CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A021900060001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 15, 2016
• Document Release Date: December 2, 2003
• Sequence Number: 1
• Publication Date: May 17, 1972
• Content Type: REPORT

InTMMMMAMM.
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DIRECTORATE OF
INTELLIGENCE
Central Intelligence bulletin
State Department review completed. On file USDA
release instructions apply.
Secret
N? 42
17 May 1972
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No. 0118/72
17 May 1972
Central Intelligence Bulletin
CONTENTS
VIETNAM: Government forces are becoming more ag-
gressive. (Page 1)
CHILE: Rash of violence creates problems for Allende
government. (Page 3)
MALAGASY REPUBLIC: President's position undermined
by ruthless reaction to student protests. (Page 4)
LIBYA: Government measures to solve problems re-
aate~'Cc. to nationalization of BP assets. (Page 6)
GOLD: Sharp price increase on London market. (Pa.ge 7)
EGYPT-US: Cairo calls for reduction in US mission
(Page 8)
USSR: Movement on Soviet purchase of US grain
(Page 8)
JAPAN-USSR: Postponement of visit by Japanese
technicians to Tyumen oil fields (Page 9)
JAPAN-EC: Trade talks remain at impasse (Page 9)
JAPAN: Trade surplus (Page 10)
LAOS: Move to force Souvanna Phouma's resignation
(Page 10 )
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C VIETNAM: South Vietnamese forces are becoming
more aggressive in certain sections of the country,
but the enemy continues to prepare for new major
assaults.
North of Saigon, the South Vietnamese have
organized a task force to help relieve the garrison
at An Loc. Composed of the South Vietnamese 9th
Armored Cavalry Regiment, an infantry battalion,
and supporting artillery, this force has encountered
only light resistance while moving to within eight
miles of the town. Another battalion has been air-
lifted to a point five miles from the town, and two
regiments of the long-stalled 21st Division have
begun to move north on both sides of Route 13 to
link up with these advance units. Enemy forces
around An Loc have taken heavy casualties in the
ground fighting for the city and from allied air
attacks, and they may have difficulty blocking the
reinforced government relief column.
South Vietnamese units near Hue mounted three
separate operations along Route 547 after reoccupying
Fire Support Base Bastogne on 15 May. They claim
to have killed 210 Communist troops and to have
captured seven tons of ammunition in these opera-
tions.
The Communist units that have been trying to
get into position for a major assault on Hue have
not put much pressure on the government's defensive
network in recent days. They have been taking a
heavy pounding from the air, and recent government
forays probably have disrupted their activities
somewhat. Nevertheless, they still appear to be
bringing in supplies and reconnoitering the battle-
field. They probably are withholding their heavy
fire in order to keep their heavy weapons concealed
until they have assembled stocks of ammunition in
forward positions adequate to support a substantial
operation.
(continued)
17 May 72
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C In the highlands, government forces defending
Kontum City have repelled the second tank-led enemy
probe in three days. Most Communist forces in the
area are concentrating on reconnaissance nd other
preparations. 25X1
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CHILE: A rash of violent incidents is creating
headaches for President Allende and his coalition
and opportunities for the opposition.
The push by the Popular Unity government to
finish expropriating all large farms by 1 June has
triggered a wide range of dissatisfied reactions.
Peasants are disgruntled over the meager immediate
effects of agrarian reform, while landowners are
trying to salvage what they can. Both sides often
resort to violence, sometimes urged on by groups
of the extreme left and right. The carabineros
(national police) and the local judiciary are in-
creasingly caught in the middle, their actions at-
tacked by one side or the other. The results fre-
quently lend substance to the opposition's claims
that the touted independence of the Chilean judi-
ciary is threatened under Allende's government.
Violence last weekend in the strongly leftist
industrial city of Concepcion has also raised
hackles, both within the UP and among opposition
forces. The ranking provincial official, a bumbler
who is stronger on Communist Party discipline than
good sense, set the stage by authorizing three
competing political marches on the same day. At
the last minute, when crowds were already gathering,
he canceled the marches on orders from Allende.
The more radical UP factions and the Movement of
the Revolutionary Left defied the Communists, ig-
nored the cancellation, and joined in a demonstra-
tion. Two days of brawling ensued, with the cara-
bineros' riot squad out against the marchers in
full force.
The opposition Christian Democrats charged
that the cancellation of their march was a sup-
pression of democratic freedoms. They have re-
scheduled it for 19 May, and the UP has done the
same. Further violence in the area could also
set off rural confrontations that rightists have
been hoping to provoke in surrounding provinces.
17 May 72 Central Intelligence Bulletin
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(MALAGASY REPUBLIC: President Tsiranana's
position has been. seriously undermined by his inept-
and ruthless handling of violent student protest.
Tsiranana has been thoroughly discredited in
Tananarive because of the deaths of 30 people during
four days of disorder. The president's radio broad-
cast, in which he said the killings would continue
until the antigovernment protests ended, has drawn
particular revulsion. Most of the
lieve Tsiranana
should be ousted.
Tsiranana can no longer rely on the island's
gendarmerie or army to carry out his orders. Both
forces have refused to take strong action against
the students, and many gendarmerie are openly sym-
pathetic toward the protesters. The Republican
Security Force (FRS) that willingly carried out
Tsiranana's order to kill the demonstrators is no
longer feared as students have sought out and
killed FRS troopers. In recent days the army and
gendarmerie have acted more as buffers between the
irate populace and the FRS and any attempt to re-
deploy the FRS would only intensify antigovernment
feeling.
Despite Tsiranana's dwindling support, no
leader has emerged to directly challenge the pres-
ident. The army and the gendarmerie have the power
to oust Tsiranana, and the students have indicated
their willingness to support a military take-over.
However, top military officers have so far main-
tained an outward show of loyalty to Tsiranana.
The lack of a strong leadership or a clear sense
of purpose by the regime's opponents has clearly
worked to Tsiranana's benefit. The release of a
few imprisoned student leaders and their reception
by an official delegation have helped restore calm,
but the Embassy believes that the balance of power
will lie with the remaining student leaders who
will soon be released.
(continued)
17 May 72 Central Intelligence Bulletin
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C Tsiranana's position would seriously deteriorate
if violence again erupts. Should the gendarmerie
then refuse to act, the army might make its move.
General Andriamahazo, second in command of the Mala-
gasy armed forces, would be in position to assume
power. His appointment as military governor of
Tananarive has placed him at the center of the
crisis, and he has enhanced his public image by
sympathetic actions d the students.
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LIBYA: The government is moving on two fronts
to solve problems related to its nationalization of
British Petroleum (BP) assets.
Discussions took place last week between Deputy
Premier Jallud and a high-level BP representative in
Cairo on compensation for the assets sequestered
last December. BP almost certainly rejected Libya's
initial offer, and bargaining is likely to continue
for some time.
Meanwhile, Oil Minister Mabruk reportedly has
reached an agreement with the USSR for the sale of an
unspecified quantity of the nationalized oil that
Libya has been unable to market elsewhere because
of BP's threats to mount legal actions against any
purchaser. The deal may be a barter arrangement
for Soviet oil equipment and services or perhaps
military hardware. Mabruk also is visiting several
East European countries, probably in an attempt to
sell more oil in markets that are shielded from BP's
legal pressures.
17 May 72 Central Intelligence Bulletin
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GOLD: The free market price of gold in London
shot u$1.50 an ounce yesterday to reach a record
$54.60.
The sharp price increase followed a statement
by South African Reserve Bank Governor de Jongh
that Pretoria no longer needs to sell all its cur-
rent gold production, which represents over three
quarters of non-Communist output. Pretoria is pro-
jecting a balance-of-payments surplus for the first
time in several years, largely because of the cur-
rency devaluation last December and sizable capital
inflows.
South African gold sales had fallen off mark-
edly even before de Jongh's announcement. South
Africa's production this year is about ten percent
less than in the same period last year, and the
Republic is not selling all of its newly mined gold.
Although its official gold holdings increased by
only $7.5 million through 5 May, Pretoria may be
concealing even larger increases.
Even before the South African announcement,
gold prices were under considerable upward pressure
because supply was falling behind the demand of com-
mercial users and hoarders. This suggests that
prices may in the range of $50 an ounce for
some time.
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EGYPT-US: Cairo has apparently chosen to ex-
press its dissatisfaction with US policies in the
Middle East by calling on the US Interests Section
in Egypt to reduce its size from 20 to ten individ-
uals. The chief US representative in Cairo was given
no deadline for the reduction but was informed that
the size of the diplomatic mission should be returned
to the level that existed following the break in re-
lations in 1967. An agreement to expand the size of
the US Interests Section to the present level was
reached a year ago during a period of relative cor-
diality in US-Egyptian ties. Cairo may hope that
this action will serve as a way of pressing Washing-
ton to adopt a position more favorable ta__tl~ rab
cause.
USSR: Soviet trade officials have indicated
a willingness to accept US Commodity Credit Corpo-
ration terms in purchasing US grain, but only for
a one- or two-year commitment. Such credit terms
would involve higher interest rates and a shorter
repayment period than the USSR had originally
sought. In talks with the Department of Agricul-
ture, the Soviets reiterated their earlier position
that longer term commitments would be made only
when more favorable credit terms were offered.
Under the short-term commitment, however, annual
purchases could reach $500 million, about twice
that suggested in earlier alks.
(continued)
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JAPAN-USSR: Moscow has postponed until next
month the visit of a Japanese technical team to in-
spect the Tyumen oil fields. The visit, requested
by the Japanese in connection with their possible
participation in the development of the fields and
in the construction of a pipeline to the Sea of
Japan, was originally scheduled for mid-May. The
Japanese insist that on-site inspection is essential
if they are to consider seriously Moscow's request
for credits up to $1 billion, to be repaid in Tyumen
oil. According to the Japanese, the postponement
followed heated inter-ministerial wrangling in Mos-
cow. This indicates that the Soviet desire to up-
grade relations with Japan is difficult to translate
into concrete policy action. The delay also has
heightened Japanese uncertainty about Soviet inten-
tions.
JAPAN-EC: Trade negotiations between Tokyo
and the European Economic Community remain at an
impasse following three days of talks between Ralf
Dahrendorf, the Community's commissioner for ex-
ternal trade, and Japanese government leaders. The
EC has been eager to conclude an agreement with
Japan because it would be the first with a major
trading partner under the common commercial policy
due to take effect on 1. January 1973. The negotia-
tions for a trade agreement, however, have been
stalled for more than a year because of Tokyo's
refusal to accept a "safeguard" clause insisted on
by the EC members to prevent Japanese goods from
flooding their markets. Rapidly growing Japanese
exports to Western Europe are increasing protec-
tionist feelings within certain sectors of the EC,
even though purchases from Japan still constitute
only three percent of the EC's imports.
(continued)
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JAPAN: There has been a slight slowdown in
the growth rate in Japan's trade surplus. Exports
last month were 19 percent higher than those in
April 1971, but this growth rate is slower than
those recorded in the first three months of this
year. Moreover, a recent slackening in the number
of export contracts suggests this trend may con-
tinue. The growth rate of imports, on the other
hand, continues to rise slowly as the economy be-
gins to gather momentum. A trade surplus of $710
million was recorded last month, and the balance-
of-payments surplus was $160 million as a result
of continuing deficits in the capital and service
accounts. Japanese holdings of foreign exchange
approached $17 billion at the end of April.
C LAOS: Several right-wing politicians, led by
members of the powerful Sananikone family, are trying
to get support in the National Assembly for a resolu-
tion that would require the resignation of Souvanna
Phouma. The resolution states that the constitution
requires the resignation of the prime minister and
his cabinet following a general election, such as
was held last January. The purpose is evidently to
force changes in the cabinet, rather than to oust
Souvanna. One rightist leader now claims his group
has enough votes to pass-the measure, but some of
the claimed supporters say privately that they would
not support a showdown on the issue. Souvanna is
working behind the scenes and appears confident that
he can overcome this most recent challenge from an
Assembly which has given him trouble periodically
over the years.
17 May 72 Central Intelligence Bulletin
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