CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A019000030001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: December 14, 2016
• Document Release Date: July 30, 2003
• Sequence Number: 1
• Publication Date: May 10, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 040
10 May 1.971
State Department review completed
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No. 0111/71
10 May 19 71
Central Intelligence Bulletin
INTERNATIONAL MONETARY SITUATION: Newly approved
proposals have preserved a measure of unity in the
Common Market, but difficult problems remain.
(Page 1)
EC-UK: A new drive is under way to settle the is-
sues involved in Britain's bid for membership.
(Page 3)
INDIA-PAKISTAN: Relations are still strained by the
stalemate in repatriation of diplomatic personnel
and the growing influx of refugees. (Page 5)
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I INTERNATIONAL MONETARY SITUATION: The package
of proposals approved in Brussels yesterday has pre-
served a measure of unity in the Common Market, but
difficult problems--and a residue of bitterness--re-
main.
US Mission sources affirm that the Germans ini-
tially proposed that all community currencies be per-
mitted to float in relation to the dollar, and of-
fered monetary support to keep them within agreed
margins. Although this would have been a step to-
ward monetary union in the community, none of the
other members--France and Italy in particular--was
prepared to go this far and the proposal was re-
jected.
The compromise that was finally worked out will,
permit Bonn instead to allow the mark to float, ap-
parently within limits and for an unspecified period
of time. At a press conference last night, Economics
Minister Schiller said it remains his government's
"present aim" to return eventually to the prefloat
rate of exchange.
Of the four other countries which joined West
Germany last week in discontinuing official trading
in dollars, only the Netherlands is again following
the German lead in allowing its currency to float
against the dollar. Switzerland and Austria have
revalued their currencies outright, and Belgium
evidently intends to rely on its dual exchange rate
system. The French and Italians have announced
their intention to maintain their present parities.
The stopgap of floating rates will have to be
supplemented by additional measures. Floating of
the mark will be accompanied by a renewal of domes-
tic controls on the inflow of foreign funds into
Germany. It may be difficult for the community to
agree on how to control capital movements and to
regulate the Eurodollar market.
(continued)
10 May 71 Central Intelligence Bulletin
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 Approved For Release 2003/OINUC.
I If the float of the mark is held to about 2.5
percent on either side of parity in order to limit
the adverse effects on the Common Agricultural Pol-
icy (CAP), speculators may still believe that the
mark is undervalued. On the other hand, a wider
fluctuation would be severely disruptive of the CAP
and measures would have to be taken to compensate
the German farmer, who will receive less as the
mark floats upward. Bonn nevertheless has agreed
not to take unilateral measures to help its farmers
pending an attempt by the ministers to find a commu-
nity solution at a meeting tomorrow.
French Finance Minister Giscard d'Estaing has
publicly acknowledged. that the need to resort to
the measures approved yesterday will make it impos-
sible for the Six to narrow their exchange rate mar-
gins on 15 June as they had intended to do in keep-
ing with the projected plan for monetary union.
Whether the delay will be a prolonged one will ob-
viously depend on how the money markets respond to
the various stabilization measures.
10 May 71
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EC-UK: The ministerial level meetings early
this week will open a drive to settle by summer the
main issues involved in Britain's bid for Common
Market membership.
At the meeting of the ministers of the Six to-
day, France has promised to propose a solution to
the problem of Britain's contribution to the commu-
nity budget. The negotiations have been deadlocked
on this issue since last December, and if France's
proposal is approved by the Six, it will be consid-
ered when they meet with the UK tomorrow and Wednes-
day. At that time, the problems of continued access
to an enlarged community for New Zealand dairy prod-
ucts and Commonwealth sugar will also be discussed.
The French proposal on financing will apparently
be a formula rather than a precise figure. The fact
that Paris is taking the initiative on this issue
marks a change from the earlier French position
which left the next move up to London. Following
a talk with President Pompidou last week, New Zea-
land Prime Minister Holyoake confirmed that Paris
may also suggest that the dairy and sugar problems
simply be set aside until after British entry, with
the understanding that they then would be dealt
with fairly.
It is highly doubtful that the seven can fully
settle these issues in a two-day meeting--the Six
had already agreed with the British in March that
an additional session could be held later this month
if necessary. Paris has been strongly urged by its
EC partners to be more forthcoming, however, and its
new proposal on financing may be a sign of increased
flexibility.
The announcement over the weekend that Prime
Minister Heath will discuss the accession issue
with President Pompidou in Paris on 20-21 May is a
reversal of London's previous position regarding
such a meeting. Why Heath has changed his mind is
10 May 71 Central Intelligence Bulletin 3
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unclear. It has long been speculated that Pompidou
might seek at such a meeting to extract concessions
from Heath in return for entry, but the monetary
crisis of the past week--in which German economic
pre-eminence again became apparent--may have made
Britain's accession seem politically more desirable
I
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INDIA-PAKISTAN: Relations continue strained as
a result of the impasse over the repatriation of
diplomatic personnel from Calcutta and Dacca and
the mounting influx of East Pakistani refugees into
India.
No progress has been made in recent days on the
repatriation issue, with Pakistan continuing to in-
sist that its specially assigned representative in
Calcutta be allowed individual interviews with those
members of the staff of Pakistan's Deputy High Com-
mission who have opted for Bangla Desh. Indian of-
ficials, however, claim they have no power to force
the disaffected Pakistanis to meet one-by-one with
Islamabad's representative. Until such interviews
take place, the Pakistanis refuse to schedule the
reciprocal exchange of personnel.
Meanwhile, New Delhi charges that its deputy
high commissioner in Dacca, Sen Gupta, and his staff
are still being subjected to severe restrictions on
movement and communication and that some of the
staff may now be running out of food. The US consul
general in Dacca was turned back by a Pakistani
Army officer when he attempted to call on Gupta on
8 May. The officer also volunteered that he was
under strict orders not to allow Gupta outside the
compound where he resides.
The refugee issue may be aired today in the
UN Economic and Social Council (ECOSOC) if India
obtains permission to speak on the situation in
East Pakistan. Islamabad is expected to insist that
the issue is an internal matter, not subject to de-
bate before ECOSOC or any other international body.
The Indians plan to charge the government of Paki-
stan with committing "atrocities and barbarities"
that have resulted in massive numbers of refugees
fleeing across the border of East Pakistan into
neighboring Indian states. According to a senior
Indian official, the Indian representative will
also demand that a way be found to relieve the
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East Pakistanis from the "oppression" they currently
suffer. The same official claims that a "conserva-
tive" estimate of the number of refugees presently
in India is 1.8 million and that the influx is
growing daily, with no end in sight.
10 May 71 Central Intelligence Bulletin 6
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