CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A019800030001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: December 15, 2016
• Document Release Date: February 26, 2004
• Sequence Number: 1
• Publication Date: August 17, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
D
Central Intelligence Bulletin
State Department review completed
Secret
N2 42
17 August 1971
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No. 0196/71
17 August 1971
Central Intelligence Bulletin
CONTENTS
INTERNATIONAL ECONOMIC SITUATION: Reaction to the
new US policy. (Page 1)
CAMBODIA - SOUTH VIETNAM: Phnom Penh is reducing
its military dependence on Saigon. (Page 3)
PAKISTAN: Guerrilla activity in East Pakistan.
(Page-TT
VENEZUELA: Strike at the state-owned steel mill.
(Page 5
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AUSTRALIA-USSR: Wheat sale (Page 7)
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INTERNATIONAL ECONOMIC SITUATION: The new US
economic policy has been met largely with equanimity
in foreign official circles but with considerable
consternation by foreign businessmen.
Suspension of the convertibility of foreign-
held dollars into gold at $35 per ounce resulted in
nearly all major industrialized countries closing
their foreign exchanges and gold markets yesterday
to gain time to assess the results and to determine
responses. The notable exception was Japan. The
Bank of Japan refused to allow the dollar to float,
absorbing over $600 million as it continued to sup-
port the yen-dollar parity. Japanese officials at-
tribute the supply of dollars to Japanese commercial
banks reducing their dollar holdings plus some ad-
justments in the timing of trade payments. Mean-
while, Tokyo's stock average continues to register
a sharp decline in anticipation of lost export op-
portunities in the US.
International monetary uncertainty will continue
as most major exchange markets remain closed again
today while intergovernmental discussions take place
on appropriate actions. Following the meeting of
Treasury Under Secretary Volcker with his European
financial counterparts in London yesterday, the EC
Monetary Committee convenes in Brussels today. Bel-
gian Finance Minister Snoy stated publicly a belief
that the US action should prompt an accelerated
movement toward EC monetary union. In Bonn.a For-
eign Office official has indicated that the German
reponse will be in the Community context.
Moscow reports that the US action reflects the
"very deep crisis of American capitalism" and that
the "cure" proposed is at the expense of "the work-
ing-people," a judgment parroted by the northern
tier of East European states. Romania and Yugoslavia
limited themsel actual reports. 25X1
17 Aug 71
Central Intelligence Bulletin
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CAMBODIA - SOUTH VIETNAM: Phnom Penh is moving
to reduce its military dependence on Saigon.
According to a recently announced plan, the Cam-
bodian Navy (MNK) is to assume full command and con-
trol responsibility from the South Vietnamese Navy
for escorting and protecting all ship convoys on the
Mekong River on 1 September--rather than taking over
gradually as recommended by South Vietnamese and US
officials. In line with that plan, Phnom Penh has
also formally requested that the South Vietnamese
vacate their major base on the Mekong at Neak Luong.
A Cambodian delegation reportedly arrived in Saigon
yesterday to begin working out a schedule for the
South Vietnamese withdrawal from that installation..
the Cambo-
ians want to have immediate, complete control of
military operations on the Mekong because they can-
not work with the South Vietnamese with the "mutual
trust" that a phased turnover would require. There
are indications, however, that the Cambodians are
ill-prepared to replace the South Vietnamese in main-
taining security along the river. The MNK, for ex-
ample, has less than half the number of boats pres-
ently being used by the South Vietnamese, and most
of them are in bad condition. Moreover, the MNK
does not have adequate support facilities.
It is likely that Phnom Penh's apparent deter-
mination to go forward with its plans has been dic-
tated in part by domestic political considerations.
In addition to trying to demonstrate that it is be-
coming militarily more self-reliant, the Lon Nol
government undoubtedly also wants to decrease the
South Vietnamese presence in order to. reduce the
likelihood of further depredations by South Vietnam-
ese troops operating on Cambodian soil. Despite its
clear desire for control over the Mekong, however,
Phnom Penh probably recognizes that it will have to
continue to rely on Saigon for many forms of military
I support for the foreseeable future. 25X1
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PAKISTAN: Guerrilla activity in East Pakistan
appears to Be on the increase.
Fragmentary reporting suggests that Bengali in-
surgents are active in a larger number of areas than
previously and that their stren th is growing.
the Mukti Bahini
(Liberation Force) was even able to hold a village
near the Indian border against three attacks by West
Pakistani troops.
The most widely publicized recent incident was
the bombing of the Dacca Intercontinental Hotel in
which 19 people were injured. Bombings--usually do-
ing little damage--have been frequent in Dacca and
presumably are aimed at preventing a return to life
as usual... In Chittagong., a similar campaign maybe
causing some people to leave the city.
There have also been many assassinations, prob-
ably intended to discourage East Pakistanis from col-
laborating with the government. Possibly the most
important victim so far is the vice president of a
small religious party, who was killed as he was
making a progovernment speech.
In additioni
guerrillas have begun attacking installations
o t e jute industry--Pakistan's largest foreign ex-
change earner. Two jute warehouses have been burned,
and bombings near factories are probably designed to
encourage workers to stay away.
The army has been able to open several trans-
portation routes previously blocked by blown bridges,
but guerrillas have closed others. Mining of roads
is also a problem. On 2 August, two returning refu-
gees were killed and 30 wounded when their bus struck
a mine.
Despite rumors of an impending "Tet offensive,"
the guerrillas do not appear strong enough to chal-
lenge the army. Nevertheless, they continue to dem-
onstrate their ability to prevent military authori-
ties from re-establishin normal conditions.
17 Aug 71
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VENEZUELA: The government has signaled its in-
tention to de-al vigorously with the current serious
strike at the state-owned steel mill.
Last week the minister of labor declared the
strike illegal and ordered the workers to return to
their jobs. Defiance of the government's decree has
resulted in the arrest of several labor leaders and
orders for the arrest of others who are in hiding.
In addition, the government has deployed police,
national guard, and army troops to strategic places
in the area of the strike.
The strike began on 7 August in support of an-
other strike against the Orinoco Mining Company and
because of asserted contract violations. Both strikes
are largely politically motivated. The Orinoco
strike, which began on 30 June at the end of the
contract year and is therefore legal, involves an
effort by labor leaders affiliated with opposition
New Force political parties to weaken the government-
oriented Confederation of Workers of Venezuela. The
strike at the government-owned steel mill is largely
the work of the Movement to Socialism, a breakaway
Communist party.
The military suspect that "leftists" are trying
to use labor and student problems to harass the gov-
ernment continuously. Thus, the government is as-
sured of firm military backin in its strong stand
against the illegal strike. 25X1
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NOTE
AUSTRALIA-USSR: Moscow has bought 500,000 tons
of Australian w heat worth about $28 million for de-
livery during the first half of next year. With ad-
ditional charges for insurance and freight, the total
value of the contract probably will be well above
$30 million. This wheat, like most of the 3.5 mil-
lion tons recently purchased from Canada, probably
will be substituted for poor-quality domestic wheat
currently being fed in large quantities to livestock.
Although prospects for this year's wheat crop are
highly favorable, the USSR's policy of increasing
substantially the domestic availability of livestock
products has raised the demand for all types of feed
grains.
17 Aug 71 Central Intelligence Bulletin
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