CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026000130001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 15, 2016
• Document Release Date: March 19, 2004
• Sequence Number: 1
• Publication Date: January 21, 1974
• Content Type: REPORT

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Top Secret
Central Intelligence Bulletin
DIA and DOS review(s) completed.
Top Secret
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Janua 8 1, 1974
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January 21, 1974
Central Intelligence Bulletin
CONTENTS
ARAB STATES - ISRAEL: Israelis to begin withdrawing
troops from west bank of canal on Friday. (Page 1)
USSR-EGYPT: Moscow concerned about its exclusion
from disengagement talks. (Page 4)
CHINA - SOUTH VIETNAM: Chinese gain control of
Paracel Islands. (Page 5)
CAMBODIA: Fighting south of Phnom Penh light and
indecisive over weekend. (Page 6)
INTERNATIONAL MONETARY DEVELOPMENTS: International
reaction to Paris' decision to let franc float.
(Page 7)
ARGENTINA: Peron declares war on terrorist groups.
(Page 8)
ARAB FINANCIAL ACTIVITIES: Arab governments ponder
ways to invest surplus funds. (Page 9)
JAPAN-IRAQ: Tokyo will provide economic credits in
return for oil. (Page 10)
AUSTRALIA: Renewed pressure on government to cut
tie between US and Australian dollars. (Page 11)
GRENADA: Demonstrators demand resignation of Gairy
government. (Page 12)
FOR THE RECORD: (Page 13)
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ARAB STATES - ISRAEL: Israeli Chief of Staff
Elazar announced yesterday that Israel's forces will
begin withdrawing from the west bank of the Suez
Canal on January 25. The first portion of the Israeli
salient to be eliminated will be that south of the
Cairo-Suez road. This withdrawal will reopen the
road to Egyptian traffic, thereby freeing the en-
circled Third Army.
The Israeli announcement came after a meeting
yesterday between Elazar and Egyptian Chief of Staff
Gamasy at Kilometer 101. Their meeting was the first
of several scheduled to work out arrangements for
implementing the disengagement agreement signed on
January 18. No significant cease-fire violations
have been reported since the signing.
Egyptian officials are making determined efforts
to marshal wide Arab backing for the agreement. Pres-
ident Sadat over the weekend took his case to the
leaders of Saudi Arabia, Syria, Kuwait, Bahrain,
Qatar, and the United Arab Emirates. Although most
appeared eager to be briefed on the details of the
disengagement accord, none proffered enthusiastic
public support.
Sadat is particularly eager that Syria's Presi-
dent Asad withhold any criticism of Egypt's initiative
in negotiating with Israel. Syria so far has not
issued an official reaction to the agreement; Damascus
radio has reported only that Asad and Sadat conferred
briefly on January 19.
Egyptian Foreign Minister Fahmi is scheduled to
travel to Moscow today, according to Cairo's Middle
East News Agency. Part of his job presumably will be
to convince the Soviets that Egypt has been able to
protect its own interests and has not cooperated too
closely with the US in negotiating the disengagement.
(continued)
Jan 21, 1974 Central Intelligence Bulletin
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At home, Egyptian officials are appealing for
popular support for the agreement by stressing the
concessions made by Tel Aviv. Egypt's only politi-
cal party, the Arab Socialist Union, on January 19
issued a statement alleging that the "one-sided with-
drawal" had already caused a collapse in Israel's
internal political situation. The statement mini-
mized the importance of Egypt's commitments, and
emphasized that Cairo had accepted the buffer zone
"on the basis that it can move any amount of its
forces and equipment in the west to the east at any
moment if necessary."
The Egyptian media have made public the general
terms of the disengagement agreement and have praised
it as having completed implementation of the earlier
six-point accord. Al-Ahram has cautioned, however,
that the latest agreement is but a preliminary step
toward the implementation of more basic UN resolu-
tions, and that disengagement must also be applied
to the Syrian front.
Two Arab states have strongly criticized the
disengagement accord. Libya's domestic radio charged
that Arab participation in any negotiations is a gain
for Israel, and suggested that the planned separation
of forces will provide Tel Aviv with "total security."
Iraq's government newspaper attacked the Egyptian
move as a withdrawal from the "pan-Arab battle against
Israel," adding that it opened the way not to an
overall solution but to an overall surrender. Cairo
has not yet replied to these attacks.
Radical fedayeen groups have also criticized
Egypt for signing the agreement. Fedayeen leaders
look on it as another sign that Cairo cannot be trusted
to defend Palestinian interests. A spokesman for the
Palestine Liberation Organization in Beirut has also
condemned the agreement, but PLO opposition may be
restrained when Chairman Yasir Arafat returns to Beirut
from Cairo, where he has been consulting with Egyptian
leaders. Arafat already has denounced the PLO stand
taken in his absence.
(continued)
Jan 21, 1974 Central Intelligence Bulletin 2
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C Israel's leaders are continuing their efforts
to explain the advantages of the disengagement agree-
ment in order to counter vigorous criticism of the
government by spokesmen for the opposition Likud
bloc. The Jerusalem Post has published a front-page
story purporting to givveddetails of the secret bi-
lateral accords signed by Egypt and Israel with the
US. The story may have been leaked by government of-
ficials hoping to play up provisions which they con-
sider will reduce domestic opposition to disengage-
ment or provide information the public can use to .
judge how well Egypt is implementing the understand-
ings.
Likud is calling for mass demonstrations timed
to correspond to this week's opening of the new
Knesset. An initial rally in Tel Aviv Sunday night
drew a crowd estimated at several thousand. The
Knesset is scheduled to debate the agreement follow-
ing an address-by Prime Minister Meir tomorrow.
Jan 21, 1974 Central Intelligence Bulletin 3
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USSR-EGYPT: Moscow is clearly upset by its ex-
clusion from the Egyptian-Israeli disengagement nego-
tiations. The Soviets presumably want to return the
talks to the Geneva peace conference, where the USSR
is represented.
In a conversation in Geneva on January 17 which
the Egyptian ambassador described as "very tough,"
Soviet Ambassador Vinogradov was openly critical of
the way the disengagement agreement had been achieved.
Vinogradov, the chief of the Soviet delegation at the
conference, rebuked the Egyptians for "having forgot-
ten their true friends" and claimed that he was under
pressure from certain Arab states to reconvene the
conference. When asked to identify these states,
Vinogradov reportedly backed off.
On the following day, Vinogradov's deputy, Y.
D. Pyrlin, got in touch with the US delegation in
Geneva for the first time in two weeks and suggested
that the Geneva talks should be soon reactivated.
Pyrlin said he had no details on the disengagement
agreement and complained that Moscow was sending the
Geneva delegation almost no information.
Soviet press commentary also indicates that
Moscow is having a difficult time adjusting to Wash-
ington's monopoly over the Arab-Israeli negotiations.
Soviet reporting has hardly mentioned Secretary
Kissinger's part in the talks, and some East Euro-
pean commentary is straining to impute a role to the
Soviets in the disengagement negotiations.
Jan 21, 1974 Central Intelligence Bulletin
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CHINA - SOUTH VIETNAM: Chinese and South Viet-
namese troops clas:e yesterday for the second
straight day, with the Chinese gaining complete con-
trol of the Paracel Islands.
According to a South Vietnamese spokesman, the
Chinese followed up yesterday morning's air strikes
with an amphibious assault on Pattle, Money, and
Robert islands. Saigon's naval and air forces have
been ordered to withdraw from the area, and the South
Vietnamese have abandoned their troops on the islands.
Among those left behind is an American liaison officer
from the defense attache's office.
Saigon has thus far not commented on casualties
suffered in yesterday's fighting. It had admitted
to some 8 killed, 39 wounded, and at least 67 missing
in previous actions.
Peking's initial statement on the fighting, an
NCNA press release of January 19, characterized China's
activity in the Paracels as a defense of its terri-
torial integrity and sovereignty. The NCNA statement
focused on the South Vietnamese actions and charac-
terized Peking's response as one of self-defense.
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Until recently the South Vietnamese had main-
tained a presence only on Pattle Island. The appear-
ance of Saigon's troops on neighboring islands may
have provided the stimulus for Peking's military ac-
tion.
Jan 21, 1974
Central Intelligence Bulletin
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CAMBODIA: Fighting was light and indecisive
along Phnom Penh's southern defenses over the weekend.
Khmer Communist elements made several minor breaches
along the western end of the defense line, but this
was the result more of jittery government defenders
than of serious pressure. Inconclusive skirmishing
also occurred along the Bassac River southeast of the
city.
There is no indication as to when the Khmer Com-
munists intend to commit major elements of their
forces to their campaign southwest of the capital.
To the northwest of the capital, the government
achieved its first gains in over two weeks of fight-
ing against enemy units dua in several miles from
the airport.
Jan 21 , 1974 Central Intelligence Bulletin
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%,INTERNATIONAL MONETARY DEVELOPMENTS: In reac-
tion to the French decision to let the franc float,
West Germany, Japan, Belgium, and the Netherlands
today announced the closing of their international
money markets. Foreign capitals are fearful that
traders will step up their movement into dollars or,
to a lesser extent, gold.
Paris' decision will put more pressure on the
industrial nations to resolve the financial problems
resulting from higher oil prices. Finance ministers
and central bank governors from the Benelux coun-
tries met yesterday to discuss the problem. They
called for a meeting of Common Market countries to
discuss means for maintaining what is left of the
European joint float.
Although the French action eases the strains
on the joint float, its prospects for survival are
poor. With the French pullout, the mark is the only
major currency still. participating. Other partici-
pants will now be reluctant to draw down their re-
serves to support the joint float.
The French decision clearly reflects the heavy
reserve losses Paris has experienced in defending
the franc; Paris has spent over $2 billion since
last fall to maintain the franc's position in the
joint float. Some French observers predict that
Paris will take further steps, such as tightenin
exchange controls, to protect its reserves.
Jan 21, 1974 Central Intelligence Bulletin
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ARGENTINA. President Peron has publicly de-
clared war on terrorist groups in Argentina follow-
ing yesterday's massive guerrilla attack on an army
garrison some 300 miles south of the capital.
Peron appealed. to the nation to help him end
violence in a television address after he met in
emergency session with his top advisers. The meet-
ing came after a seven-hour gunbattle between ap-
proximately 70 members of the Trotskyite Peoples
Revolutionary Army (ERP) and an armored regiment
located in the town, of Azul. The ERP, which is the
best organized Argentine extremist group, killed at
least five people, including the regiment's commander,
and briefly held the garrison in what observers de-
scribed as the biggest guerrilla operation thus far.
While recent government efforts to stem mount-
ing terrorism have not been successful, Peron can
be expected to take stronger measures. He will un-
doubtedly press for quick passage of an antiterror-
ist bill now before Congress, and may push for more
active military participation in countersubversion.
Jan 21, 1974 Central Intelligence Bulletin
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ARAB FINANCIAL ACTIVITIES: The Arab Planning
Institute and the Kuwait Economic Society will sponsor
a seminar in Kuwait next month on investment of Arab
surplus funds. The first totally Arab-run investment
seminar, it represents another attempt by the Arab
oil-producing countries to utilize their growing
financial resources.
Attention at the seminar will focus on govern-
ment policy. Participants will include leading Arab
economic officials and academicians. Other repre-
sentatives from Arab governments and world financial
institutions are expected to attend.
Since November the Arabs have established a
fund for domestic development and, in a joint venture
with a British bank, formed an advisory group for
channeling surplus reserves to local investment proj-
ects. By the end of this year, the current account
surpluses of Arab oil producers will exceed $30 bil-
lion.
? a f 21, 1974 Central Intelligence Bulletin 9
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JAPAN-IRAQ: Tokyo will provide Iraq with $1
billion in credits for oil and industrial projects in
return for Iraqi shipments of crude oil, petroleum
products, liquefied gas, and other commodities, Radio
Baghdad reports.
According to the terms of a preliminary agree-
ment, Japan will provide both official and private
aid for construction of an oil refinery, a liquefied
gas plant, a petrochemical complex, and fertilizer,
cement, and aluminum plants. Private financing for
some of these projects had been arranged before the
Arab-Israeli war. Japan also will supply raw mate-
rials for many of the new industrial facilities and
possibly oil tankers to carry Iraq's expanding oil
exports. Tokyo has also offered to provide technical
assistance and training to Iraqi nationals.
Until now, Arab oil-producing countries have
received only an insignificant share of private and
official Japanese aid commitments. The Arab-Israeli
war and the Arabs' use of the oil weapon, however,
underscored Japan's vulnerability in relying on mid-
dle East oil, which provides three fourths of its
supplies. Tokyo, therefore, apparently has decided
that a major shift in aid policy toward the oil-
producing states is necessary to ensure long-term
deliveries from this area.
In addition to the reported commitment to Iraq,
Tokyo is studying requests for aid from Egypt, Syria,
and Iran. Kuwait and Saudi Arabia also are interested
in technical cooperation and commercial arrangements
with Japan. F7 I
Jan 21, 1974
Central Intelligence Bulletin 10
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AUSTRALIA: Canberra is again under pressure to
cut the tie b etween the Australian and the US dollars.
The opposition Liberal Country Party, backed by
powerful agricultural interests, has for several
months advocated a downward adjustment of the Aus-
tralian currency, which has appreciated sharply
along with the US dollar. Some major business groups
recently have recommended floating the Australian
dollar because of concern over the worsening outlook
for sales to Japan.
Although Canberra may be willing to break its
tie to the US dollar, it is unlikely that the govern-
ment will permit the currency to be devalued signif-
icantly. A substantial depreciation would have an
inflationary impact on the economy at a time when
prices are rising at an annual rate of about 13 per-
cent.
Jan 21 , 1974 Central Intelligence Bulletin
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C GRENADA; An even larger demonstration than last
week's unprecedented march took place this weekend,
as crowds estimated at 15,000 to 20,000 surged through
the streets of the capital city of St. Georges demand-
ing the resignation of Premier Eric Gairy? The pro-
test gained momentum late Sunday when the telephone
and electricity workers' union called its members
out on strike.
The demonstrators this weekend were made up of
both moderate and radical elements, whose short-range
goals of forcing the disbanding of Gairy's secret po-
lice happen to coincide. Gairy's refusal to comply
with this demand has resulted in middle-road opposi-
tion groups remaining allied with the radical New
Jewel Movement, despite the divergence of their long-
term aims.
Neither the government nor its opponents have
shown any willingness to compromise, and a serious
clash--probably before independence on February 7--
is almost inevitable. Premier Gairy may resort to
busing demonstrators in from the rural areas, where
his support is greatest; the resulting confrontation
could give him an excuse for mass arrests of opposi-
tion leaders. If the diverse anti-Gairy forces should
succeed in bringing down the government, they would
be unprepared to form an administration with any co-
hesion or positive course of action.
Jan 21, 1974 Central Intelligence Bulletin
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FOR THE RECORD*
USSR-Cuba: After several postponements over
the past month, General Secretary Brezhnev is sched-
uled to arrive in Cuba on January 28 for a one-week
visit. En route the Soviet party chief will make
a short stopover in Newfoundland, where he will be
met by Canadian officials. A Soviet Foreign Minis-
try official told the US charge in Moscow on January
18 that Soviet-Cuban economic ties will "undoubtedly"
be on the agenda.
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'These items were prepared by CIA without consulta-
tion with the Departments of State and Defense.
Jan 21, 1974
Central Intelligence Bulletin 13
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