CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A019500020001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 14, 2016
• Document Release Date: June 17, 2003
• Sequence Number: 1
• Publication Date: July 9, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
State Dept. review completed
N ?_ 0 41
9 July 19 71
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No. 0163/71
9 July 1971
Central Intelligence Bulletin
CON7'~ENT S
LAOS: Souvanna Phouma's response to Pathet Lao pro-
posals for a cease-fire and bombing halt. (Page 1)
COMMUNIST CHINA: Kang Sheng appears to have lost
all political power. (Page 2)
BURMA: The government party's first congress.
Page 4 )
IRAN: Opium production. (Page 5)
MALTA: Prime Minister Mintoff's diplomatic moves.
Page 6)
ITALY: Moves to stimulate the economy. (Page 8)
RHODESIA-UK: No break in the impasse. (Page 9)
UGANDA: The quarrel with Tanzania. (Page 10)
ROMANIA - WARSAW PACT: Refusal to participate in
exercises Page 11
BULGARIA: Zhivkov's elevation to chief of state
Page 11)
PHILIPPINES: Rollback in oil price increase (Page 12)
ECUADOR: Request for aid from US oil companies
Page 2)
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~f Government held location
Irregular position
?Communist-held location
a
Irregular clearing ~per8tion
Ban Na~
long.. Tiang
Muong PoY.
Bour.m Long
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LAOS: Prime Minister Souvanna Phouma has
adoptec~`a" flexible tone in responding to the most.
recent Pathet~Lao proposal s. fora cease-fire and
bombing halt.
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ouvanna accep e t e Communist proposal that
negot~.ations be-held alternately in Vientiane and
on the Plaine des Jarres. He artfully sidestepped
.the Communist demand that a country-wide cease-fire
precede negotiations. Instead the government pro-
posed that. a limited standclown.be imposed in a 20~
mile radius around the Plaine? The talks themselves
would take up the larger gLlestians of a country-wide
cease-fire and bombing halt: and then other outstand-
ing issues.
The government proposal is ostensibly an effort
to get the negotiations onto the same-track as last
year when the. two sides came close to agreeing to a
limited cease-fire on the Plaine. It is doubtful
that. the Communists will buy the scenario this year--
particularly because much of the Plaine is presently
in government hands--and the government was well
aware of this ,when it framed its response.
On the Plaine, Vang Pao's irregulars are con-
tinuin,g to press forward .and are noia moving north-
ward toward Phou Keng,,the dominant high ground
north of the Plaine. Other irregulars, are. conducting
clearing operations in the Muong-Pot Valley some four
miles east of Ban Na; the valley is thought to be a
major North Vietnamese supply and logistic center.
Communist forces have made probes and. harassing at-
tacks on irregular outposts on the Plaine, but there
is as yet no indication that a major North Vietnamese
assault is imminent.
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SECRET
COMMUNIST CHINA: Kong Sheng, heretofore the
fifth-ranked member of the elite politburo standing
committee, appears to have lost all political power.
In a recent conversation with the US ambassador
in Bucharest concerning the visit of Romanian party
chief Ceausescu to Peking last month, First Deputy
Foreign Minister Macovescu declared flatly that "Kang
no longer occupied a post." Kang, who made his only
public appearance since last November at a major re-
ception held by Mao Tse-tung far Ceausescu on 3 June,
was described by Macovescu as a sick man who had come
out of the hospital to greet the Romanians as a cour-
tesy. The removal of a leader of Kong`s stature from
his posts for health reasons simply does not accord
with past Chinese Communist practice, and his prin-
cipal "illness" is almost certainly political.
During Kong's nearly seven-month absence from
public view, several stories circulated in Peking
that he, along with his still-missing colleague on
the politburo standing committee, Chen Po-ta, had
been heavily censured at the major party plenums last
year for extremist activities during and since the
Cultural Revolution. In recent months, there have
been numerous reports that a nation-wide crackdown
on extremists is intensifying, and it appears that
Chen Po-ta, at least, has been purged on the grounds
that he organized the notorious "May 16 Corps"--an
ultraleftist group which in 1967 allegedly had at-
tempted to undermine the positions of Premier Chou
En-lai and several of the major regional military
commanders now on the politburo. Although Kang was
also linked with the "May 16 Corps," the recent
charges against him were never specified even in
the rumors, suggesting that the question of his
political fate was the subject of prolonged debate.
Even if the Romanian account of Kong's status
is correct, it still is not clear why he appeared at
the reception in June. Whatever the explanation, the
complex maneuvering within Chi:na's uneasy ruling
coalition continues, and Kong's brief reappearance
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probably indicates that the influence of the leftist
forces with which he has been associated has not
waned completely, even though he has lost his per-
sonal standing.
Kang's political demise would mean that at
least four full or alternate politburo members of
varying political persuasions apparently have lost
status since last year. The leadership situation
in Peking continues to be fluid, however--a point
which was underscored last week by the extraordinary
absence of a public display of China's top officials
during the 50th anniversary celebration of the Chi-
nese Communist Party.
9 Jul 71 Central Intelligence Bulletin
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BURMA: Continued military domination of the
government seems ensured by developments at the
government party's first congress.
Current military and government leaders have
been elected to all key posts in the Burma Socialist
Program Party (BSPP), the country's only recognized
party, which is now in the second week of its con-
gress. The announced purpose of the congress i.s to
transform the BSPP from a "cadre" party into a "mass"
organization with elected leaders. The government
leader, General Ne Win, has often promised to return
power to the people, and in the future, the govern-
ment will be theoretically responsible to the party.
To the surprise of no one, General Ne Win was
unanimously .elected chairman of the BSPP, and his
heir presumptive, Brigadier Sa:n Yu, was voted gen-
eral secretary. Of the 200 members of the Central
Committee, which apparently will be the highest:
policy-making body in the government, 146 are senior
military officers.
The congress, which still has to complete the
task of developing the party's substructure is
likel to ad'ourn next week.
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IRAN: Tehran has stiffened its conditions for
stopping its increasing production of opium.
In 1955 Iran,. bowing t:o international pressures,
placed a complete ban on opium production. As a re-
sult, a thriving illicit commerce soon developed
with Turkey, Afghanistan, and Pakistan to fill the
large domestic demand. To get some measure of con-
trol over the domestic narcotic problem, the Shah
reinstituted poppy cultivation in 1969, along with
a strict program of addict registration and control
of illegal traffic. At that time, the Shah said
that Iran would suspend poppy cultivation only when
Turkey and Afghanistan adopted a similar ban.
Prime Minister Hoveyda recently told US offi-
cials that it remained Iran's policy to end poppy
cultivation when "a11 its neighbors who were sources
of supply" did so.
Iran has increased its poppy crop yearly and
expects to produce 130 tons of usable opium this
year. This output is barely sufficient to meet the
needs of the country's 65,000 registered addicts.
An additional 250 tons of opium, to supply about
300,000 unregistered opium users, are expected to
be smuggled in, mainly from Afghanistan.
Meanwhile, Tehran continues its highly effective
control over the production and distribution of the
drug. Registration of farmers, continuous observa-
tion of the harvest, and guarded transport of opium
have so far kept Iranian odium from entering the
illicit market
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MALTA: Prime Minister Mintoff is moving on
severa~~iplomatic fronts at the same time.
Mintoff, who maintained a strong anti-Italian
position during the election campaign, has sent a
message to Rome indicating his desire to make a new
start in Italian-Maltese relations and suggesting
that a special emissary be dispatched for discussions.
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Mintoff's private secretary met with Libyan
Prime Minister Qadhafi last week and, according to
press reports, negotiations will begin soon on eco-
nomic and trade relations. Libya has also agreed
to release the small amount of Maltese funds blocked
in Libyan banks since the overthrow of the monarchy
in 1969. It is likely that Valletta will-conclude
an economic agreement with Tripoli, but whether it
becomes more than a symbol of Mintoff's desire for
a neutral Malta will depend greatly on the outcome
of the renegotiation of the defense and financial
agreements with the UK.
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Mintoff is incensed over British. press and par-
liamentary statements that downgrade Malta's stra
tegic importance and over London's delay in sending
an-envoy to open talks. He has threatened to -ter-
minate completely Britain's-use of Maltese facilities
if a minister is not sent "without delay."
The results of the-talks with the UK-will also
affect Mintoff?5 attitude toward. the Soviets. Accord-
ing to press reports, the non-resident Soviet ambas-
sador, Mikhail 5mirnovsky, was in Malta earlier this
week and planned to meet with the ministers of justice
and trade, industry, and tourism, Moscow is expected
to ask for permission to open an embassy in Valletta
and offer some sort of economic assistance.
Central Intell~~genee Bullet{n
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ITALY: The government is taking steps to stim-
ulate economic activity.
Five decree laws aimed at reviving investment
demand and production have been issued. The new,
wide-ranging measures, which are effective immedi-
ately but require parliamentary approval within 60
days, have an estimated budgetary cost of $900 mil-
lion over the next 18 months. Their provisions in-
clude temporary lowering of employer social security
contributions, particularly for smaller companies
and. for those located in southern Italy, and addi-
tional funding for subsidizing credit to industry
and agriculture. The government also plans to ac-
celerate tax rebates on exports. Although several
measures will immediately improve the self-financing
ability of industrial firms, the full impact on in-
vestment probably-will not be felt until later this
year and in 1972?
The decree laws provide a badly needed stimulus
to the economy. Investment and consumer demand are
sluggish and industrial output actually declined
three percent in the first five months of this year
compared with the same period in 1970. Major factors.
behind the slowdown are a squeeze on industrial prof-
its, continued labor strife, and concern about the
durability of the present coalition government.
Economic growth estimates far this year. we re down-
graded in March from an initially optimistic six-to-
seven percent to about four percent, and the govern-
ment is now hoping that the new measures will help
keep economic growth from fal_linq below three per-
cent.
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RH?DESIA-UK: British envoys, sent last week to
probe t e re a Rhodesian government?s negotiating
position, have completed their talks with officials
in Salisbury with no indication of a break in the
impasse.
The British press has characterized-these meet-
ings as a prelude to eventual ministerial-level dis-
cussions between the two governments designed to
reach a negotiated settlement. Both governments,
however, have been conspicuously silent on these.
talks in public and private. The joint statement
issued on the departure of the British negotiators
simply said that "all aspects of the problems" had
been discussed and that it was now "necessary for
the two sides to report-back to their respective
governments." Because of the Tories' election cam-
paign promise to make a last-ditch attempt to reach
a settlement, further meetings between the two are
likely even if the latest round of negotiations
proved unproductive.
Unless one side or the other is ready to make
substantial concessions, however, a settlement seems
as remote as ever. The Heath government, like its
predecessor, is committed to a settlement based on
the principle of eventual African majority rule in
Rhodesia, an anathema to the white-minority govern-
ment in Salisbury. Even in the unlikely event that
Heath were willing to settle for something less, he
would face formidable obstacles including charges
of a sell-out from African Commonwealth members and
the Labor Party as well as the knotty problem of
how to end UN economic sanctions. As for the Rho-
desians, they probably are adhering to a stand-pat
position. They have been hurt by economic sanctions
but not enough to make them bend very much. ~
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UGANDA: President Amin may be turning the
spotligT ht on Uganda's quarrel with Tanzania in an
effort to obscure a deteriorating domestic situa-
tion.
Amin, who has repeatedly charged Tanzania with
harboring guerrilla supporters of ex-president Obote,
has closed Uganda's border with Tanzania. Last, week
the government officially attributed sizable mili-
tary losses suffered since the coup to encounters
with guerrilla groups entering from Tanzania. The
losses--670 officers and men of an army of over
10,000--are in fact more likely to be the result of
clashes between Amin's fellow West Nilers and troops
from other tribes. General Amin has also placed re-
strictions on two Tanzanian officials in the East
African Community in retaliation for Tanzanian ac-
tions against Ugandan representatives to the Commu-
nity.
Tanzania does not pose a serious threat to
Uganda, but Amin, who has failed to solve such do-
mestic problems as a worsening economic situation,
a serious crime wave, and the excesses of an in-
creasingly tribalized and unruly army, will probably
continue to exploit the issue.
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ROMANIA - WARSAW PACT: Romania will not par-
ticipate in the Warsaw Pact. military maneuvers
scheduled to begin in southeastern Bul aria in mid-
Au u s t
The Romanian eadership as ong oppose co ine
military maneuvers and has not sent troop units to
participate in Pact exercises for several years.
Headquarters elements of a Romanian division did
take part in last year's "Comrades-in-Arms" maneu-
vers in East Germany, but Bucharest has apparently
decided against even such minimal participation
this year. Conflicting information on the number,
type, and national;~ty.,of un~t~ .scheduled to take
part in the exercise has been received from various
East. European sources, but apparently at least So-
viet and But arian forces wall be involved.
BULGARIA: Party boss `.Codor Zhivkov's elevation
---~--r-
to the position of chief of state, which had been
expected, will involve him rnore directly in foreign
affairs and also places him at the head of the body
that will be the dominant government institution.
Under the new constitution, the State Council, tech-
nically a successor to the ~>owerless Presidium of
the National Assembly, has greater legislative and
executive responsibility, as well as more scope for
independent action. The Cot~neil is similar to Ro-
.mania's Council of State, bL1t is unlike Poland's
State Council or Hungary's Presidential Assembly,
both of which are little more than bolitica7 r~?~+-_
bins.
(continued)
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PHILIPPINES: The Supreme Court has ordered a
full rollback in recent price increases for petz-o-
leum products. The move, in response to a legal
action which had the support of the Philippines
solicitor general, is aimed at forestalling further
strikes and antigovernment demonstrations. The
Supreme Court action comes as a surprise to the oil
industry, which felt that President Marcos had given
tacit approval for the price hike. Earlier this
year oil companies, mainly US awned, tried to raise
prices with only limited success. As a result of
the 1970 devaluation, tariff increases, and the
higher cost of crude oil, the Industry expects a
serious profits squeeze unless some price adjust-
ments are made. The rollback may temporarily take
some of the w? ut of demands to nationalize the
oil industry.
ECUADOR: The government as again seeking fi-
nancial ass stance from US oil companies to ease its
budget problems. The Velasco administration is ask-
ing the Texaco-Gulf consortium to guarantee a $55-
million loan it is trying to negotiate with seven
US banks. In May it had requested the cansorti.um
and two other oil companies to provide a $15-million
loan--an arrangement successfully used in-1969 when
budget difficulties developed. The consortium is
willing, at most, to guarantee a much smaller loan
than is now being requested by the government, and
then only if issues concerning the government':
financial provisions applicabl o forthcoming pe-
troleum exports are resolved.
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