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December 14, 2016
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December 14, 1972
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Approved For Release 2003/08/05: CIA-RDP79T00975A0234S G1M-8 25X1 DIRECTORATE OF INTELLIGENCE Central Intelligence Bulletin Secret N2 42 14 December 1972 Approved For Release 2003/08/05 : CIA-RDP79T00975A023400030001-8 25X1 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Approved For Release 2003/08/05 : CIA-RDP79T00975A023400030001-8 SECRET No. 0299/72 14 December 1972 Central Intelligence Bulletin USSR-CHILE: Allende trip apparently has not changed Moscow, s cautious aid policy. (Page 1) FRANCE: Tough French stance on coming trade talks indicated. (Page 3) 'UK: Economic growth rate slows. (Page 5) MALAGASY REPUBLIC: Tribal rivalries unsettle gov- ernment. 7Page 6) SOUTH KOREA: Pak forms "rubber stamp" council Page 8) MALAYSIA: Sluggish economy and high unemployment (Page 8 SRI LANKA - CHINA: Peking fulfills arms aid com- mitment (Page 9) SECRET Approved For Release 2003/08/05 : CIA-RDP79T00975A023400030001-8 Approved For Release 2003/0$0/ RI P79T00975AO23400030001-8 USSR-CHILE: President Allende's recent visit to Moscow apparently did not result in any signifi- cant change in Moscow's cautious policy toward eco- nomic aid to Chile. Allende was accorded the usual round of offi- cial ceremonies and met on several occasions with the top Soviet leaders. Before and during the visit, lower level officials held intensive talks on aid matters. The joint.communique issued on 10 December cited general areas of the Soviet aid com- mitment, but gave no indication that hard currency assistance would be forthcoming. an economic eT-egafion remai e e "concrete measures" promised in the communique. This delegation report- edly consists largely of Chilean Communist Party members. The president of the Chilean Central Bank, who accompanied Allende to Moscow, has said that a program of permanent and definitive economic ex- changes would be set up to make unspecified Chilean economic sectors complementary with the Soviet economy. The Soviets' own current economic difficulties will make it more difficult for them to meet Chilean needs, particularly in the realm of hard currency which Santiago urgently requires. The communique, in fact, implies that the bulk of any "new" aid will involve Chilean utilization of about $200 million in project and commodity credits extended in earlier agreements. The generally bland communique did not contain the standard invitation for a return visit by the Soviet leadership. The Chileans reportedly opposed including such an invitation for fear that it would complicate Allende's already delicate domestic sit- uation. The communique avoided specific criticism of the US, relying instead on pro forma references to "international monopolies" and national sovereign rights in the exploitation of natural resources. (continued) 14 Dec 72 Central Intelligence Bulletin 1 SECRET 25X1 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 SECRET The Chileans won last-minute inclusion in the communique of a pledge to coordinate positions on Law of the Sea matters for the UN-sponsored confer- ence to commence in Santiago in 1974. The subject was discussed at length because Chile and several Latin American states claim a 200-mile offshore limit. This conflicts with the Soviets' distant- waters fishing interests. Central Intelligence Bulletin SECRET 25X1 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Approved For Release 2003/i : DP79T00975AO23400030001-8 FRANCE: There is considerable sentiment in of- ficial 'circles for a generally tough French stance on the multilateral trade negotiations expected to begin late next year under GATT auspices. The comments of Jean-Pierre Brunet, director of economic affairs in the Foreign Ministry, reflect widely shared opinions, many of which run contrary to US hopes for the negotiations. Brunet neverthe- less emphasized that Paris had not yet focused on all of the issues and that he was offering personal views. As could be expected, these differed from US positions most widely on agriculture. He noted that France still tends to favor an international com- modity agreement to deal with trade in grains and that achieving this is the key to agreement on agri- culture. Even more troublesome may be Brunet's view of the GATT negotiations which are to determine whether outsiders are due compensation for the possible ad- verse effects on them of the EC's enlargement. Brunet believes that Paris will not want to make any concessions in these negotiations, which are to precede the multilateral trade talks. The community, he said, could not be expected to reduce agricul- tural protection in the first set of negotiations and then be called on to liberalize further in the subsequent bargaining. Brunet reiterated the French view that "for some years to come" the EC's common external tariff would continue to be an indispensable element of community cohesiveness and that Paris thus opposed the complete elimination of industrial tariffs. He did suggest that the community might eventually pro- pose "harmonizing" the industrial tariffs on the developed countries, possibly at three separate levels: manufactured goods, semi-processed goods, and raw materials. (continued) 14 Dec 72 Central Intelligence Bulletin 3 SECRET Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Approved For Release 2003/O kI ft DP79TOO975AO23400030001-8 25X1 Brunet remarked that, because of the complexity of negotiating non-tariff barriers to trade, Paris had thus far made no progress in determining its policy in this area--which many consider the heart of future trade liberalization efforts. On the question of whether a failure of the US to obtain a clear and precise negotiating mandate from Congress would kill all prospects for the multilateral negotiations, Brunet was less categor- ical than other recently reported official remarks had been. He, nevertheless, indicated there was considerable French concern on this score and that Paris still hopes for a strong congressional mandate. F__ I 14 Dec 72 Central Intelligence Bulletin 4 SECRET pprove or a ease 2003/08/05: CfA-RDP7 T 0975AO23400030001-8 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 SECRET UK: A leveling off of economic growth and a weakening international payments position will create major policy difficulties for London next year. After a rapid rise in the third quarter of 1972, economic growth has slowed to about four per- cent, according to the prestigious National Insti- tute for Economic and Social Research. In November, the trade deficit rose to $190 million, ending a steady improvement in the trade balance since the end of the dock strike in August. With prices rising at about eight percent annually, inflation continues to threaten Britain's international com- petitiveness. The Heath government is focusing on the prob- lems of inflation and its impact on the interna- tional sector, and will probably opt for less stimulus to the economy to slow the rise in prices and improve the trade balance. Such action, how- ever, could create domestic problems by slowing growth and adding to the already difficult problem of unemployment. 14 Dec 72 Central Intelligence Bulletin 5 SECRET Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 25X1 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 SECRET MALAGASY REPUBLIC: General Ramanantsoa's seven-month-old government is increasingly troubled by rivalry between the island's two main tribal groups. A dispute over reforms in the educational sys- tem is the most immediate cause of heightened ten- sion between the wealthier, better educated Merina of central Madagascar and the cotier (coastal) tribes. The dispute has split the national student coalition formed after the downfall of former pres- ident Tsiranana, himself a cotier, last May. Cotier students believe the reforms, designed to reduce French influence, are working to the benefit of the Merina. The cotiers particularly resent the imposition of the Malagasy language, which is es- sentially Merina, and they want Merina teachers replaced by cotiers. The government has imposed a curfew on the coastal city of Tamatave and sent security reinforcements there following clashes between Merina and cotier students. During the rioting a large hotel was destroyed by fire and a prison reportedly set afire. Cotier students in other coastal towns are reported restless-. Many cotiers, including some officials, be- lieve the government is acquiring an increasingly Merina complexion and will try to impose Merina domination on the numerically larger and once po- litically dominant cotiers. Ramanantsoa, a Merina, is acutely aware of cotier sensitivity and appointed members of both groups to his cabinet. The better qualified Merina, however, hold almost all the key ministries, and Ramanantsoa's close personal ad- visers are Merina. Cotier fears are ready-made for exploitation by ousted cotier officials of the Tsiranana regime. Ramanantsoa, in a radio address on 13 Decem- ber, cautioned against too rapid educational re- form and promised the creation of a new national language synthesizing the major dialects. He 14 Dec 72 Central Intelligence Bulletin SECRET Approved For a ease200 / A T 0975A02340003 001-$ Approved For Release 2003/OSI RI ' DP79TOO975AO23400030001-8 faces a serious test in trying to hold the tribal rivalries in check. While assuaging cotier fears, he must also deal with dissatisfaction among radi- cals, mostly Merina, who believe the government carrying out its promised reforms too slowly. II 25X1 14 Dec 72 Central Intelligence Bulletin 7 SECRET Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Approved For Release 2003/0WCki!'EDP79T00975AO23400030001-8 SOUTH KOREA: The National Council for Unifi- cation to be elected on 15 December will re-elect President Pak next week and serve merely as a rub- ber stamp for future regime policies. Candidates for the 2,359 seats on the Council have been largely handpicked by the government, and the closely con- trolled campaign has generated little public enthu- siasm. Regime confidence that it can carry out this process with no difficulty has prompted it to lift some security regulations and restore a few democratic trappings. After reopening universities early this month, the government on 14 December re- scinded its two-month-old martial law decree and announced that it will lift the ban on political activity after the presidential inauguration on 27 December. Other extensive government controls are to remain in force, however, and will continue to forestall any active opposition. MALAYSIA: The government's budget for 1973 is designed to stimulate the sluggish economy and reduce the high unemployment rate. Malaysia's eco- nomic growth rate fell drastically from about seven percent annually during the late 1960s to only two percent in 1971, but has recovered somewhat to al- most four percent this year. The slowdown was due largely to declining world prices for Malaysia's major export commodities and stagnating private in- vestment. The new budget offers several inducements to encourage both domestic and foreign investment, including a reduction of the minimum development tax to aid small investors, a liberalization of tax allowances on export sales, and provisions for cus- toms-free warehouse facilities. By encouraging in- dustrial development, Kuala Lumpur hopes to cut into the high unemployment rate, which has been running at about eight percent for the past several years. (continued) 14 Dec 72 Central Intelligence bulletin SECRET 25X1 Approved For Release 200 /0 / CIA-RDP79T00975A 4 0 Approved For Release 2003/0FAC- B`J-'bP79TOO975AO23400030001-8 SRI LANKA - CHINA: Peking has fulfilled its outstanding military aid commitments to Colombo with the delivery of a fifth Shanghai II class mo- tor gunboat. The boats, which are to be used as coastal patrol craft, were promised to Colombo dur- ing the insurrection in April 1971. Almost $1 mil- lion worth of ground forces equipment also was of- fered at that time but was not accepted by Colombo until March 1972. Delivery of this equipment, in- cluding 12 85-mm. field guns, was completed by mid-year. In the future, Sri Lanka will seek to obtain virtually all its military needs from tra- 1 71 ditional Western sources. 14 Dec 72 Central Intelligence Bulletin SECRET Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 25X1 Approved For Release 2003/08/05 : CIA-RDP79T00975AO23400030001-8 Secret Secret Approved For Release 2003