CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A025500080001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: March 12, 2004
• Sequence Number: 1
• Publication Date: November 1, 1973
• Content Type: REPORT

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Top Secret
Central Intelligence Bulletin
State Department review completed
Top Secret
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Central Intelligence Bulletin
ARAB STATES - ISRAEL: Both fronts remain quiet.
(Page 1)
JAPAN-OIL: Arab oil cuts forcing Tokyo to re-evaluate
its policy on the Middle East. (Page 4)
JAPAN: Foreign exchange reserves drop for seventh
consecutive month. (Page 6)
CHILE: Government using pre-emptive force against
leftists. (Page 7)
BRAZIL-CHILE: Chilean economic mission to Brazil
disappointed with results. (Page 8)
ARGENTINA: Feuding among President Peron's support-
ers intensifies. (Page 9)
IRAN-USSR: Iran agrees to increase deliveries of
natural gas to the USSR. (Page 10)
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AFGHANISTAN: President Daoud faces major domestic
and foreign problems. (Page 12)
SWEDEN: Cabinet changes intended to help streamline
domestic policy. (Page 14)
FOR THE RECORD: (Page 15)
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,ARAB STATES - ISRAEL: Both fronts remained quiet
yesterday, although there were several minor incidents
on the Egyptian front.
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Israeli and Syrian ground forces continued to
honor the cease-fire yesterday.
President Sadat asserted in a press conference
yesterday that he has been under pressure from his
military chiefs to renew hostilities if Israel re-
fuses to withdraw to the 22 October cease-fire lines.
He said he would restrain the army until he sees the
result of current contacts in Washington by his newly
appointed foreign minister, Ismail Fahmi, and the im-
pending visit to Cairo of Secretary Kissinger. If
the diplomatic talks are successful, and the Israelis
do pull back, Sadat said he is prepared immediately
to begin arrangements for a peace conference. Sadat
may run into some difficulty from Syria when the time
comes to begin talks, however. Damascus radio broad-
cast a statement by the Syrian information minister
yesterday rejecting direct negotiations with Israel
and affirming Damascus' refusal to bargain over Syr-
ian territory.
Sadat also acknowledged that his decision to ac-
cept the original cease-fire has brought him some
criticism. He defended himself with the claim that )
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C the US airlift had virtually forced him to stop fight-
ing. Sadat said that Egyptian forces had initially
held their own and gotten Israel down to a three-day
supply of ammunition, before new US weapons began ar-
riving on the battlefield. Sadat was not totally
negative, however; he credited the US, despite its
help to Israel, with a "constructive attitude" thus
far in its efforts to find peace.
According to an Israeli announcement, the trans-
fer of supplies to the Egyptian Third Army was re-
sumed on the afternoon of 31 October, following an
unexplained delay. Radio Jerusalem said that in the
past three days some 50 truckloads of supplies have
been sent to the Egyptian Army units on the east bank.
Earlier this week the Israelis agreed to allow a con-
voy of 100 trucks driven by UN personnel to pass
through the lines with non-military supplies.
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JAPAN-OIL: The Japanese Government is under in-
creasxng pressure to abandon its neutral stance on
the Middle East in favor of open support for the Arabs.
Vice Foreign Minister Hogen, hoping that a polit-
ical settlement can be arranged before Japan's oil
supply situation becomes tight, has thus far held to
the line that Tokyo should not go beyond supporting
Security Council Resolution 242 in responding to Arab
demands for political support. The government may
face a major policy decision by late November, how-
ever, in view of the Arab's announced intention to
make further cuts in the oil supply. Depending on
their severity, such cuts could have a profound ef-
fect on the Japanese public and possibly endanger the
Tanaka government.
Japan stands to lose at least 500,000 barrels
per day of oil imports, or about 9 percent of consump-
tion, as a result of the initial cutback in production
by the Arab producers. The major international oil
firms that supply the bulk of Japan's oil have al-
ready notified the Japanese of impending cutbacks in
deliveries. Gulf Oil, which supplies about 10 percent
of Japan's imports, will cut shipments by 35 percent
retroactive to 1 October. Japanese refineries thus
far are operating normally and petroleum stocks prob-
ably are equivalent to about six weeks of normal
consumption. Nonetheless, the government is drawing
up plans to restrict consumption, including rationing
if necessary.
Japanese diplomats have already offered to under-
write previously rejected aid projects to Arab coun-
tries, and a new soft line on Egyptian debt resched-
uling is being considered. A Japanese Foreign Min-
istry official has told the US Embassy, however, that
working-level officials do not believe such repre-
sentations will be sufficient to restore oil deliv-
eries to Japan to previous levels. Consideration is
1 Nov 7 3 Central Intelligence Bulletin
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now being given to sending International Trade Minis-
ter Nakasone, or even Prime Minister Tanaka, to visit
Arab capitals, if the Middle East situation has not
improved by December. The working-level officials
envisage that such a trip might be accompanied by a
drastic change in Japanese Middle East policy, possi-
bly including a break in diplomatic relations with
Israel. Thus far, senior Foreign Ministry officials
have talked to the US Embassy only about Arab demands
that Japan support them on the territorial issue.
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JAPAN: Tokyo's foreign exchange reserves fell
by nearly $750 million in October, the seventh con-
secutive monthly decline. Since February, official
reserves have declined by $5 billion from their $19-
billion peak because the Bank of Japan had to meet
part of the heavy dollar demand during that period
by intervening almost daily in the foreign exchange
market. During October about $1 billion was sold
by the central bank.
Underlying the decrease in reserves has been
the sharp decline in the trade surplus this year
combined with record long-term capital outflows.
Despite intervention by the central bank, the yen
has depreciated by about 1 percent against the dollar
in recent months. Some concern over the continuing
decline in reserves is evident in the government's
renewed consideration of easing some controls on
capital inflows.
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CHILE: The government continues to use pre-
emptive force to forestall the violent opposition it
anticipates from the left. It apparently is less con-
cerned about the economic recovery program's impact
on the working class--a potentially more serious
threat.
Opposition activity appears to be picking up
somewhat in the countryside
national police reportedly have reassumed primary
responsibility for maintaining public order, freeing
the armed forces to concentrate on training in counter-
insurgency tactics.
Some progress toward the formation of a new anti-
government organization has been reported, but the
left is not yet ready to begin a coordinated guerrilla-
terrorist campaign. The apparent existence of unco-
ordinated fronts and commands suggests that much or-
ganizational work remains.
The most radical leftist groups probably remain
anxious to take up arms, but not all components of the
former Popular Unity coalition are convinced that
violence is the best tool with which to confront the
government. Some groups appear to believe that fo-
menting strikes among workers disgruntled by the
growing gap between wages and prices would be more
productive.
The left's present ability to mobilize the work-
ers is as questionable as its readiness for querrilla
warfare, but the regime publicly admits that there will
be no early end to the economic squeeze. Moreover,
there are indications of rising unemployment. Should
workers come to believe that they are making all the
sacrifices, resentment could lead to strikes even
though leftist organizers have been removed from their
factory jobs. Widespread strikes pose a potentially
greater threat to the government than bands of rural
guerrillas or urban terrorists.
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BRAZIL-CHILE: According to a local Brazilian
observer, the C lean economic mission to Brazil,
headed by Foreign ministry economic adviser Orlando
Saenz, departed highly disappointed over the results
of the visit.
A US Embassy source claims that Saenz asked for
Brazil's assistance in guaranteeing new international
lines of credit for Chile. Brazil reportedly refused
to enter into such an arrangement. One senior offi-
cial of the Brazilian Foreign Ministry told the US
ambassador that his country already has given Chile
at least $70 million in credits on terms highly fa-
vorable to Chile. The official remarked that this
constitutes deep economic involvement in Chile, "per-
haps too deep."
Despite past expressions of willingness to aid
the Chileans, Brazilian leaders showed considerable
caution during this visit. The only real progress
that the Saenz mission made in Brazil reportedly was
a revival of a Brazilian-Chilean mixed commission
and an outline of plans for the development of com-
plementary industries.
I I
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ARGENTINA: The vigor with which President Peron's
supporters are carrying out their orders to "purge
Marxists" and reorganize the party has intensified
the long-simmering feud between left and right wing
factions.
One provincial governor, a leftist sympathizer,
has been ousted and Peron's Justicialist Party council
has proposed that former president Hector Campora
and Governor Obregon of Cordoba Province--both ac-
claimed as leading lights by Peronist radicals--be
expelled from the party for "insults" to Peron.
CPeron, however, has rejected the council's recommenda-
tion and said it was necessay to move more slowly
in the Campora-Obregon case.
Although Peron's manipulations obviously are de-
signed to ensure absolute loyalty from the Peronist
hierarchy, the campaign against real or imagined po-
litical challengers may run into formidable opposition
in Cordoba where dissident elements have frequently
defied Buenos Aires. Dissatisfaction with Peron is
running high among leftist student and union groups,
and the stage is set for more violence.
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IRAN-USSR: Iran has agreed to increase its
deliveries of natural gas to the Soviet Union. Under
the terms of a protocol signed on 24 October, Iran
apparently will provide the Soviet Union with gas for
local use, thereby enabling Moscow to divert to West
Germany gas from Soviet fields in the western USSR.
Bonn has held discussions with Iran and the USSR on
the proposed arrangement, but no final agreement has
been reached. The proposal would enable the Soviets
to solve an internal distribution problem, give Iran
an export market, and improve the USSR's capability
to export gas to Western Europe. To obtain Soviet
natural. gas, West Germany has provided pipe and equip-
merit for construction of transmission facilities in
the USSR.
Tehran already exports natural gas to the USSR
through a pipeline built with Soviet assistance. Al-
though an increase in the amount of gas exported to
the USSR probably would require construction of
another pipeline, the protocol did not mention Soviet
financing for such a project. In any case, Iran
probably will build a pipeline from its northeastern
gas fields to the Soviet border.
The recent protocol also calls for Soviet par-
ticipation in a wide range of projects, some of which
already are included under existing Soviet credits.
No new assistance was announced, but some aid may be
forthcoming after feasibility studies have been com-
pleted. Moscow will build two 300,000-kilowatt
thermal power plants, two cement plants, and a petro-
chemical plant; expand a machine tool plant to pro-
duce parts for the Soviet-built Isfahan steel mill;
and provide vocational training for Iranians.
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AFGHANISTAN: President Daoud claims to have
established firm control over the handling of polit-
ical issues, but major domestic and foreign problems
remain.
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Daoud has denied repeated accusations that the
pro-Communist Parcham Party constitutes a threat to
his government. An embassy assessment, however, in-
dicates that Parchamists have infiltrated the govern-
ment and now hold many positions at the working level,
some with decision-making authority. Daoud has con-
sistently claimed that only minor posts have been
given to the Parchamists, whom he also tends to de-
scribe as primarily Afghan nationalists and only
secondarily Communists.
Despite Daoud's optimism, he faces many diffi-
cult problems. Important political and economic de-
cisions are being deferred, at least in part, be-
cause of the upheavals in the bureaucracy over the
past few months. Many senior military officers,
some of whom have been retired since the coup, re-
main bitter at the treatment they received from the
new government. Reports continue to circulate in
Kabul that Daoud, disgusted with the inefficiency
and corruption of members of his cabinet, will soon
announce sweeping personnel changes.
Meanwhile, trials of two groups--high officials
of the government overthrown in July and individuals
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accused in September of plotting against the present
regime--are being held in camera. The former report-
edly will receive light sentences; some of the latter
are likely to be given stiff penalties, including
death.
Daoud claims to have transcripts and other evi-
dence implicating Pakistan in the alleged plot to
over throw his government. This issue, plus continu-
ing controversy over Islamabad's actions in the two
Pakistani frontier provinces, keep bilateral relations
tense. An isolated clash on the Iranian border
week also has increased tension with Tehran.
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SWEDEN: Prime Minister Palme's cabinet re-
shuffle yesterday, following the elections last month,
was intended primarily to streamline government do-
mestic policy. Nevertheless, chances for improved
relations with-Washington were enhanced by the re-
placement of Foreign Minister Krister Wickman by
Sven Andersson. Andersson, who had been defense
minister since 1957, has been much less critical of
US policy than Wickman. Two old ministries--interior
and civil--were replaced by three new ones--labor,
housing, and municipal. The restructuring resulted
in new assignments within the cabinet for five min-
isters. Three new faces were added, reflecting the
loss of Wickman, who resigned, and of disarmament
specialist Alva Myrdal, who retired, plus the crea-
tion of one new ministry. Further changes may occur.
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Syria: Work has begun on repairing the power
plant at the $120-million Homs refinery that was
damaged by Israeli air strikes. Contrary to sev-
eral. earlier reports, the refinery was not destroyed,
although production halted because of damage to
nearby power and export facilities. The 3--million-
ton capacity refinery accounts for Syria',s total
output of petroleum products.
This item was prepared by CIA without consultation
with the Departments of State and Defense.
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