NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026700010050-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 26
• Document Creation Date: December 20, 2016
• Document Release Date: September 5, 2006
• Sequence Number: 50
• Publication Date: July 17, 1974
• Content Type: REPORT

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Top Secret
National Intelligence
Bulletin
State Dept. review completed
DIA review(s) completed.
Top Secret 25X1
17 July 1974
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National Intelligence Bulletin
July 17, 1974
CONTENTS
CYPRUS: Situation report. (Page 1)
PORTUGAL: Gorcalves expected to name cabinet today.
(Page 7)
SOUTH KOREA: Campaign to stamp out dissent now focused
on nationally known figures. (Page 10)
NORTH VIETNAM: Prospects are poor for improvement in
agricultural sector this; year. (Page 12)
WEST GERMANY - USSR: Bonn may be trying to restore
some momentum to its Eastern policy. (Page 14)
UK - NETHERLANDS - WEST GERMANY: Three producers of
enriched uranium commit their full capacity to domestic
needs. (Page 18)
ARAB INVESTMENTS: Little change in pattern of foreign
investments by oil producers. (Page 21)
HONDURAS - EL SALVADOR: Tensions rise following border
incident. (Page 23)
FOR THE RECORD: (Page 24)
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. *,
Eskisehir
Balikesir
ALBANIA 1{~
ITALY GREECE,
Athens
*iMorphou
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National Intelligence )Bulletin
July 17, 1974
Ousted president Makarios arrived in Malta yesterday
and plans to fly on to London this morning, apparently
en route to the UN. He left Cyprus from the British
base area near Limassol.
The failure to kill Makarios clearly complicates
the task of consolidating the new Cypriot government and
may ultimately undermine Ioannidis' position at home if
the new government is not successful in gaining interna-
tional and domestic acceptance.
Nicosia had earlier announced that National Guard
troops had entered Paphos, the last major stronghold of
Makarios forces. Those forces appeared to include ele-
ments of the police and those members of the Tactical
Reserve Units who had not surrendered.
The UK has agreed to Turkey's request for talks
aimed at reaching agreement on joint action regarding
Cyprus. The Ecevit government has called for parliament
to meet in extraordinary session tomorrow, apparently to
secure a blanket authorization to act as the situation
requires.
The Turks have said they are not prepared to accept
Nicos Sampson or his government as legitimate. They be-
lieve Athens engineered the coup to bring about enosis.
Ankara will be watching closely the semiannual rota-
tion of the 950-man contingent of regular Greek forces
on the island, scheduled to take place today. Any effort
by Athens to increase the size of the force or its equip-
ment would be viewed by the Turks as highly provocative
and would increase the likelihood of Turkish interven-
tion.
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National Intelligence Bulletin July 17, 1974
In fact, the chances of Turkey's military interven-
tion on Cyprus are growing. The Turks are making all
the political and military preparations that would be
necessary if they decided to move.
Ankara is determined not to permit fundamental
changes in the status of Cyprus. The Ecevit government
would feel compelled to mount military action against
Greece if the new regime were to announce enosis. The
aim of the Turks in this event would be to establish an
independent Turkish Cypriot republic on part of the is-
land--in effect partitioning Cyprus.
If there is not an outright declaration of enosis,
Turkey will not likely intervene before determining how
the internal situation on Cyprus is developing. Partic-
ularly, Ankara will want to gauge the effect Makarios'
escape from the island has had.
As long as there are no direct attacks against the
Turkish community on the island, Ecevit will probably
try to resist urgings to embark on a military course of
action. He heads a delicately balanced coalition which
is beset with serious domestic and foreign problems, how-
ever, and he is obliged to be responsive both to the na-
tional mood and to the military establishment, which in
the past has shown itself to be hawkish.
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July 17, 1974
a unit. of division size was heading
through Adana toward Erdemli-Silifke for reported stag-
ing for Cyprus last night. Movement of military forces 25X1
through Adana has been confirmed DIA
but there was no deployment of troops to Cyprus during
the night.
Press sources yesterday reported that Turkish troops
in full battle dress and with ammunition were moving in
truck convoys through Adana. The troops may have been
either army or paramilitary forces.
The US defense attache in Ankara states that Turkish
air force units at two airfields west of Ankara--Eskisehir
and Balikesir--and at an airfield near Adana now have
aircraft armed with air-to-air and air-to-ground weapons.
The Greeks continue to claim that the situation on
Cyprus is an internal affair and that the Greek govern-
ment will maintain its principle of "nonintervention in
the affairs of other countries."
Cypriot President Nicos Sampson has announced a
cabinet that is made up of people who are not well known
and has a marked rightist, pro-enosis character. Several
of the new ministers have been open supporters of EOKA,
the pro-enosis terrorist. organization, and have strong
ties to the Greek mainland.
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National Intelligence Bulletin
July 17, 1974
Nicosia was largely quiet last night, with only a
minimum of scattered firing heard. This morning, the
situation has returned to normal. Motor traffic was
heavy as people were returning to work.
NATO members in Brussels seem to realize that the
personal role Secretary General Luns can play in the
Cyprus situation is limited at this point, and that the
best way to keep Athens and Ankara in line is to put
pressure on them in the NATO Council. At an extraordi-
nary session last night, most members felt the burden
was on Athens to prove its claims that Greek policy to-
ward Cyprus had not changed and that the problem was
largely an internal Cypriot one. Specifically, the
council urged the Greek representative to relay to Ath-
ens the hope that the rotation of the Greek contingent
on Cyprus today would take place normally and the view
that the Greek National Guard officers should be re-
placed.
Earlier in the day, NATO members had formally ex-
pressed their concern about the Cyprus situation and
their hope that the parties involved would exercise re-
straint so that conflict between two members of the al-
liance would not result. The members also expressed sup-
port for the oral and written demarches that Secretary
General Luns had made with the Greeks and the Turks.
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National Intelligence Bulletin
July 17, 1974
Prime Minister Vasco Goncalves' delay in announcing
his new cabinet apparently stems from his difficulty in
selecting and getting acceptances from persons satisfac-
tory to all sides. Goncalves, appointed last.Saturday
to replace Palma Carlos, said last night that his cabinet
choices would be announced today.
The chosen candidate of the Armed Forces Movement
and more liberal than his predecessor, Goncalves had been
expected to encounter few problems in forming a govern-
ment. He planned to draw from the same elements--Social-
ists, Communists, centrists, and technocrats--that made
up the outgoing cabinet, but with a greater military
representation. The last. cabinet had only one military
man, the minister of defense. Goncalves may be having
trouble both making room for additional military ap-
pointees and satisfying the demands of, the leftists for
certain posts.
Outgoing Socialist foreign minister Mario Soares,
who is expected to be reappointed, told the US ambassador
in Lisbon that the current crisis was artifically and
wrongly brought on by Palma Carlos. Soares claimed that
no really serious issues divided the government or im-
paired its ability to govern.
There is widespread suspicion that the crisis was
an abortive attempt by "reactionary forces" to reinstall
an authoritarian regime. Some observers view Palma Carlos,
with his proposals for an. early presidential election and
delayed legislative elections, as a stalking horse for
Spinola, who would have easily won the presidential elec-
tion and thereby established his supremacy over the Armed
Forces Movement.
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National Intelligence Bulletin July 17, 1974
SOUTH KOREA
With the conviction and sentencing of 55 smaller po-
litical fry out of the way, President Pak's campaign to
stamp out domestic dissent has come to focus on a number
of nationally known figures, most prominently former
South Korean president Yun Po-sun.
The 76-year-old Yun went on trial yesterday in
Seoul on charges of providing financial support earlier
this year to student activists allegedly plotting the
overthrow of the Pak government. Leaders of the student
group are among 14 South Koreans already sentenced to
death. Yun's co-defendants include a prominent univer-
sity professor, the dean of a prestigious theological
seminary, and a well-known Presbyterian minister.
The authorities are also expected to try Bishop
Chi Hak-sun, a leader of Catholic social action groups,
on similar charges at an early date. The bishop is under
house arrest following high-level church intervention
that secured his release from prison. Finally, the trial
of former opposition party leader and presidential candi-
date Kim Tae-chung seems likely to resume following re-
jection of his recent motion to deny jurisdiction of the
judges assigned in his case.
The new round of trials seems likely to contribute
to a growing atmosphere of unrest in Seoul and elsewhere
in South Korea over the nation's ultimate direction.
While the government has been able to link several of the
55 convicted conspirators to Communist- and other leftist-
oriented organizations, it has been equally apparent that
many, particularly in student and church-affiliated
groups, had no coherent action program beyond mass demon-
strations in support of Pak's ouster--on the 1960 anti-
Rhee pattern.
The new trials, particularly those of such estab-
lished anti-Communist figures as Yun and Bishop Chi--
both likely to be vigorous in their own defense--may
become counterproductive from the government's viewpoint.
The trials could easily provide a focus for all shades
of dissent in South Korea, from covert elements on the
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July 17, 1974
left to moderates who normally eschew political action.
The authorities, of course, hope the new trials, and
likely convictions, will nail down the point that oppo-
sition to Pak is a hopeless cause.
The domestic situation also has adverse implications
for Seoul's relations with major foreign supporters.
Tokyo is concerned because two Japanese have been caught
up in Pak's dragnet and given 20-year sentences. There
is also uneasiness in Japan about the fate of Kim Tae-
chung 25X6
Until
these two problems are resolved with Seoul, the Japanese
government--under intense media pressure at home--may
feel compelled to cut back on some aspects of its close
bilateral relationship with the South.
Contention in South Korea may also affect US Con-
gressional deliberations on assistance to South Korea.
Anti-Pak church and intellectual groups in the US,
American as well as South Korean, have already begun to
lobby against such aid. 25X1
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NORTH VIETNAM
July 17, 1974
Prospects for improvement in the agricultural situa-
tion this year are poor. Output from the spring and au-
tumn crops will probably fall below last year, when North
Vietnam produced only about three fourths of its require-
ments.
Harvesting of the spring rice crop is about a month
behind the normal May-June schedule because poor weather
earlier in the growing season slowed development of rice
seedlings and delayed transplanting. The delay will
probably reduce the crop some 10 to 20 percent below last
year's moderately successful harvest of an estimated 1.2
million tons of rice.
Hanoi has been encouraging rapid harvesting of the
spring rice crop and completion of preparations for the
larger autumn crop. The regime has assigned high prior
i.ty to improving food distribution and to rebuilding rice
stocks that were drawn down further this spring when
serious rice shortages were reported in parts of the coun-
try. Shortages frequently occur in the months prior to
the spring harvest, but this year's problems were more
severe than usual because the disappointing harvest last
autumn did not permit sufficient stock-building.
The spring harvest will help ease the food situation,
but Hanoi remains dependent on imports not only to meet
emergencies but also to satisfy normal demand. Food
imports have reached record levels in the first half of
this year and are likely to remain high. Seaborne im-
ports of 480,000 tons from January to June were nearly
double the amount shipped during the same period in 1973.
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Some reduction in output of the autumn crop is almost
certain because of the delay in the spring harvest.
This further increases
the possibility that the autumn crop will be damaged by
adverse weather. At the least, yields are likely to be
reduced because growing conditions will not be optimum.
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WEST GERMANY - USSR
The announcement late last week of Chancellor
Schmidt's plans to visit Moscow in October or early No-
vember suggests that Bonn is trying to restore some mo-
mentum to its Eastern policy. Schmidt's surprise ap-
pointment of Ostpolitik expert Egon Bahr as minister of
economic cooperation earlier this month, along with the
announcement of the Chancellor's visit, should help fur-
ther dispel speculation that Schmidt intends to down-
grade relations with the East.
c mi i s visit to the Soviet
Union as been under discussion since he took office in
May, but no date for the visit had been set. A West Ger-
man government spokesman announced on July 12 that
Schmidt would visit Moscow this fall to "reaffirm his
commitment to the Eastern policy of his predecessor,
Willy Brandt."
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German Foreign Office officials believe that the
Soviets remain interested. in a governmental level agree-
ment covering scientific and technical cooperation, de-
spite several recent agreements with individual large
West German industrial firms. Bonn will not accept an
agreement, however, that is open to interpretations that
could be harmful to West Berlin's interests.
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UK - NETHERLANDS - WEST GERMANY
July 17, 1974
7renco--the British, Dutch, and West German tripar-
tite company for the production of enriched uranium--
apparently has committed its enrichment capacity to
domestic users in the three countries through 1980
The program in-
volves the first commercial use of gas centrifuges to
enrich uranium for the supply of nuclear power reactor
fuel.
Five utilities in the UK and West Germany have signed
letters of intent with Urenco that will absorb about two
thirds of its projected 1980 capacity. Urenco is also
negotiating with six other utilities in West Germany and
the Netherlands for orders that are expected to bring its
total orders for delivery in 1980 to 2,000 or more metric
tons of separative work units. (A separative work unit
is a measure of the effort expended to separate a quantity
of uranium into an enriched portion and a depleted por-
tion.)
Urenco plans to have a uranium enrichment capacity
by 1980 that will just about meet these orders. Present
plans call for Urenco's capacity to be increased to 10,000
metric tons of separative work units per year by 1985.
If this is achieved, Urenco will be a major supplier of
enriched uranium among non-Communist states. Excluding
the US, the estimated annual enrichment needs of non-Com-
munist powers by 1985 are about 34,000 metric tons of
separative work.
Urenco is negotiating ten-year supply contracts for
enrichment services, even though it is just starting con-
struction of two enrichment plants, one at Capenhurst in
the UK and the other in the Netherlands. These plants
are scheduled to become operational by 1976 and will be
expanded to meet the 1980 target capacity.
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West Europeans have been particularly concerned in
recent weeks whether supplies of enriched uranium will be
available in sufficient quantity for the increased number
of European nuclear power plants under construction.
Early this month, the EC Commission expressed concern
to the US mission in Brussels over the discrepancy between
the services the US Atomic Energy Commission can supply
and the contracts requested by EC utility firms. In
answer to a question at the European Parliament on July 9,
Commissioner Simonet warned that unless sufficient supplies
are assured, it would be necessary to seek Soviet supplies
and to ask the two European enrichment producers--the
French-sponsored Eurodif as well as Urenco--to consider
enlarging plant capacities.
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Composition of Foreign Assets
Saudi Arabia
Gold and reserve position
in the IMF
Other foreign reserves
Hank deposits
Highly liquid (current
and call accounts)
Relatively liquid (time accounts
and certificates of deposal
Treasury stocks and bonds
Selected notes and loans
i
L__ Other foreign assets, including
equities and real estate
Libya
Currency Denomination of Foreign Assets
Saudi Arabia
~'^100',,55'00'* Total Foreign Assets
i h O 01
Eurodollars
US Dollars
Sterling
Other currencies
Sold and reserve
position in the IMF
Libya
f his is a point of time estimate. Assets had accumulated in London and had ant hAen disbursed in
accordance with established patterns. Therefore, assets held in the UK shuuld decline somewhat
soon while assets held elsewhere should increase.
Total Foreign Assets
( Million US $ )
Kuwait
Kuwait
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ARAB INVESTMENTS
Foreign assets of the major Arab oil producers have
increased sharply since December, but their composition
and currency denomination have remained relatively stable.
The following investment pattern is emerging:
--Saudi Arabia, unable to keep pace with its
foreign asset accumulation, continues to rely
heavily on bank deposits, particularly in London.
--Kuwait, the most sophisticated investor of the
four, is purchasing large amounts of real estate.
When oil payments retroactive to January 1 are
received, Kuwait's bank balances will also in-
crease markedly as will its assets that are de-
nominated in sterling.
--Libya is purchasing more US treasury securities
and is gradually increasing its dollar holdings.
The Arabs continue to rely on the Eurodollar market
because it has satisfied their investment objectives.
Up to now, deposits have been relatively free from eco-
nomic and political risks, and the rate of return has gen-
erally been sufficient to maintain the real value of
their holdings.
The producers' heavy reliance on the Eurodollar mar-
ket creates problems that will become more acute over
time. The massive flow of Arab funds to these markets
increases the potential for market instability and is
depressing interest rates on Arab deposits. Growing
concern over the Eurodollar market's ability to assimi-
late producers' revenue is already becoming evident,
even though the increased flow of Arab funds began only
in April, when the first quarterly oil payments reflecting
higher prices were received.
The Arabs will increasingly direct their deposits
toward the major national capital markets, particularly
the US market. Security-conscious Saudi Arabia apparently
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has decided to shift some of its future investment from
London to New York. This will satisfy the Saudi desire
for security, retention of control of the funds, and a
reasonable, if somewhat lower, rate of return. These
markets are, however, no better suited at present to
recycling funds to consuming countries than is the
Eurodollar market.
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Honduran leaders fear that El Salvador may be plan-
ning to attack or to provoke an incident that would give
it an excuse to resume hostilities.
Following El Salvador's renunciation of the Bogota
Pact, which prescribes steps for peaceful settlement of
disputes, and the recent failure to convoke a Central
American summit to discuss the border dispute, a number
of developments have heightened Honduran concern. El
Salvador has. bought arms, including jet planes, that have
increased its military capability and may make it stronger
than Honduras. Recently, there have been several alleged
border violations and overflights of Honduran territory
by Salvadoran planes. Honduras has charged that in one
area two platoon-sized Salvadoran units entered Honduras
and some 600 shots were exchanged. El Salvador, more-
over, has been conducting maneuvers within 45 miles of
the border. The chiefs of the general staffs of the two
countries are investigating the latest Honduran claims
and will probably resolve this matter amicably.
Honduran uneasiness is not without foundation, how-
ever, especially when viewed against the background of
long-standing mutual antagonism. If Honduras had military
superiority, it might well be doing the saber rattling.
Furthermore, El Salvador, with a population density al-
most ten times that of its neighbor, may hope to occupy
and settle areas now in dispute and then defy an OAS
resolution calling for withdrawal.
There is no internal pressure on either government
to reach a settlement, In fact, nationalist sentiment
in both countries tends to reinforce the unyielding posi-
tions of both governments. Although there is no firm
evidence that El Salvador is preparing to resume fighting,
mutual distrust and the danger of miscalculation are
greater now than at any time since the brief hostilities
of 1969.
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Peru-Cuba: Raul Castro, Cuba's first vice prime
minister and armed forces minister, is scheduled to visit
Peru for the Peruvian National Day celebrations on July
28. Peruvian and Cuban officials have exchanged frequent
visits since diplomatic relations were re-established
two years ago. Raul Castro will be the highest ranking
Cuban official to visit Peru since Fidel Castro's airport
stopover in Lima in December 1971. Although the visit
appears primarily politically oriented, Raul is likely
to discuss, among other things, military cooperation be-
tween the two countries. For example, he may offer Cuban
help to overcome difficulties the Peruvians are experi-
encing in handling their recently acquired Soviet tanks
and other equipment.
Haiti: The Duvalier government intends to press for
renegotiation of its contract with the Reynolds Metals'
Haitian subsidiary before the end of the year.
Port-au-Prince wants substantially
greater tax and royalty payments and may also seek a com-
pany commitment to expand its Haitian operations. The
proposed move is being prompted by the example of Jamaica's
recent success in raising bauxite taxes and by Haiti's
need for foreign exchange to combat growing balance-of-
payments pressures. Reynolds' Haitian operation accounts
for 1 percent of US bauxite supplies. 1 -1
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