CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A019300060001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 14, 2016
• Document Release Date: April 22, 2003
• Sequence Number: 1
• Publication Date: June 18, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N? 040
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 Approved For Release 20036($EF RDP79T00975A019300060001-1
No. 0145/71
18 June 1971
Central Intelligence Bulletin
CONTENTS
NATIONALIST CHINA - US - JAPAN: The Senkaku Islands
dispute. (Page 1)
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SUDAN: The government is looking West for aid.
Page 3)
EUROPEAN COMMUNITIES: Monetary policy. (Page 4)
ICELAND: Opportunity for anti-US political parties.
Page 5)
YUGOSLAVIA - COMMUNIST CHINA: Yugoslav foreign min-
ister's visit. (Page
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JAPAN: Balance of payments (Page 9)
SINGAPORE: Defense outlays (Page 9)
TANZANIA: Emigration of Asians (Page 10)
VENEZUELA: Foreign investment (Page 10)
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NATIONALIST CHINA - US - JAPAN: Taipei appears
to be exploiting student sentiment to buttress its
diplomatic protests regarding the Senkaku Islands
dispute.
Yesterday 500-600 youths carrying placards and
flags staged the most highly organized and thoroughly
controlled of the recent student demonstrations on
Taiwan connected with the issue. They were protesting
failure to consult Taipei regarding the US-Japanese
Ryukyuan reversion agreement, which included the
Senkaku Islands. Student representatives, accompanied
by a police official, also presented a petition at
the US and Japanese embassies, but they left immedi-
ately afterward. Others, however, threw rocks at the
buildings, breaking a window at the Japanese Embassy.
On the previous day, the Foreign Ministry had
informed US officials of the details of the demon-
stration and had given assurances that the group
would be kept under control. Taipei had already
protested US and Japanese actions on the Ryukyus
and Senkakus through standard diplomatic channels,
but it probably approved the demonstration--and the
text of the petition, which was stronger than ear-
lier statements--both to outflank student demands
for stronger assertion of Chinese interests and to
apply additional pressure on its allies.
Taipei has claimed to Washington that reaction
on Taiwan to current US Asian policies could create
instability and actually imperil the Nationalist
regime. For this reason, Taipei appeared to have
decided earlier to ban such demonstrations. The Na-
tionalists are reluctant to ban expressions of strong
student feeling and have apparently concluded that
they can exploit these sentiments, but the potential
Central. Intelligence Bulletin
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SUDAN: The government is again looking toward
the West for aid.
The minister of treasury and planning and the
minister of information have confirmed in detail
that the policy shift is not a passing phase but a
basic decision by the whole government with Presi-
dent Numayri leading the way. Steadily deteriorating
economic conditions apparently are prompting Sudan
to make this move.
Representatives from the International Bank for
Reconstruction and Development (IBRD) have recently
arrived to resume negotiations for financing Sudan's
major development project, the Rahad irrigation
scheme, and aid is being sought from several West
European countries., To attract private investment,
the Sudanese Government recently passed legislation
to limit nationalizations and confiscations, to as-
sure the safety of investments, and to provide for
the repatriation of profits and capital.
After the 1969 coup, the radical new government
had opted for closer ties with Communist countries.
Aid from these countries has been limited largely
to the supply of military equipment, while economic
aid, including the financing of the Rahad project,
proved to be little more than promises. Most of
the small economic assistance received since the
coup had been committed by Western countries and
the IBRD prior to 1969.
18 Jun 71 Central Intelligence Bulletin 3
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EUROPEAN COMMUNITIES: Pressures are increasing
in the EC to deal with both the causes and the effects
of last month's monetary crisis.
In continued efforts to get at the sources of
monetary instability, the EC finance ministers at a
meeting earlier this week considered a number of
proposals to cope with erratic capital flows. The
measures discussed, which could also facilitate
fixing the mark rate, included widening the margins
of EC currencies vis-a-vis the dollar, establishing
minimum reserve requirements for Eurodollar deposits,
otherwise placing controls on Eurodollar movements,
and creating a two-tier exchange market. The West
Germans have not withdrawn their proposal to float
the EC currencies as a bloc,. but the French remain
opposed to this step. They reached no agreement,
but directed the Commission to draw up proposals
for consideration by the Council on 1 July.
The other EC members realize that Bonn's de-
cision to float was triggered by the influx of capital
into Germany, but they believe that the floating mark
is rapidly posing an intolerable situation for their
common agricultural policy (CAP). The Commission and
the other five members told the Germans at the meeting
of the finance ministers and at a subsequent session
of the agricultural ministers that unless Bonn soon
fixed its exchange rate the CAP could be wrecked.
Although the continued float of the mark pre-
vented narrowing the EC exchange rates as scheduled
on 15 June, the members did carry out other work
planned for the first phase of economic and monetary
union. The ministers consulted on short-term eco-
nomic policy and the Commission submitted a paper on
member-state national budgets for the next year. The
ministers reportedly agreed that restrictive economic
policies are currently appropriate in all EC countries
and that the present weakness of the Italian economy
- It 1---
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ICELAND: The resignation of the government fol-
lowing its setback in Sunday's election presents an
opportunity for the parties long opposed to existing
US military arrangements in Iceland to come to power.
Of the two parties in the governing coalition,
the conservative Independence Party managed to hold
its own as Iceland's largest political party, but
the Social Democrats lost heavily to the new Liberal
Left Party and slipped to an all-time low in terms
of popular support. Realizing that the party needs
a period in opposition to refurbish its socialist
credentials, the Social Democrats have apparently
decided not to consider entering any new government
coalition.
The Independence Party, bereft of its partner
of 12 years, has quietly approached its long-time
adversary, the agrarian Progressive Party. The Pro-
gressives, however, intoxicated with the vision of
leading a government after years in opposition, have
apparently decided to pursue their efforts to form
a coalition with the Liberal Left and the Communist-
dominated People's Alliance before attempting an all-
bourgeois government.
A coalition of these three former opposition
parties is mathematically possible, but there are
even greater differences among them than between the
two bourgeois parties. The Progressives favor Ice-
land's continuing in NATO, for example, while the
Liberal Left has vacillated and the People's Alliance
has long been on record advocating withdrawal from
the alliance. On the issue of the US military pres-
ence in Iceland, the People's Alliance has persist-
ently called for withdrawal, but the Liberal Left
has again vacillated. The Progressives, for their
part, are divided over maintaining the status quo,
renegotiation, and withdrawal.
(continued)
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Even as these three parties begin their negotia-
tions, the People's Alliance newspaper has resumed
its criticism of the leaders of the other two par-
ties. The leader of the Liberal Left Party has fired
return salvos against his former Communist colleagues
in the People's Alliance. The question yet to be re-
solved is whether the eagerness of these three par-
ties to assume power will overcome their fundamental
differences.
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COMMUNIST CHINA: The Yugoslav
foreign minister's visit to China from 8 to 15 June
opened the way for further improvement in relations.
The atmosphere of the meetings was marked by
friendly pragmatism and an extensive exchange of
views. The Sino-Yugoslav communique, however, re-
veals a surprisingly narrow political consensus
compared with the agreements from Romanian President
Ceausescu's recent talks in Peking. The two sides
agreed that the principle of peaceful coexistence
should be the basis of relations between all states
regardless of their social systems, and they call
for expanded cooperation and increased state contacts.
Resumption of party relations, however, is still
blocked by ideological differences.
During Tepavac's talks in Peking, the Tito
regime at home seemed to take calculated measures--
including a diplomatic protest to Moscow over hostile
emigre activities there--to emphasize the Soviet
threat to Yugoslavia and, by implication, to China,
Available details of the talks in Peking, however,
convey the impression that neither party indulged in
open anti-Soviet manifestations. Nevertheless, the
two sides did tacitly criticize the Brezhnev doctrine.
The US, however, fared well in some aspects of
the talks. Tepavac at his first state dinner in
Peking intimated that Yugoslavia intended to pursue
relations with the US consistent with Washington's
good intentions toward Yugoslavia, without visible
Chinese objections. In addition, the communiqu6
failed to mention any international issues including
Indochina or Chinese admission to the UN.
18 Jun 71 Central Intelligence Bulletin
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JAPAN: Preliminary balance-of-payments data
througgh May compared with those of a year ago in-
dicate exports rose in value by some 24 percent de-
spite Tokyo's attempts to limit their expansion.
Exports to the US, Japan's leading customer, in-
creased 29 percent with automobile sales gaining
more than 100 percent and iron and steel some 25
percent. Total imports grew only seven percent com-
pared with an increase of 32 percent last year, re-
flecting the country's present economic slowdown.
The rapid export growth combined with the compara-
tively marginal increase in imports produced a trade
surplus of $2.2 billion, the highest ever recorded
for any January-through-May period. This, together
with continued heavy capital inflows, is likely to
result in even more pressure for revaluation of the
yen.
SINGAPORE: The government's defense outlays
for this fiscal year, which began 1 April, will in-
crease more than 50 percent and account for almost
a third of total government spending. They could
reach ten percent of gross national product compared
with last year's level of seven percent. Outlays
of this magnitude, however, are easily handled by
the country's fast-growing economy. Singapore's
increased defense expenditures result from the coun-
try's desire to raise its own defense capability to
the maximum extent possible in light of the with-
drawal of all but a token contingent of British
forces from the area by the end of this year.
(continued)
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TANZANIA: Accelerated emigration of the skilled
and wealthy Asian population may cause Tanzania sub-
stantial economic damage. Recent government nation-
alization and foreign exchange control measures have
put increasing pressure on the 70,000 Asians who
hold a predominant commercial and professional in-
fluence in Tanzania. Many are moving assets out of
the country illegally; applications for emigration
allowances as of mid-May amounted to about 30 percent
of Tanzania's foreign exchange reserves of $66 mil-
lion. President Nyerere may soon face the dilemma
of restricting free movement out of the country or.
of watching a significant part of the nation's wealth
and talent leave.
VENEZUELA: Despite recent increases in petro-
leum and mining taxes, foreign investors continue
to show interest in investment in Venezuela. US
Steel, which suspended plans to expand iron mining
and processing facilities following the increase,
has now decided to move ahead with the project at
a cost of $40 million. After several months' con-
sideration, three oil companies apparently have
signed service contracts and will start developing
new production in southern Lake Maracaibo,. On the
other hand, several companies that bid for conces-
sions to develop nickel deposits, entailing an in-
vestment of more than $50 million, have backed out.
The government may undertake this project on its
own- if it cannot attract foreign capital.
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