CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A014700100001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 15, 2016
• Document Release Date: February 2, 2004
• Sequence Number: 1
• Publication Date: October 14, 1969
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
51-
14 October 1969
State Department review completed
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No. 0246/69
14 October 1969
Central Intelligence Bulletin
CONTENTS
Vietnam: Hanoi is guarding against a letdown after
Ho-`-f s death . (Page 1)
Japan - South Korea: Tokyo is moving ahead with a
controversial ai program. (Page 2)
East Germany - West Germany: Pankow has made a bid
to influence the new coalition. (Page 3)
Czechoslovakia: Husak will head a delegation of top
leaders to Moscow next week. (Page 5)
Yugoslavia: Inefficient enterprises may have to be-
come profitable or face liquidation. (Page 6)
USSR-Turkey: The Soviets have agreed to increase
industrial development aid. (Page 7)
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Sierra Leone: The prime minister is under increas-
ing fire from his own party. (Page 9)
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Panama: A return to representative government is
unlikely to happen soon. (Page 11)
Nicaragua: Somoza is seeking a meeting of Central
American Common Market states. (Page 12)
Yugoslavia: Literary censorship (Page 13)
Philippines: US base rights (Page 13)
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C Vietnam: Party leaders in Hanoi are taking
precautionary measures against any letdown in public
discipline following Ho Chi Minh's death.
The Public Security Ministry has received in-
structions for implementing the Politburo's politi-
cal indoctrination campaign proclaimed two weeks ago.
According to a brief announcement by Radio Hanoi,
the ministry has been ordered to undertake a wide
effort to tighten internal security particularly in
areas related to the war effort.
In the South, Communist military activity re-
mained generally light yesterday although the south-
ern delta region experienced rocket attacks on four
government outposts. There r also several brief
but intense round clashes.
14 Oct 69 Central Intelligence Bulletin
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Japan - South Korea: Tokyo is moving ahead
with a controversies a.L7 project for South Korea
because of overriding political considerations.
Japanese officials recently confirmed that the
decision to approve the much-criticized Pohang. steel
mill project, even without the blessing of the World
Bank, was taken because of the importance attached
by the Sato government to strengthening political
relations with Seoul. The project is an important
political issue in South Korea, and President Pak
has been pressing the Japanese hard to build the
mill. The project had stalled last year when a
Western consortium failed to obtain the necessary
financing because of concern both over the economic
viability of the project and over South Korea's fu-
ture ability to meet foreign debts.
Japanese officials indicated that a continuing
negative attitude on the part of the World Bank,
which had previously postponed the project, is not
likely to alter the government's decision. Tokyo,
however, is seeking US assistance in persuading the
World Bank to participate in the project, and is
prepared to pressure the South Koreans to modify
their planning to take into account technical crit-
icisms expressed by the bank.
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East Germany - West Germany: The East Germans
have made a heavy-handed bid to influence the policy
of the prospe i.ve Socialist - Free Democratic coa-
jl.N
lition in Bon
as erma
would agree to a meeting between ancellor-designate
Brandt and Stoph, if the former makes certain con-
cessions in a public declaration of the new coali-
tion's polic
The declaration would commit Bonn to negotiate
on t e asis of East Germany's draft treaty of 1967,
which was a catalog of Pankow's maximum demands.
Brandt was also specifically asked to conclude an
agreement on the renunciation of force, to ratify
the nuclear nonproliferation treaty, to participate
in a European security conference, and to ban the
iriaht-wing National Democratic Party. This done,
eventual high-level talks
might address "humanitarian-- issues such as reduced
travel restrictions for West Germans visiting East
Germany _ ., perhaps, similar freedom for West
Berliners.
Whether the East Germans are seriously inter-
ests in such talks remains in doubt. By demanding
that Bonn negotiate on the 1967 draft treaty, Pankow
has provided the West Germans with grounds for re-
jecting its proposal. The East Germans, however,
probably are under pressure from their allies--
particularly the Soviet Union--to be more forth-
coming in their relations with Bonn; they :may have
made this offer in response to Soviet prodding
Brandt undoubtedly wants to respond favorably
`
to any sign of a genuine East German interest in
talks. Moreover, Pankow's demands, except for the
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i
reference to the 1967 draft treaty, fit well with
Brandt's position on these questions. On the other
hand, overtures such as these, which are of uncer-
tain authority and which are not especially forth-
coming in terms of what the East Germans might be
willing to do, will make him cautious. Brandt
probably will not want to commit himself to Pankow's
demands at this time, preferring instead to have
his government seize the initiative at a time and
in circumstances of its own choosina.l -
14 Oct 69 Central Intelligence Bulletin
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Czechoslovakia: Party First Secretary Husak
will head a delegation of the country's top leaders
to Moscow next Monday for a one-week visit
The reported composition of the group suggests
that the talks will review what has been accomplished
toward "normalization" and what needs to be done in
the next few months. The most pressing issues are
factionalism within the Czechoslovak party, the
holding of a party congress next year, the sched-
uling of national elections, and the deteriorating
economy.
Husak, challenged by the growing influence of
conservatives within his regime, probably will seek
and receive a more open and direct endorsement of
his leadership. Czechoslovak leaders may also re-
quest a large credit from the USSR and greater
freedom to work out domestic problems in their own
way
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Yugoslavia: The government is threatening to
force inefficient enterprises to either become prof-
itable or face liquidation.
Belgrade is proposing to close loopholes which
permitted enterprises without cash resources to con-
tinue operating at losses by borrowing money intended
for investment to pay for current operating expenses.
Such firms would be subject to mandatory pay restric-
tions, ineligibility to import, and more rigorous re-
ceivership and bankruptcy procedures if they are un-
able to meet their debts. Enterprises believed cap-
able of rationalizing their operations would benefit
from liberal write-off allowances for bad debts, un-
salable stocks, and over-assessed capital equipment.
The government is anxious to shift from those solu-
tions that have involved expansion of the money sup-
ply and that caused inflation.
It is not anticipated that the current measures,
even if enacted as they now stand, would cause a
large number of enterprise bankruptcies in the short
run. The Finance Secretariat is still considering
possible economic consequences to determine whether
to introduce the measures gradually or all at once,
as well as the tactics to be used if the impact is
stronger than intended.
The draft measures which have been approved by
the Federal Executive Council (FEC) are expected to
engender heated debate and attempted amendment when
presented in final form to the Federal Assembly ses-
sion at the end of October. The decision of the
Federal Assembly is not likely to emerge for weeks
or possibly months, but unless the FEC proposals are
severely watered down, the legislation should bring
market discipline strongly to bear on inefficient
firms. One loophole in the current draft permits
republics to specify certain enterprises which can-
not be touched by bankruptcy proceedings; other
loopholes may emerge in the course of debate. if
the FEC holds the line, however, the liquidity issue
could escalate into one of the most controversial
aspects of the economic reform.
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USSR-Turks : The USSR has agreed to increase
its aid for in ustrial development in Turkey.
A Soviet credit of $200 million extended in
1967 for the construction of five projects is re-
ported in the press to have been raised to $366 mil-
lion to cover increased costs. These projects in-
clude a steel mill, an oil refinery, a sulphuric
acid plant, an aluminum plant, and a fiber board
plant.
The projects have not progressed as fast as
Turkey would like, although contracts have been
signed for all of them and construction has begun
on the aluminum plant, the oil refinery, and the
sulphuric acid plant. Construction of the steel
mill considered by the Turks to be the most impor-
tant of the five projects, now is expected to start
in early 1970 and will be supervised by Soviet ex-
perts. Most of the additional credit will go to
finance this project. Soviet technical assistance
also will be provided for in the construction of
the other plants.
According to the announcement, Turkey will re-
pay $120 million of the credit with an interest rate
ort-
ex
d b
i
p
y
o
of 2.5 percent over an unspecified per
re-
th
h
e
ow
ing goods to the USSR.It is not clear
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Sierra Leone: Prime Minister Siaka Stevens is
coming under increasij fire from his faction-ridden
All People's Congress.
I the minister of
development as threatened to resign and publicly
criticize Stevens because of his refusal to hold a
national party convention. Stevens has been delay-
ing for fear that a convention would cause an open
split in the party. Similar fears prompted him to
postpone plans for cabinet changes and for local
elections. A public resignation could trigger simi-
lar degec ions by others critical of Stevens' per-
formance
(The congress is an amalgam of several tribal
and pol3tical factions that have found it difficult
to unite on policies now that they are in power.
The discord within the party stems from tribal feud-
ing, personal conflicts, and Stevens' indecisive
leadership.
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Central Intelligence Bulletin
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Panama: The provisional junta government has
revealed that a return to freely elected representa-
tive government is unlikely to happen soon.
In a speech marking the first anniversary of
the coup, government strongman General Torrijos
said that the promise of elections in 1970 will be
honored. Instead of general elections, however, a
constituent assembly will be elected which will
"search for agreeable steps for a return to normal
republican life." No mention was made of restoring
constitutional guarantees, and there is no indica-
tion that the present government intends to relin-
quish power in the foreseeable future.
The government also unveiled an official polit-
ical party, the New Panama Movement, which stresses
renegotiation of the Canal Treaty with the US and
reforms that will benefit urban labor and peasants.
It is designed to provide General Torrijos with a
broad political base to enable his government to
maintain effective control for some time to come.
All of the country's traditional parties have been
dissolved, and they will not be allowed to function
in opposition to the new organization.
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Nicaragua: President Somoza has decided to
call a meeting of the five Central American Common
Market states in an effort to resolve some of the
problems that resulted from the El Salvador - Hon-
duras conflict.
Common Market trade, severely disrupted during
the fighting, has not returned to normal because of
Honduras' refusal to open its section of the Pan-
American Highway to Salvadoran transit trade. Re-
duced trade has seriously cut government revenue in
Nicaragua, as well as in El Salvador. Somoza is
worried that continued disruption will also adversely
affect his country's economy.
The primary goal of the meeting will be the
immediate end to the obstruction of Common Market
trade. If this is not possible, Somoza apparently
wants the temporary suspension of the Market's free
trade provisions so that Nicaraguan merchants can
order high-tariff goods from outside the area with-
out fear that the country might subsequently be
flooded with duty-free Common Market products.
Should Somoza be unable to achieve either objective,
he may be prepared to solve his problem unilaterally
by ordering a temporary embargo on all Common Market
imports.
14 Oct 69 Central Intelligence Bulletin
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NOTES
Yugoslavia.- The recent ban on Milovan Djilas's
latest The Unperfect Society, is the latest
example of Belgrade's crackdown on public expression
that might irritate the USSR. The decision to ban
the book now, after it has been in print for at least
six months, indicates that the Yugoslavs want to
strengthen the delicate foundation for improved re-
lations that they have recently established with the
Soviets. An issue of a literary magazine containing
an anti-Soviet article was banned last month just
prior to Soviet Foreign Minister Gromyko's visit to
Yugoslavia. These incidents are not likely to pose
any widespread danger to Yugoslavia's communication
media which are exempt from formal censorship and
subject only to party guidance.
Philippines: President Marcos' public injunc-
tion to the Foreign Affairs Office to seek immediate
renegotiation of US military base rights is primarily
a campaign tactic in his bid for re-election. Marcos
was stung by press allegations of his indifference
to a US military court acquittal of a US serviceman
who accidentally killed a Filipino. He found it
necessary to take action to portray himself as the
defender of national dignity. Although now publicly
committed to start talks with the US, the Philippine
Government has not yet seriously thought out a ne-
gotiating position and would have little to offer
initially.
(continued)
14 Oct 69 Central Intelligence Bulletin 13
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