CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A016300040001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: May 23, 2003
• Sequence Number: 1
• Publication Date: May 21, 1970
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
11
_$ Cl
2:L May 1970
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No. 0121/70
21 May 1970
Central Intelligence Bulletin
CONTENTS
Communist China: Yesterday's statement on Cambodia
is large Ty standard Peking boilerplate. (Page 1)
Burma: Communist incursions point up the army's
tenuous control over the northeast. (Page 3)
Japan-US: Sato is increasingly concerned about the
impasse over textile exports. (Page 4)
Cuba: Castro's speech yesterday was particularly
aggressive toward the US. (Page 5)
Peru: Harsh foreign exchange controls have dealt a
blow to the wealthy and business classes. (Page 7)
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CEMA: International Investment Bank (Page 10)
Morocco-Algeria: Hassan-Boumediene meeting (Page 10)
Chile - North Korea: Commercial mission (Page 10)
Costa Rica: Relations with Eastern Europe (Page 11)
Uruguay-Brazil: Security arrangement (Page 11)
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Communist China: Yesterday's Chinese state-
ment on Cam odia, attributed to Mao Tse-tung, is
largely standard Peking boilerplate designed to ex-
tract the maximum propaganda mileage from recent
developments in Indochina.
The statement breaks no new ground, but does
add the weight of Mao's personal prestige to previ-
ously established Chinese positions: support for
Sihanouk, recognition of his government-in-exile,
and endorsement of the communique issued by the In-
dochina "summit" conference last month. A personal
statement of this sort by Mao is relatively rare but
by no means unique. The last such statement was is-
sued in 1968, in connection with the assassination
of Martin Luther King.
The statement is meant to give added force to
Peking's present strategy in Indochina, which has
been to embarrass the Soviets and to enhance China's
position in Hanoi at the expense to Moscow. For ex-
ample, Mao pointedly notes that some 20 nations have
recognized the Sihanouk government. The implication
that the Soviets have been lax in this regard is ob-
vious.
The statement is quite mild and falls short of
previous Chinese commentary on Indochina. It con-
tains no commitment on Chinese action in Cambodia--
not even the vague promise of material support in
the struggle. Mao's remark that the danger of a
new world war "still exists" and that the people of
all countries must be "prepared" is also standard.
Variations on this theme have been played by the
Chinese since the Ninth Party Congress in April
1969, when it was first surfaced by Lin Piao.
The statement meshes fairly neatly with the
attitude taken by Peking in connection with the
postponement of the Warsaw talks. Chinese willing-
ness to discuss a new date for the next meeting
through the normal diplomatic mechanism in Warsaw
suggests that Peking does not expect the situation
in Cambodia to lead to a world crisis, and the tone
of Mao's statement tends to bear this out.
21 May 70
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Communists Renew
Insurgent Activity in Northeast Burma
Activity
Comm nist force dislodged'!
b Burmese army - / ashio
Road
-+ Railroad
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Burma: Incursions by Communist insurgents
into two government administrative centers point up
the Burmese Army's tenuous control over the north-
east.
Some 200 rebels attacked the railway station
of Lashio, the principal city of northern Shan State,
on 19 May and damaged at least two locomotives
A few days earlier,
about 300 Communists overran the town of Hsenwi and
were dislodged by the army only after repeated ef-
forts.
These incidents are the first significant in-
surgent activity reported since the Communists cap-
tured several government towns and outposts in late
March. The recent attacks were probably intended
to intimidate the Burmese Army before the monsoon
rains, which begin next month, inhibit both rebel
and Burmese military operations. The insurgents do
not appear to be trying to broaden the narrow strip
of land they control alon the Chinese border before
the rains begin.
21 May 70 Central Intelligence Bulletin
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Japan-US: Prime Minister Sato is increasingly
concerned about the impasse with the US over tex-
tile exports.
At a recent press conference, Sato urged the
Japanese textile industry to agree to compromise
with the US on the issue of voluntary export quotas.
In his strongest appeal yet to Japanese industry,
Sato claimed that the US had adopted a more flex-
ible attitude, and he "suggested" that the Japanese
should be willing to accept a two- or three-year
agreement on voluntary restraints.
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The Prime Minister is worried about the pos-
sible damage to broader US-Japanese relations that
could result from prolonged failure to reach an
agreement on the specific textile problem. More-
over, despite his contention that the US Congress
has shown some flexibility, Sato is obviously con-
cerned that US protectionist legislation is becom-
ing more and more a possibility?
Although maintaining that the textile issue
is not a government-to-government problem, Sato
seems determined to use the full weight of his of-
fice to help resolve the ,impasse. Given the deli-
cacy of the issue and its underlying nationalistic
aspects, however, he has been moving cautiously
and indirectly toward a solution up to this point.
21 May 70 Central Intelligence Bulletin
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Cuba: Fidel Castro's speech early yesterday
was particularly aggressive toward the US.
Castro accused the US of planning and launch-
ing exile attacks such as the kidnaping of the
Cuban fishermen, threatened to withdraw the Swiss
Embassy's status to represent LIS interests, and
indicated that it is only a matter of time until
the former US Embassy building is taken over. He
said the withdrawal of status would doom the US-
operated Cuban refugee airlift program because
the refugees are processed through the Swiss Em-
bassy.
He said the British should demand that the
US stop using the Bahama Islands as bases for
exile attacks and warned that if the attacks con-
tinue, Cuba will "seek every means to pass from
the defensive to the offensive." Castro also
complained that air searches for the fishermen
were cut short by the "very limited range" of his
MIG-21s and lamented that "unfortunately our
country does not have long-range aircraft." The
latter also represents an implied threat to
Guatemala and Nicaragua, which he charged with
supplying "bases for aggression."
The kidnaping incident has brought forth
Castro's most vociferous reaction to recent exile
operations. He is probably concerned about the
vulnerability of his extensive fishing fleet to
more than just harassing attacks by exile groups.
Castro probably wants it made quite clear that
his government will not be blackmailed into making
deals and hopes that exile groups will despair of
such tactics. His aggressive, confident tone may
also be a prelude to a possible announcement of
new military assistance from the Soviet Union.
Castro also announced that the ten-million
ton sugar harvest goal will not be reached and
admitted that this is a bitter defeat because the
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honor of the revolution is at stake. He praised
the Cuban people for doing as well as they have
in already achieving a record :harvest and made no
attempt to place the blame for the failure on the
US or elsewhere. He said that "our goal was too
high" but urged Cubans to an even greater effort
in the remaining time of harvest.C In another
speech last night, Castro dwelt extensively on
reasons for the failure of the sugar harvest to
reach his original goal; Castro did not resume
the strong anti-US line he emphasized in his
earlier speechl
21 May 70
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Peru: The military government's harsh new
controls s on foreign exchange have dealt a severe
blow to the wealthy and business classes, and
will further weaken the economy.
In the wake of the unexpected decree recently
issued prohibiting all private dealings in foreign
currency, the government promptly sealed off banks,
currency exchanges, and tourist agencies to pre-
vent withdrawals. Deposits of foreign currency in
private banks were frozen and after audit will be
converted to sols.
Within 30 days, all residents must declare
their foreign currency investments and claims,
and must sell all foreign exchange holdings in
Peru and abroad to the National Bank. Penalties
for violations of the decree are extremely severe.
The wealthy and middle-class businessmen thus
far have reacted with uncertainty and fear. The
final outcome, however, could be to solidify the
heretofore fragmented and ineffective opposition
to the military government. The exchange con-
trols could also accentuate the divisions within
the military because many top officers have family
ties with the business community, and some prob-
ably have personal foreign exchange holdings that
they would like to protect.
The uncertainty caused by this action will
further depress domestic and foreign business
confidence and could result in a, partial financial
paralysis over the next few weeks. It is not
clear how the new controls will affect the oper-
ations of US and other foreign companies in Peru,
but the foreign minister claims that some portions
of the new law will not apply to foreign business-
en tem.oraril resident in the country.
21 May 70
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NOTES
CEMA: The new International Investment bank
established at a recent CEMA meeting will not operate
according to the principle of unanimity of decision
previously applicable to all CEMA organizations. A
Polish announcement says that all bank decisions will.
be by a two-thirds majority of the CEMA states. As
in some other international organizations, the
"votes" might be weighted according to contributions
by members to the organization, a provision that
would ensure Soviet control in most circumstances.
The departure from the unanimity rule probably makes
it unacceptable to Romania and explains why Bucharest
has not joined the bank.
Morocco-Algeria: King Hassan will meet with
Premier Boumediene next Monday at Tlemcen, an Alge-
rian town near the Moroccan border. A recent exchange
of high-level visitors presumably has set the stage
for this meeting, which was originally scheduled to
take place last year.
Chile - North Korea: Chile has granted per-
mission for a North Korean commercial mission to
visit the country
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or Korea does not have diplomatic
or commercial relations with any Latin American
country except Cuba at the present time. Communist
China has maintained a trade information office in
Santiago since May 1964.
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Costa Rica: President Jose Figueres, who was
inaugurated less than two weeks ago, continues to
move rapidly on his announced intention to expand
relations with Eastern Europe. Immediately follow-
ing the establishment of diplomatic relations with
Hungary, Figueres sent Communist leader Manuel Mora
to Moscow on a coffee sales mission
Mora is one of two communist deputies in
the new y installed legislature, and his increasingly
prominent role in administration affairs will prob-
ably disturb anti-Communist groups already concerned
by what they view as Fi ueres' indifference to the
threat of the far left.
Uruguay-Brazil: Uruguay will receive ten small
aircraft from Brazil under a security arrangement
concluded at a meeting of the two presidents on 11
May. Some weapons may also be provided by Brazil
T e communique issued at the end o
the-meeting did not mention security matters. They
were probably discussed, however, in view of Presi-
dent Pacheco's sympathy with his military leaders'
growing desire to replace Uruguay's largely obsolete
arsenal. An example of the military's concern is
the earnest request this week by the Uruguayan Navy
t about
chief for discussions with his US counterpar
bsolescence and deterioration of the navy.
h
e o
t
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