CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A017400130001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: August 4, 2003
• Sequence Number: 1
• Publication Date: October 29, 1970
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
State Dept. review completed
Secret
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No. 0259/70
29 October 1970
Central Intelligence Bulletin
CONTENTS
PERSIAN GULF: Talks on the formation of a federation
appear to be collapsing. (Page 1)
UNITED KINGDOM: The government has announced its
fiscal policy, (Page 2)
LAOS: The Communists have renewed their bid to open
peace talks. (Page 3)
JAPAN: Tokyo has decided to relax its tight credit
policy. (Page 4)
CHILE: Allende's party appears to have the upper
hand in maneuvering over cabinet posts. (Page 5)
URUGUAY: The Tupamaros are continuing their terror-
ist activities. (Page 6)
JORDAN : New cabinet (Page 7)
LEBANON-FEDAYEEN: Increased commando activity (Page 7)
BULGARIA: Party congress (Page 8)
ECUADOR: Security measures (Page 9)
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Talks on Federation of Arab Amirates Appear to be Collapsing
KUWAIT
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Dubai
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PERSIAN GULF: Talks looking toward the forma-
tion o37 a nine-member :Federation of Arab Amirates
appear to be collapsing.
The deputy rulers of the nine sheikhdoms failed
to agree Monday on representation in the proposed
federation's parliament. Populous Bahrain demanded
representation proportionate to the population of
each federation member. The smaller Trucial States,
fearful of being submerged in a federation, supported
the concept of equal representation.
Numerous conflicts have marred consideration
of the British-sponsored plan to create the federa-
tion. With the nine-member federation now a receding
prospect, talks among the smaller sheikhdoms about a
confederation of their own are likely to begin. Ri-
valry among the rulers is too intense, however, to
allow: a quick settlement of differences. The possi-
bility that the British may decide not to withdraw
all their forces from the Persian Gulf by the end
of 1971 has lessened the need for a federation in
the eyes of the rulers of the Trucial States.
Saudi Arabian leaders, however, who had viewed
the creation of a federation as a deterrent to sub-
version in the gulf, will be disappointed by the
apioarent collapse of the talks.
29 Oct 70 Central Intelligence Bulletin
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UNITED KINGDOM: The government's recent fiscal
policy announcement gives further evidence of the
Conservative Party's resolve to reduce the role of
government in the economy.
Planned expenditure cuts and increased charges
for government services should reduce spending by
almost $800 million for the fiscal year beginning
next April and slow the long-run rate of increase
of public spending to 2.8 percent a year. Because
of the complexity of the fiscal measures, however,
their over-all impact on the economy for the short
run cannot yet be reliably estimated.
Particularly important fiscal changes will af-
fect corporate and personal income taxes, charges
for government services, and the prices of agricul-
tural commodities. Corporations will lose the sys-
tem of investment grants, but will gain a lower
basic tax rate and more favorable depreciation allow-
ances for taxes due on 1 January 1971. Individuals
will benefit from an April 1971 reduction in the
standard rate of the personal income tax, but will
have to pay more for such government services as
medical and dental assistance as well as for some
foods.
The anticipated increase in food prices results
from a fundamental change in the nature of the
British foreign support program. This change aligns
the methods of British agricultural support with
those of the European Communities, thus making it an
important first step in effecting the difficult
British transition to the Common Agricultural Policy.
It could give a boost to the negotiations on this
issue. F -1
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LAOS: The Communists have renewed their bid
to open peace talks.
The chief negotiator for the Pathet Lao, Phoun
Sipraseuth, has sent a telegram to Pheng Phongsavan,
Prime Minister Souvanna's representative for the
talks, calling for the "earliest possible meeting."
The message, which came a few days before Souvanna's
return to Laos, stated that Pathet Lao special envoy
Souk Vongsak would return to the capital to "prepare
concrete questions" for the meeting.
The Communist initiative sticks to the line
that the proposed discussions would be between the
representatives of the "two princes"--Souvanna and
Pathet Lao leader Souphanouvong. Vientiane has op-
posed.this formulation because it failed to recognize
Souvanna's position as head of the Laotian Govern-
ment. It is possible, however, that both sides are
now prepared to sidestep on this question--perhaps
by each holding to its own while ignoring the other's
position.
Government leaders are optimistic about the
chances that substantive talks will get under way;
some believe they may even lead to a settlement.
Pheng Phongsavan has told a US official that an
agreement to meet would be reached and that talks
might begin at Khang Khay in early December. The
crucial question remains that of a bombing halt,
which the Communists have been insisting is essen-
tial to any settlement. Pheng indicated that the
government would continue to insist that no cessa-
tion could occur without a supervised withdrawal of
North Vietnamese forces. He thought, however, that
the Communists would be willing to discuss a partial
bombing halt in return for some reduction of hostil-
ities in northern Laos.
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JAPAN: The lowering of the official discount
rate reflects Tokyo's decision to relax its 14-month-
long tight credit policy.
The adverse effect of restrictive monetary policy
on industrial output has recently become apparent.
Growth in steel and in a number of other important
industries has slowed appreciably. Inventories of
construction machinery, home electric appliances,
and synthetic fibers are up sharply, leading to ex-
pectations of production cutbacks. Moreover, there
has been a decline in shipments of key commodities
such as automobiles and television sets, new orders
for construction and machinery, and overtime work
in manufacturing.
Tokyo probably only reluctantly eased its credit
policy, because its primary aim to slow inflation has
not yet been achieved. Both wholesale and consumer
prices have continued to increase in recent months,
maintaining the upward trend that has persisted or
two years.
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CHILE: Salvador Allende's extremist Socialist
Party appears to have gained the upper hand in the
maneuvering over allocation of cabinet posts.
The Socialists,'many of whom prefer the Cuban
revolutionary path to the Soviet via pacifica, still
insist on having one of their members appointed min-
ister of interior, which is the senior cabinet posi-
.tion. The.minister of interior has control over the
police and provincial governments, and is first in
line of succession to the presidency. If, as ex-
pected, a Castro admirer is appointed foreign minis-
ter, this will also give a more radical cast to the
new administration than either Allende or the cau-
tious Communist Party had intended, at least in the
beginning. The Communists, the major component of
Allende's six-member Popular Unity coalition, re-
portedly are dissatisfied over the Socialists' grab
for power in the cabinet and for lesser, but impor-
tant posts.
The investigation of the assassination of Army
Commander in Chief Rene Schneider has somewhat ob-
scured Allende's difficulties in setting up his gov-
ernment. Administration officials announced the
arrest of all those involved in the attack, and re-
tired General Roberto Viaux has surrendered to
"prove his innocence."
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URUGUAY: The Tupamaros are continuing their
terrorist activities.
This week the guerrillas bombed the British-
owned Western Telegraph facilities, causing sub-
stantial damage. On 13 October, a US-associated
company suffered $250,000 in damages in a firebomb-
ing similar to the hit-and-run attacks on several
US firms in September. Although the Tupamaros still
have the capability for spectacular operations,
most of their activities this month seem to be
aimed simply at demonstrating their freedom of ac-
tion and at keeping themselves in the public eye.
The Tupamaros have taken over several theaters
in Montevideo for short periods of time in order to
publicize and distribute their political manifesto,
which they demand be published by all news media
in exchange for the release of one of the two kid-
nap victims held since early August. In an effort
to keep pressure on the government, which stead-
fastly refuses to negotiate with the terrorists,
the Tupamaros this week released pictures of the
American agronomist, Claude Fly, who apparently is
in good health.
In an attempt to intimidate prominent Uruguay-
ans, the Tupamaros have vandalized the homes of
several leading families, most of whom are associ-
ated with the media. Last week the editor of a ma-
jor newspaper was abducted, beaten, and left in a
vacant lot.
The police, meanwhile, have continued their
counterterrorist campaign. Three Tupamaros were
captured and one killed during a shootout with po-
lice on Tuesday, and earlier this month eight mem-
bers of a second terrorist group were arrested.
The government now holds more than 200 Tupamaros in
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NOTES
JORDAN: The appointment yesterday of former
premier Wasfi Tal to head a new cabinet reflects
King Husayn's concern with strengthening domestic
policy. Tal is a strong, tough-minded leader with
considerable support within the army and among the
East Bank Jordanians; he is generally unpopular in
the radical Arab states. Following the death of
Nasir--whose strong moderating influence was valuable
to Husayn in his dealings with the fedayeen--the
King has given a high priority to strengthening
Jordan's stability, especially with relation to
the Palestinians. Husayn had already restored his
tough cousin, Zaid bin Shakir, to his position in
the army; the new premier's appointment probably
reflects the King's desire to give Shakir a stron
civilian partner. I- I
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LEBANON-FEDAYEEN: Increased commando activity
along the Israeli border could again spark govern-
ment-fedayeen clashes. Following a short period of
quiet, commandos have made four attacks across the
border into Israel since the beginning of this week.
On direct orders from President Franjiyah the Leba-
nese Army has increased its forces in the area; the
fedayeen may soon follow suit. In the event that
commando activity reaches a high level, Tel Aviv
could launch strong retaliatory strikes again.
Meanwhile, fedayeen organizations may be making
contingency plans for fighting in Beirut.
(continued)
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BULGARIA: The delayed tenth Communist Party
Congress has been announced for April 1971, a month
later than the scheduled start of the Soviet congress.
According to Bulgarian leader Zhivkov, the agenda
will include the endorsement of the draft constitu-
tion under discussion since 1968 and the approval
of the first long-term party program, as well as a
1971-75 socioeconomic plan. Details are lacking,
but the constitution reportedly is intended to codify
changes that have been made in Bulgaria since the
current document was adopted in 1947. It probably
is also designed to support the proposed five-year
plan which, according to Zhivkov, for the first time
will rely heavily on automation and cybernetics to
determine planning priorities.
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ECUADOR: The government, apparently with no
clue to the identity of the kidnapers of General
Rohon, is continuing strict security measures and a
roundup of political opponents. As time passes with-
out any authenticated communique stating the kid-
napers' terms, the possibility that Rohon has been
killed increases, as does the possibility that the
government will feel compelled to take harsher re-
taliatory action against suspected terrorists. The
reported bombing yesterday of the home of leftist
Vice president Zavala, ousted when Velasco assumed
dictatorial powers in June, will probably prompt
speculation that the milita is already embarked
on an extralegal course.
29 Oct 70 Central Intelligence Bulletin
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