CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A021500030001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 14, 2016
• Document Release Date: June 23, 2003
• Sequence Number: 1
• Publication Date: March 22, 1972
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
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No. 0070/72
22 March 1972
Central Intelligence Bulletin
LAOS: Heavy fighting on Skyline Ridge. (Page 1)
NORTH VIETNAM: Airfield construction in the south-
ern part of the country. (Page 3)
UNITED KINGDOM: Government proposals to boost the
economy. (Page 4)
JAPAN-CHILE: Chile presses case on debt renegotia-
tions width Japan. (Page 5)
SOUTH VIETNAM: Large increase in rice deliveries
boosts farmers' income in Mekong Delta. (Page 6)
JAPAN - EAST GERMANY: Medium-term loans (Page 7)
YUGOSLAVIA-USSR: Soviet investment credits (Page 7)
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FRANCE: Move to raise ceilings on overseas invest-
ment (Page 8)
UNITED KINGDOM: British exports to be more compet-
itive Page 9)
election (Page 10)
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LONG TIENG AREA
0 Government-held location
0 Communist-held location
A Highpoint
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W N
LAOS: Intense fighting continues on Skyline
Ridge.
North Vietnamese troops on 21 March drove ir-
regulars from another position on the western end
of the ridge. Of the nine major strongpoints on
Skyline, four are now held by the Communists. Gov-
ernment forces are regrouping to launch a counter-
attack before the Communists can use their toehold
to cover the movement of troops and tanks from the
Sam Thong area. There are signs that tanks may
already be approaching the ridge from the north.
The Communist positions on the western edge of the
ridge also threaten the irregulars holding blocking
positions on the Nam Ngum River.
The irregulars who have been defending Skyline
during the week-long battle have fought with con-
siderable tenacity, but it seems questionable that
they can hold on indefinitely without major rein-
forcements. Although Vang Pao is trying to move
two fresh battalions into the area, heavy enemy
fire has thus far prevented them from landing at
Long Tieng airstrip. The Communists also have paid
a price in the protracted heavy fighting.
Central Intelligence Bulletin
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1NORTH VIETNAM: Hanoi probably is building
another airfield in extreme southern North Vietnam,
increasing the threat to US air operations over
South Vietnam and the Ho Chi Minh Trail.
Photography in mid-March indicates that con-
struction has started on a probable new airfield
near Bai Duc Thon. The runway is in an early stage
of construction and only 3,800 feet long, and it
could be extended easily. At Khe Phat, where a
new airfield was started early this year, the North
Vietnamese are now surfacing the 5,600-foot runway.
The pace of construction at these airfields
suggests that Hanoi may intend to mount a higher
level of air operations during the next few months.
When the work is completed, probably by this summer,
the North Vietnamese will have six airfields south
of the 20th parallel capable of handling jet air-
craft. When Hanoi stepped up its air war against
US aircraft early in 1971, North Vietnam had only
three airfields in this area that could handle jet
22 Mar 72 Central Intelligence Bulletin
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)UNITED KINGDOM: Chancellor of the Exchequer
Anth Barber in his budget message yesterday prom-
ised to restart the country's stalled economy and
to align the tax structure for EC entry.
The $3.1 billion in proposed tax cuts provide
about the amount of reflationary stimulus expected
by most business and labor observers. To boost con-
sumer and investor spending, sales taxes will be cut,
while depreciation allowances, personal tax exemp-
tions, and old age pensions will be increased. Other
measures are intended to facilitate investment by
British firms in EC countries and to encourage in-
vestment in economically depressed areas of the UK.
The budget is a crucial one for the UK. So far
fiscal policy alone has not been enough to enable
Britain to reach Prime Minister Heath's growth tar-
gets. The new measures are not likely to provide
enough stimulus to attain the higher growth goal of
five percent established yesterday. Previous gov-
ernment reflationary measures have not induced timid
UK investors to start investing on the scale neces-
sary to sustain an economic recovery or to modernize
and re-equip British industry to take full advantage
of its entry into the EC. With less than one year
before EC entry, the country is still plagued by
one of Europe's highest inflation rates, and unset-
tled labor relations appear to preclude an early end
to inflation problems.
22 Mar 72 Central Intelligence Bulletin 4
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JAPAN-CHILE: High-level Chilean officials are
in Tokyo to press their case on debt renegotiations
currently under way in Paris between Chile and its
major Western creditors.
Chile owes Japan $22 million in private export
credits, including $13 million due during 1972-74.
In addition, Japanese interests are owed $55 million
in long-term loans made to US mining firms in Chile,
whose operations were nationalized in 1971 by the
Allende government. The Japanese are willing to
renegotiate at least $45 million, if not all, of
the mining loans. Part of these loans are repayable
in copper ore, and the Japanese would like to delay
and stretch out shipments because of slack demand
resulting from Japan's recent economic slowdown.
Chile hopes to expand trade with Japan and to
attract Japanese capital and perhaps economic aid.
Tokyo, however, has indicated a concern over its
financial risk in Chile in view of Santiago's moves
against US-owned properties. The Chileans will al-
most certainly fully honor their obligations to
Japan to pave the way for a much-needed expansion
of financial and commercial ties with the Japanese.
22 Mar 72 Central Intelligence Bulletin
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SOUTH VIETNAM: A large increase in rice de-
liveries from the Mekong Delta has sharply boosted
farmers' income in that region.
Only last fall, sales of surplus rice from the
Delta were too small to maintain adequate stocks in
the rice deficit areas of the country. Large gov-
ernment purchases and strong private demand early
in 1972, however, have generated the highest level
of Delta deliveries in nine years. With the delivery
price also high, Delta farmers' income has increased
dramatically. In January and February alone, farmers
earned more than three times the amount earned during
the comparable period last year.
The recent gain in income, coming on top of
increases registered in the Delta for the past two
or three years, should provide sizable funds for in-
vestment to permit further increases in agricultural
production. Moreover, the gain in agricultural
sales, together with the elimination of rents as a
result of land reform, would help pave the way for
government taxation of the farmers, who have been
virtually tax exempt for many years. The farmers'
excellent cash position, however, may encourage
them to hold rice off the market later in the year,
a frequent practice in the past. Saigon is revising
its purchasing policy in an attempt to forestall
this kind of speculation.
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examining possibilities for similar arrangements
with Romania, Bulgaria, and Hungary. Last month
Tokyo lifted a long-standing ban on using Export-
JAPAN - EAST GERMANY: Several major Japanese
banks reportedly will extend $45 million worth of
medium-term loans to East Germany later this month
to finance sales of Japanese industrial goods. The
loans, part of Tokyo's increased efforts to expand
sales to Communist countries, could boost Japanese
exports to East Germany significantly above the
$15-million level of recent years. Japan, which re-
cently extended trade credits to Yugoslavia, now is
Import Bank funds to finance exports to China.
YUGOSLAVIA-USSR: Bilateral economic discus-
sions in Moscow next week reportedly will cover So-
viet investment credits to Belgrade, described by
a Yugoslav official as the "largest ever." The
recent intensification of economic relations be-
tween the two countries in part may reflect Moscow's
attempt to overcome President Tito's political
reservations about his trip to the USSR scheduled
in May. The upsurge has been highlighted by a $130-
million credit granted in January to the Yugoslav
firm Energoinvest for the construction of alumina
and aluminum plants in Bosnia and the conclusion
in February of a $100-million barter arrangement
between Moscow and Belgrade's Fiat affiliate. Fu-
ture discussions are likely to center on possible
Soviet credits for the development of nonferrous
metals, particularly in the underdeveloped republics
of Kosovo and Macedonia.
(continued)
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FRANCE: Finance Minister Va1-e'y Giscard
d'Estaing has indicated that France':s strong 1971
balance-of-payments surplus makes it possible to
raise some ceilings on long-term investment abroad.
Lifting these ceilings would probably stimulate an
outflow of dollars. The inflow of foreign cur-
rencies, attracted by the relatively high interest-
rate structure that France has maintained as an in-
flationary curb, recently has kept the franc near
its official dollar ceiling. The government hopes
that a long-term capital outflow would reduce ex-
change-market pressures, but it may nevertheless
still seek to lessen these pressures by adding to
exchange controls.
(continued)
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JUNITED KINGDOM: The recent reduction in the
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of six percent on government-guaranteed credits
reportedly puts British exports in the middle of the
competitive range--lower than the West German rate,
but higher than the American. French, and Japanese.
inte t rate for credits guaranteed by.the govern-
ment will help British exporters to compete in East-
West trade. The UK has faced increasingly stiff
competition in selling to the East for some time,
particularly with the recent rise in US and Japa-
nese exports to this area. The new interest rate
(continued)
22 Mar 72 Central Intelligence Bulletin 9
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EL SALVADOR: Preliminar returns indicate
that the governing party,
has won 39 of the 5 seats in the new egis-
ature. The margin is sufficient to pass any type
of legislation, but the party would have to be able
to deliver all 39 votes for ratification of any
treaty affecting the national boundaries--such as
might emerge from its dispute with Honduras. The
leftist coalition won eight seats, a moderately con-
servative party won four, and a far right group
one. In the 261 mayoralty contests, the governing
party won at least 240 but lost the three largest
cities to the leftist coalition. Most Salvadorans
are embarrassed by the way this year's elections
were handled, and the new Molina administration,
elected on 20 February, will have to work hard to
rebuild popular support and confidence.
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