CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A019800070001-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 14, 2016
• Document Release Date: June 11, 2003
• Sequence Number: 1
• Publication Date: August 21, 1971
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 42
21 August 1971
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No. 0200/71
21 August 1971
Central Intelligence Bulletin
CONTENTS
INTERNATIONAL ECONOMIC DEVELOPMENTS: Less hectic
activity in Tokyo. (Page 1)
BOLIVIA: Situation report. (Page 3)
SUDAN-USSR: Indications that tensions are easing.
(Page 4 )
CEYLON: New draft constitution. (Page 5)
ZAMBIA: Move against a new political party. (Page 6)
ETHIOPIA: Cabinet reshuffle (Page 7)
YEMEN (SANA): New prime minister (Page 7)
CENTRAL AMERICA: Sugar quota (Page 8)
EL SALVADOR: Teachers" strike (Page 8)
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INTERNATIONAL ECONOMIC DEVELOPMENTS: Activity
on the Tokyo foreign exchange market yesterday was
considerably less hectic as a result of government
action in curbing dollar borrowing abroad by Japa-
nese exchange banks and trading companies. The in-
ability of Japanese businessmen to use these borrow-
ings as a hedge against yen revaluation has already
slowed trading activity substantially and negotia-
tions on export contracts have been virtually sus-
pended.
Most Japanese businessmen now feel some adjust-
ment in the yen-dollar parity is inevitable. II 25X1
the
Japanese Government would like to try to tie yen
revaluation to a reduction or elimination of the
ten-percent import surcharge imposed by the US. In
other financial developments the Tokyo stock market
rose four percent, thus reversing the downward trend
that saw the market drop 20 percent the first four
days of. this week.
All of the major European foreign exchange mar-
kets that had been officially closed this past week
are expected to reopen on Monday. As a result of
the failure of the EC council to agree upon a common
position yesterday, each government will follow in-
dependent policies with respect to its own foreign
exchange market.
West Germany and the Netherlands will resume
the flotation of their respective currencies. France
will introduce a dual-rate system, which will provide
a fixed parity for commercial transactions and a
separate, floating rate for financial transactions.
Belgium also still plans to utilize a split rate;
the commercial franc will be floated jointly but
narrowly with the guilder under the "supervision"
of the Belgian and Dutch central banks, while the
financial franc will continue to float freely. No
definitive plan has been revealed yet by the Italians
or the British. It appears likely, however, that
both will employ a fixed parity, but with somewhat
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widened bands, when the markets reopen on Monday.
The EC countries have pledged to minimize the ex-
change rate fluctuations among their. currencies.
Although some disruption of commerce and finance
is unavoidable, it is not likely to be.serious
enough to force an early solution.
The present makeshift arrangements are expected
to prevail at least until 13 September when the EC
finance ministers again will seek to resolve their
differences. Two days later the Group of Ten world
financial powers, which includes the US, UK, Sweden,
Switzerland, Canada, and the EC countries, will
gather to discuss the broader need for exchange rate
adjustments and other reforms to the monetary system.
Pierre Paul Schweitzer, director of the International
Monetary Fund (within which the Group of Ten was or-
ganized) has urged that a multinational realignment
of currencies be undertaken as soon as possible.
The members of the EC now are turning their at-
tention to the US import surcharge, which GATT will
take up next week, the 25X1
Belgians, French, and possibly the Italians, are dis-
posed to take a hard line against the surcharge,
while the attitude of the Dutch will depend on whether
they believe it is administered in a discriminator
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I BOLIVIA: President Torres remains in control
of La Paz despite the growing strength of the mili-
tary and civilian rebels in the provinces.
Most of the important military garrisons outside
the capital had joined forces with the rebels by late
yesterday, but the all-important military units in
La Paz were remaining loyal or at least neutral. The
air force issued a communique' declaring its support
for Torres and calling on rebels to lay down their
weapons to avert "a fratricidal confrontation." The
President also has the support of leftist student
and labor groups in La Paz and the mining centers of
Oruro and Potosi. In a large progovernment demon-
stration in La Paz last evening Torres vowed to crush
the "fascist" rebels with the aid of the popular
forces which he said would be armed to "defend the
revolution."
Only minor fighting has occurred thus far be-
tween pro-Torres civilians and the military units
that have seized control of the major provincial
cities including Cochabamba and Santa Cruz. Both
sides in this contest for power still appear hopeful
of achieving victory by demonstrating their strength
and a will to fight. The potential for serious
bloodshed exists, however, with the arming of workers
and students in La Paz and with the strong possibil-
ity of a clash between the army and the well-armed
miners' militia in Oruro.
The decisive factor appears to be the loyalty
of the army units in La Paz that continue to hesitate
to commit themselves to the rebel cause. The prob-
ability of a serious clash with civilians if these
units should move against the government may cause
them to continue to back Torres. The leading organ-
izers of the rebellion remain free, however, and con-
tinue to believe they can swing the La Paz units to
the rebel cause. 25X1
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SUDAN-USSR: There are indications that tensions
in Sudanese-Soviet relations are easing.
Following a period of bitter mutual recrimina-
tions touched off by the execution of leftist coup
leaders and three top local Communists last month,
both countries are edging toward more normal although
.still cool relations. Sudanese spokesmen have
stressed in the past week that Sudan does not wish
to perpetuate the state of hostility with Moscow and
that trade agreements with the USSR and Eastern Eu-
rope would continue to be honored.
Some Soviet military advisers are reportedly
beginning to resume their activities, which had been
curtailed since the coup. Moreover, the homes of
Soviet military personnel no longer appear to be
under armed guard.
There have been no critical comments in the
Soviet press for more than a week. Last Saturday,
the Soviet Embassy in Khartoum routinely announced
that the Soviet ambassador had returned to Moscow
on 7 August for reassignment, which suggests a fur-
ther gesture to appease President Numayri. .
Sober reflection presumably has persuaded Nu-
mayri that he could not sacrifice vital Soviet mili-
tary aid and advisory programs to emotions of the
moment. The Soviets, for their part, have apparently
decided that abandonment of their efforts to defend
local Communists is a prerequisite to recovery of
their position in Sudan. F__ I 25X1
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CEYLON: A new draft constitution will increase
the government's ability to maneuver in a tense po-
litical situation.
Drafting a new constitution has been the key
political issue facing Ceylon in the wake of the
insurgency which wracked the island last spring.
Until now, the only draft under consideration was
one submitted by the government's left-leaning min-
ister of constitutional affairs. His proposals
would recast Ceylon's political structure along
Marxist lines. The new draft is being submitted
by Home Minister Felix Bandaranaike, a close ad-
viser to the Prime Minister and a leader of the
moderates in her cabinet and party.
Because Prime Minister Bandaranaike wishes to
avoid upsetting the delicate balance between left
and right in her coalition government, she has not
expressed herself clearly on the constitution. She
holds the balance of power between the Ceylonese
right and left, however, and the fate of the new
draft will indicate whether she believes that the
moderates are politically effective enough to jus-
tify her facing a showdown with the left.
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a mi i ary coup to
free the government from dependence upon the left
was an increasing possibility. The government has
responded to coup rumors, as well as to stepped-up
insurgent activity, by tightening security around
the Prime Minister and by extending the curfew to
key towns in outlying areas. Colombo, the capital,
remains under nightly curfew as government offi-
cials continue to believe that it will be hit by a
new insurgent attack. In the meantime, the emer-
gence of the new draft constitution, because it ap-
pears to offer the possibility of a parliamentary
alternative to Marxism in Ceylon, may serve to
dampen rightist interest in a cou at least during
the new draft-'`s testing period. 25X1
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ZAMBIA: President Kaunda has announced the
suspension of four members of Parliament from the
ruling UNIP party for being involved in the sub rosa
establishment of a new, third political party, the
United Progressive Party.
the new party
is dominated by dissident politicians, both in and
outside the UNIP, who are from the Bemba tribal
group, an important source of government support.
Such a tribally oriented political party would stand
little chance of seriously challenging Kaunda, be-
cause the assertive Bembas are highly unpopular with
other tribes.
Nevertheless, Kaunda has apparently decided to
expose the group and try to quash it. In that way,
he probably hopes to keep disgruntled Bembas within
the ruling party, and in turn to prevent the ever-
present tribal animosities in the UNIP, particularly
anti-Bemba sentiment, from flaring up. In announcing
the suspensions, Kaunda specifically warned against
accusing any "tribe or people" of being anti-UNIP.
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NOTES
ETHIOPIA: The cabinet reshuffle announced late
this week may have been designed by the Emperor
merely to give the impression of change, a tactic he
has used frequently in the past. In the most impor-
tant move, long-time foreign affairs minister Ketema
was replaced by Minassie Haile, a former ambassador
to the US who has sought the foreign affairs port-
folio for several years. Asrate Kassa, former gov-
ernor-general of Eritrea Province, has been named
chairman of the Crown Council, which meets infre-
quently to advise the Emperor on political questions.
Asrate Kassa has been known to favor limited reforms
that would liberalize the government, but he has had
little success in pressinq his views with the Emperor.
YEMEN (SANA): Commander in chief Hasan al-Amri
has been asked b President Iryani to form a new
government, according to Radio Sana. General al-
Amri has been negotiating with the President over
the premiership since the resignation in July of the
former premier, with al-Amri demanding authority be-
yond that the President was willing to grant. The
announcement indicates that Iryani has apparently
acceded to,al-Amri's demand for a free hand in naming
the new cabinet. It is still to early to tell, how-
ever, the extent to which Iryani has given in to al-
Amri's other demands. Al-Amri's chief concerns will
be to obtain the large-scale economic assistance re-
quired to ease the country's financial chaos and to
dampen unrest in the army.
(continued)
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CENTRAL AMERICA: Sugar producers may face large
losses as a result of the cancellation of a 35,000-
ton increase in the US sugar quota. The increase,
which had been announced earlier this month, was
open to all quota-holders on a first-come first-
served basis to ensure delivery before the East Coast
dock strike expected in late September. Guatemalan
and Honduran growers have already contracted for de-
livery of almost 22,000 tons and four boats have
been loaded in Guatemala. If the growers do not
ship the sugar, they will suffer sizable losses be-
cause they contracted for extra ships at higher than
normal rates and paid overtime to workers. They can
still ship the sugar for placement under bond in the
US, but this also would cause financial losses. A
similar situation exists in other central American
countries.
EL SALVADOR: The teachers' strike that began
on 8 July appears to be ending. The government and
the teachers' association, yielding to various pres-
sures, have begun to negotiate their differences.
Despite the military's insistence that the govern-
ment maintain a hard-line toward the strike activ-
ity, a rash of short-term sympathy strikes has dis-
lodged officials from their original refusal to talk.
The teachers, on the other hand, are under pressure
to settle matters, since the hiring of replacements
is threatening their position. The teachers appear
to have modified their demands sufficiently to per-
mit a dialogue, and talks are proceeding under the
sponsorship of the democratically oriented trade
union confederation.
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