CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A023900070001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 14, 2016
• Document Release Date: August 12, 2003
• Sequence Number: 1
• Publication Date: March 2, 1973
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Central Intelligence Bulletin
Secret
N2 41
2 March 1973
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No. 0053/73
2 March 1973
Central Intelligence Bulletin
CONTENTS
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INTERNATIONAi MONETARY DEVELOPMENTS: Unp cedented
selling of do-.lar forces closure of majo money
markets. (Pag2 )
CHINA - NATIONAL T CHINA: Peking st -s up propa-
ganda stressing r )nification of Tai/an with main-
land.
(Page 4)
CHILE: Some violencemay result'rom Sunday elec-
tions. (Page 6)
USSR: Soviets deploy nepst,,uided-missile cruiser
in Mediterranean. (Page
USSR: Both foreign and c]Amektic benefits may re-
sult from Soviet access' n to opyright convention.
(Page 10)
CHILE: Santiago mov against IrOll (Page 11).
MOROCCO: Hassan bins thirteenth ar of sometimes
turbulent reign t orrow. (Page 12)
BURMA: Rice exports off (Page 13)
DAHOMEY: nti-French rioting (Page 13)
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INTERNATIONAL MONETARY DEVELOPMENTS: Sustained
and unprecedented selling of the dollar throughout
Europe yesterday precipitated today's closure of
major money markets.
Total European central bank purchases in sup-
port of the dollar yesterday amounted to almost
$4 billion. West German intervention reportedly
reached almost $2.8 billion, the largest daily
amount ever. Dutch purchases were $604 million,
almost twice that country's total interventions
before the last dollar devaluation. Intervention
was also noted in Belgium, France, the UK, Denmark,
Austria, and Spain.
Most European currencies that have not been
floated closed at their ceilings relative to the
dollar yesterday. Both the mark and the guilder
were traded below the dollar's floor in unofficial
bank transactions after the markets closed. Among
the floating currencies the Swiss franc was little
changed from the previous day, but it has still ex-
perienced the largest revaluation of any currency
compared with rates prior to 12 February. The pound
and the lira weakened slightly against the dollar,
probably reflecting traders' anticipation that both
currencies will be devalued and repegged against
other Community currencies, if a joint EC float
occurs.
The closing of the major exchange markets
amounts to a tacit admission that fixed rates among
the non-floating European currencies cannot be main-
tained. A decision to introduce a joint float is
the most likely outcome of the present situation.
The West German Economics Minister said last night
that an EC Finance Ministers' meeting probably
would be held shortly. The major problems to be
solved in implementing a joint float include the
system of intervention to be used, the capital con-
trols to be allowed, and the position of the pound
and the lira, both of which are now floating, rela-
tive to other countries' currencies. Some spadework
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has already been done. West German Chancellor Brandt
and British Prime Minister Heath held a special meet-
ing last night on the crisis after their scheduled
talks in Bonn.
The Japanese also decided to close the exchange
market in order to avoid possible large-scale dollar
selling. The Finance Ministry stated it intends to
await developments in Western Europe before deciding
when to reopen the exchange market. The yen closed
yesterday with a revaluation of 15.6 percent compared
with its old dollar central rate.
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CHINA - NATIONALIST CHINA: Peking has stepped
up its propaganda campaign stressing reunification
of Taiwan with the mainland in the wake of last
week's Sino-US communique.
Mainland media have given wide publicity, in-
cluding extended broadcasts beamed to Taiwan, to a
commemorative meeting marking the anniversary of
an uprising of native Taiwanese against Nationalist
officials shortly after World War II--an event that
Peking propaganda organs had ignored since 1965.
Speeches given at this meeting, including one by a
former Nationalist general who defected to the Com-
munists during the civil war, have also been widely
disseminated.
The speeches were generally conciliatory in
tone, and while they stressed Peking's determination
to "liberate" Taiwan, they made no reference to the
use of force in this endeavor. The speakers called
for "unity of action" on the part of the peoples on
the mainland and local Taiwanese, but the main ap-
peal for reunification was clearly addressed to
officials and leaders of the Nationalist government
itself. The former general called specifically for
direct negotiations on reunification, adding that
secret or open informal contacts might be a first
step if the Nationalists were not ready for formal
negotiations. Both major speeches claimed that
Taipei could not count on indefinite US support and
that neither Peking nor Washington would permit a
"third party"--that is, the USSR--to guarantee the
island's continued separation from the mainland.
Since last autumn, Peking has been engaged in
a largely private two-pronged effort to move the
Taiwan issue in a direction favorable to it. In
talks with Asian and European officials, Chou En-lai
and other Chinese leaders have emphasized that Pe-
king does not contemplate the use of force to regain
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the island, that the reunification process might be
a prolonged one covering perhaps several decades,
and that present foreign investments on the island
would not be initially disturbed. At the same time,
the mainland has been encouraging Taiwanese living
abroad and others with ties to the island to visit
the People's Republic, where officials have stressed
the themes of reconciliation, flexibility, and "le-
niency." While Peking obviously judges the time is
ripe to move this campaign into higher gear, the
Communists have neither privately nor publicly clearl
spelled out their terms for reunification.
2 Mar 73 Central Intelligence Bulletin
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CHILE: The congressional elections on Sunday
will not ease growing political tensions, and there
may be clashes if the outcome--as expected--enables
both government and opposition to claim "victory."
Chilean politics have become less a national
pastime than a bitter obsession as President Allende
has moved the already statist economy toward a so-
cialist system. At first, many Chileans, including
the Christian Democrats who preceded him in power,
took little exception to his program. Despite his
campaign promises, few expected his coalition gov-
ernment to prove radical enough to harm their inter-
ests and the outgoing congress ratified his paper-
thin plurality of 36.3 percent in a three-way race.
During 1972, however, most Chileans felt the
effects of his administration's reckless economic
policies. Even the majority that gained by income
redistribution and other policies is suffering from
record inflation and severe food shortages that show
every sign of worsening in the winter that is just
beginning.
The resulting discontent has polarized the coun-
try's persistently pluralist politics. Voters now
are either strongly for or strongly against the gov-
ernment. Although a majority clearly disapproves of
the administration, little can be done to curb its
actions as long as the armed forces continue to sup-
port it. The result is an impasse that extremists
on both sides believe can be broken only by violence.
The election results are likely only to harden
positions without significantly changing the present
political equation. Some 60 percent of the elector-
ate probably will vote for the opposition's congres-
sional candidates, thus confirming Allende's status
as a minority president--even if his Popular Unity
(UP) manages to better his 36 percent figure of 1970
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by several points. The inevitable claims and coun-
terclaims of success will exacerbate existing ten-
sions.
Leftist extremists in the UP are refusing to
go along with efforts by General Prats, who as in-
terior minister has been trying to prevent post-
election clashes by banning celebrations Sunday
night. If the take to the streets, others are sure
to follow.
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Soviet Kara-Class Guided Missile Cruiser
Length.... 570 feet
Beam . - ... 64 feet
Armament 2 twin SA-N-3 launchers
2 twin SA-N-4 launchers
2 quadruple SS-N-10 launchers
4 85-mm dual purpose guns
4 anti-missile/anti-aircraft mounts
2 MBU 2500A rocket launchers
2 ASW torpedo tube mounts
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USSR: The Soviets deployed the first unit of
their newest class of guided-missile cruiser from
the Black Sea to the Mediterranean on 1 March.
The new ship, designated the Kara class, re-
sembles the Soviets' Kresta-II class cruiser and is
armed with three different types of guided-missile
systems--two surface-to-air and one surface-to-sur-
face--in addition to conventional armament. The
new cruiser is apparently intended to be used in a
wide variety of roles, including anti-ship and anti-
submarine operations.
Deployment to the Mediterranean of the cruiser--
which was accompanied by a destroyer--follows the
arrival of two other surface combatants there on 28
February. The Soviets now have 11 major surface
combatants with their Mediterranean Squadron. Al-
though this is about the normal level for the squad-
ron, the presence of the new cruiser in the Mediter-
ranean probably presages increased exercise activity.
The Soviets probably want to test the capabilities
of the new ship in an operational environment.
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USSR: Both international and domestic benefits
could accrue to the USSR through its accession to
the Universal Copyright Convention.
Unwillingness to adhere to the convention has
long been a prickly issue in Soviet dealings with
the West, and Moscow may hope its present decision
will assist in promoting more normal relations with
the West. An easier and more regularized exchange
of published information also will improve Soviet
access to Western technology. The Soviets specified
they are acceding to the 1952 convention, which is
already in force, and not to the revised 1971 ver-
sion that is still awaiting ratification in most
countries.
For
internal security purposes, the Soviets can
make
use
of convention provisions that require each
party
to
accept the national copyright laws of the
other
parties. Soviet accession takes effect on 27
May.
After that date, under Soviet law authors who
allow
their works to reach the West for publication
through non-official channels can be prosecuted for
violating the state monopoly on foreign trade. Con-
viction is punishable by up to ten years' imprison-
ment, five years' banishment, and confiscation of
property. Furthermore, as convention adherents, So-
viet officials would be able to prevent publication
of dissident works in the West by publishing them
first in the USSR for limited circulation among the
elite and then refusing publication rights to for-
eign publishers. However, prevention of publication
in the West would require litigation that the Soviets
may be hesitant to undertake in the publishing coun-
try.
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]CHILE: Santiago has taken further steps against
Inte ational Telephone and Telegraph (ITT) proper-
ties.
An administration bill canceling ITT's manage-
rial rights in the Chilean Telephone Company became
law on Tuesday, thus legalizing continuing government
management. The Allende government had taken over
the property in September 1971, but continued nego-
tiating the purchase of the company's 70-percent
interest. In May 1972, however, the administration
used disclosures in the US press of alleged ITT in-
volvement in Chilean politics as a pretext for sub-
mitting two clearly punitive legislative proposals
to the Congress.
Still pending in Congress is the proposed con-
stitutional amendment that would nationalize all
telephone company assets in a manner similar to
that used in taking over US copper company holdings.
In both cases, the Allende government has opted to
revise the constitution in order to set up special,
hand-picked tribunals to sanction its desire to pay
little or no compensation for the expropriated
properties. Congressional expropriation, while
faster, would have permitted the US companies to
carry their compensation claims through the normal
judicial system with final review by Chile's still
independent Supreme Court.
ITT values its telephone property investment
at more than $150 million, of which $108 million
is covered by expropriation insurance administered
by the US Overseas Private Investment Corporation.
Smaller ITT properties in Chile still in company
hands, including two hotels, also are insured b
the US Government.
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MOROCCO: King Hassan begins the thirteenth
year of'his sometimes turbulent reign tomorrow.
He continues to survive as an absolute monarch by
a combination of clever political tactics, an iron
hand, and good luck.
Nearly seven months after the latest coup at-
tempt, Hassan still has taken no genuine steps
toward sharing power, providing representative
political institutions, or improving the efficiency
of his administration. Over the years he has suc-
cessfully maneuvered to discredit the traditional
political parties and leaders.
Distrustful of the military that has been the
throne's principal prop but also has twice attempted
to eliminate him, he has executed or isolated po-
tential military strongmen and has broken up and
dispersed the units on which a military contender
might rely. He has cracked down hard on trouble-
some students by withdrawing scholarships and
closing down part of the university, thereby re-
ducing the student body by half. The leadership
of organized labor has been caught in a bind be-
tween a new get-tough government policy toward
striking workers and an activist labor rank-and-
file seeking higher wages and better fringe benefits.
Hassan has timed his foreign policy maneuvers
to gain maximum popular endorsement at home. Re-
cent gestures of support for the Palestinian lib-
eration movements and his offer of military aid to
Syria can be viewed primarily as political moves
designed to refurbish his image at home and in the
Arab world. The dispatch of troops and military
equipment to Syria--which he said on 22 February
would occur this week--does not affect the capacity
of his army to mount another coup attempt and cer-
tainly will not materially alter the balance of
forces in the Middle East. It does, however, pro-
vide the Moroccan military with something besides
the domestic political situation to think about
and is a useful device for removin possible trouble-
makers from the local scene.
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BURMA: Exports of rice this year probably
will not exceed 300,000 tons, the lowest level
since World War II. Burma exported 800,000 tons
in 1971 and about 500,000 tons last year. Late
last year, the government was forced to renege
on export commitments because of insufficient
domestic stocks. It was only as a result of the
intervention of several heads of state that Chair-
man Ne Win has so far agreed to export about
100,000 tons of rice to traditional Asian import-
ing countries. These countries--including Sri
Lanka and Bangladesh--have been seeking even
larger deliveries. With government procurement
of rice from the current harvest running at least
50 percent behind last year, Burma is post onin
any decision on new export commitments. I
DAHOMEY: The military government, mindful of
its neeT-for French support, is disowning respon-
sibility for anti-French rioting touched off Wednes-
day evening by student and labor activists seeking
to exploit the government's claim that it had un-
covered a coup plot financed by an unnamed foreign
power. In public and private assurances to Paris,--
President Kerekou has blamed uncontrolled "hooligans"
for the disturbances, which grew out of a public
rally that had been organized by the extremists
with the approval of the government. Yesterday the
government also deployed troops and armored cars
in the capital and banned street gatherings of more
than three or four persons, apparently reflecting a
determination to prevent a recurrence of such dis-
turbances. These measures suggest that the moderat
ode
Kerekou has the support, at least for now, of min-
isters who control key military elements. The orien
tation of these colleagues is not clear; at times
they have appeared to be. aligned with more radical
cabinet members and extremists who want to dilute
Dahomey's ties with France.
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Secret
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