CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A016800060001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 15, 2016
• Document Release Date: February 10, 2004
• Sequence Number: 1
• Publication Date: July 31, 1970
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
50
31 July 1970
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No. 0182/70
31 July 19 70
Central Intelligence Bulletin
CONTENTS
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Arab States: Both Iraq and Syria have publicly at-
tacked the US peace proposals. (Page 2)
Cambodia: The lull in significant military activity
continues. (Page 5)
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NATO: The Allied study on defense problems underlines
opposition to changes in US force levels. (Page 9)
Yugoslavia: Joint industrial investments with the
West are moving ahead. (Page 10)
Bolivia: Ovando's latest attempts to placate the
left T ave embroiled him with the military. (Page 11)
Peru: The industrial reform offers scant hope of
moderation in the "revolution." (Page 12)
Central America - Eastern Europe: Some Central Amer-
ican countries may abandon their cool policy toward
the East. (Page 13)
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Arab States: Both Iraq and S ria have publicly
attacked the US peace initiative
Pronouncements by Syrian officials and the gov-
ernment-controlled press have categorically rejected
the US plan, as they have consistently rejected the
Security Council resolution on which it is based.
Nevertheless, a certain amount of ambiguity has crept
into this public position. On 28 July, for example,
Syrian leader Atasi met with Nasir's personal repre-
sentative, who later announced that the meeting was
"extremely successful" and that there was "full
agreement on all matters discussed."
The Iraqi rejection of the US move has been un-
compromising--presumably a reflection of the fact
that Iraq lost no territory in the 1967 war and there-
fore has nothing to gain in any settlement. Its at-
titude would be of little importance were it not for
the presence of some 20,000 Iraqi troops in Jordan.
Recent rhetoric over Baghdad radio has given rise to
press reports that Iraq has placed these forces at
the disposal of the fedayeen, but the broadcast seems
to have been misinterpreted.
Baghdad is no doubt delighted to be able to por-
tray both Husayn and Nasir as traitors to the Arab
cause, but it is unlikely to use its troops in Jordan
in an actual move against King Husayn.
(continued)
31 Jul 70 Central Intelligence Bulletin
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Palestine Liberation organization chairman
Yasir Arafat is expected to set forth the fedayeen
position on the US peace initiative today. A com-
mando spokesman in Amman announced yesterday that
the fedayeen leader would also touch upon Egypt's
recent decision to cut off guerrilla broadcasts from
Cairo. Arafat's stand is likely to be negative on
both subjects. Because of President Nasir's great
popularity among the Arab masses, however, it is un-
likel that Arafat will attack him personally.
Central Intelligence Bulletin
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Cambodia: Current Situation
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Cambodia: The lull in significant military ac-
tivity continues.
The government counteroffensive to retake Kiri-
rom, spearheaded by five fresh battalions, is moving
ahead slowly. Progress was checked yesterday when
the Communists blocked the one access road to the
town. A small enemy force also attacked a bridge on
Route 4, east of Kirirom, on the night of 29-30 July,
closing it to heavy traffic.
Most of the troops that retreated from Kirirom
on 28 July apparently were in no condition for more
combat, and have been withdrawn. The Cambodian com-
mander directing the current operation told journal-
ists that he has asked for US air support because
South Vietnamese close air strikes are inaccurate.
The continuing poor weather at Kirirom probably will
greatly reduce the effectiveness of air support in
any event.
The immediate purpose of the Communists' cam-
paign around Kirirom may be more for psychological
effect than for significant military advantage. The
rugged terrain and the restricted overland access to
the town make it an ideal site for prolonged combat,
with government troops now forced literally to wage
an uphill battle to retake it. The Communists may
hope that with a relatively small effort they can
demonstrate anew the Cambodian Army's existing tac-
tical shortcomings and at the same time garner more
headlines at Phnom Penh's expense.
The continuing presence of a regimental-sized
enemy force in the area suggests, however, that the
enemy campaign at Kirirom may have some longer range
objectives. It may represent, for example, the be-
ginning of an effort to establish a secure rear base
of operations in the remote mountainous areas of
southwestern Cambodia. Such a base could be used for
launching frequent attacks on government positions
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and lines of communication, including Route 4, in the
surrounding provinces.
Thai Troop Debate Continues
Foreign Minister Thanat told the press in Bang-
kok on 30 July that the government would send Thai
troops to Cambodia only as "a last resort." He cited
the "acrimonious" relations between the Cambodians
and South Vietnamese forces operating in Cambodia as
an example of the "friction" that can be avoided by
keeping Thai troops at home.
31 Jul 70 Central Intelligence Bulletin 6
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NATO: The initial stages of the Allied study
on defense problems of the 1970s have underlined
European opposition to any substantial change in US
force levels and in NATO strategy.
The Allies, reacting to a US presentation of
the range of possible options regarding US force
postures, have strongly favored maintenance of pres-
ent force deployments. There is general willingness,
however, to consider in the Allied defense review how
the US could make modest cuts in noncombat areas if
some reduction were absolutely necessary. The West
Germans, for example, have indicated that they could
accept such money-saving steps as a reduction in the
NATO stockpiles intended to support a conventional
war for 90 days. The Germans also would not be op-
posed to reductions in the current support system
and cutbacks of US troop strength in other European
countries.
Strong Allied objections have been raised to
any movement away from the current NATO doctrine of
flexible response and toward greater reliance on
either tactical or strategic nuclear weapons. The
Germans have been particularly unequivocal in their
opposition to any such change.
The Germans and some other NATO members now be-
lieve that in order to retain present US combat
force levels, they will have to bear a larger share
of the US financial burden. They are examining the
possible US force options in this context and will
be forwarding additional comments and questions in
the course of the upcoming defense review sessions
in August.
31 Jul 70 .Central Intelligence Bulletin
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Yugoslavia: Joint industrial investments with
the West, long sought by the Yugoslavs, are moving
ahead.
Daimler-Benz-Mercedes reportedly has agreed to
invest $40 million in a Yugoslav firm for joint pro-
duction of Mercedes trucks and buses in Belgrade.
This agreement is the eighth involving West European
automotive assembly operations in Yugoslavia. In
addition, a $10-million joint investment agreement
with Renault as well as a large one with Ford are
in the offing. Joint investments in other industries
have recently been agreed upon with US, Swedish, and
Danish firms.
Many of these recent arrangements envisage mar-
kets in hard currency areas, so that investors will
be able to earn foreign exchange. This probably was
a major inducement to Western firms to invest hard
currency in joint projects despite other difficul-
ties that have limited foreign investment in Yugo-
slavia. High taxes and limits on transferability
of capital are especially unattractive. Yugoslav
businessmen have been pressing the government for
several months to liberalize these regulations, and
some changes may be made. The requirement for re-
investment of some profits in Yugoslavia was recently
liberalized.
31 Jul 70 Central Intelligence Bulletin
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Bolivia: President Ovando's latest attempts
to placate the left appear to have embroiled him in
new difficulties with the military.
The apparently rigged resignation of Information
Minister Bailey and Ovando's less than straightfor-
ward handling of the student crisis may have created
a breach with the military high command that will be
extremely difficult to repair.
Bailey's resignation last Monday appears to have
been a ploy to undercut the military high command by
providing a platform for denouncing them as counter-
revolutionaries. Similarly, Ovando's rejection of
the resignation the following day may have been in-
tended to demonstrate his determinatioi. to continue
his "revolution," as well as his defiance of military
pressure to remove the leftist minister.
Ovando also apparently ignored military desires
when he forced through a solution to the growing stu-
dent problem with an agreement that seems calculated
to assure leftists of continued control of the Uni-
versity of San Andres. The agreement, which calls
for returning the university to leftist control and
then holding student elections, is reportedly viewed
as a betrayal by both the conservative students and
the military.
A showdown between Ovando and the military now
seems inevitable, but it may be delayed by the death
of the President's son in a plane crash on 29 July.
31 Jul 70 Central Intelligence Bulletin
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Peru: The long-awaited industrial reform ap-
pears to offer scant hope of moderation in President
Velasco's "revolution."
The new law was described by Velasco in his
independence day speech on 28 July. It is consider-
ably more radical than generally expected. Velasco
said that industrial reform would provide for: state
control of basic industry; diversion of 25 percent
of profits before taxes for distribution to employees
and the purchase of company stock for a new workers'
organization to be set up; worker participation in
management; and a maximum of 33-percent foreign owner-
ship in a company after the original investment is
recovered and a "reasonable profit" has been obtained.
Foreign ownership apparently could range as high as
49 percent if it were a joint venture with Peruvians.
Optimism among businessmen in Lima had been in-
creasing in recent weeks as it appeared that their
representations to the government on the industrial
reforms would be reflected in the final law. The
promulgation of a law that is even more radical than
the original draft, which had already alarmed the
business community, however, probably will cause
business and investor confidence to sink to a new
low.
31 Jul 70 Central. Intelligence Bulletin
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Central America - Eastern Europe: Some Central
American countries show signs of abandoning their
traditionally cool policy toward Eastern Europe.
Central American governments evidently have
kept a careful eye on Costa Rican President Figueres'
open door policy toward Communist countries. I
Costa Rica has successfully disposed o some surplus
coffee through a commercial agreement with the So-
viets, and Figueres has moved the country toward
closer relations with other East European nations.
Guatemala also is considering establishing commercial
relations with the Communist countries to sell coffee
and to save money by eliminating middle men.
Most Central Americans remain reluctant to ad-
mit Communist personnel for long periods of time.
Costa Rica, however, has negotiated to buy on credit
Soviet road maintenance equipment that would involve
technical instructors, and the bilateral agreement
awaiting congressional ratification calls for the
exchange of six-man trade missions.
Although Figueres expects quick ratification,
his cordiality toward Eastern Europe has been a mat-
ter of public controversy at home; much of the public
media has been strongly negative. He has neverthe-
less established diplomatic relations with Romania
and Hungary, and is believed to be moving toward ex-
changes with East Germany, Bulgaria, and the USSR.
If the other countries in Central America believe
that Costa Rica is able to negotiate favorable deals
with Eastern Europe, they are likely to follow suit.
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