mariano Rumor, leader of the
Christian Democrats' largest faction, will probably
be tapped. Rumor is a moderate who served as prime
minister in center-left governments in 1968-69 and
1970.
The nominee will have the difficult task of
carrying out negotiations aimed at bringing the So-
cialist Party back into the government after a year
in the opposition. The Christian Democrats' resolve
to move in that direction was emphasized Sunday by
the selection of Senate President Amintore Fanfani
as party secretary. Fanfani, one of the architects
of the first "opening to the left" in 1962, was in-
strumental in the party's unified return to that
theme at its recent national congress.
Although the Christian Democrats and Socialists
clearly want to renew their collaboration, both par-
ties remain divided over the exact form of a new
partnership. Some Christian Democrats and Socialists
prefer a transition period during which the Social-
ists would remain outside the coalition but support
the government in parliament. The Socialists' left-
wing minority is reportedly lobbying for such an
arrangement, although the party's majority is appar-
ently eager for full coalition status.
Several longer range and more basic issues must
also be faced. The Socialists' potential partners--
especially the Christian Democrats and Social Demo-
crats--will seek assurances that the Socialists will
not gravitate toward the Communist opposition as
they did in the former center-left period. Bargain-
ing will also be complicated by the smaller parties'
call for agreement in advance on specific reform
programs.
19 Jun 73 Central Intelligence Bulletin 3
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JAPAN: Beginning next April, Tokyo will re-
verse its policy of restricting rice production.
The move comes in the wake of growing Japanese con-
cern over the availability of feed grains from the
US and other countries, as well as the continuing
demands for rice from other Asian countries. The
policy change could boost production by about ten
percent, or roughly a million metric tons, but this
additional supply would not be available before late
next year. Crop diversion payments will still be
authorized for riceland where alternative crops are
grown. By selling rice at the government procure-
ment price, farmers could earn at least double the
subsidy they now receive for leaving the land fal-
low. The measure may have been timed to bolster
farm support for the ruling party just prior to the
July 1974 elections for the Upper House of the Diet.
Two years ago the Liberal Democrats lost several
seats in that chamber because of farmer discontent
with their rice support policies. Now faced with
a possible loss of his party's majority in the Upper
House, Prime Minister Tanaka seems determined to woo
back old friends.
19 Jun 73 Central Intelligence Bulletin 5
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