CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026200010001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 23
• Document Creation Date: December 15, 2016
• Document Release Date: March 22, 2004
• Sequence Number: 1
• Publication Date: February 21, 1974
• Content Type: REPORT

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Top Secret
Central Intelligence Bulletin
Top Secret
C
February 21, 1974
State Department review completed
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February 21, 1974
Central Intelligence Bulletin
ISRAEL: Mrs. Meir attempts to form minority coali-
tion overnment. (Page 1)
EUROPEAN COMMUNITIES: Finance ministers will meet
soon to discuss coordination of foreign borrowing
by members. (Page 3)
LATIN AMERICA: Strong sense of nationalism under-
lies the issues Latins will raise at Mexico City
conference. (Page 4)
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VIETNAM-CAMBODIA: Conference on Law of War used to
push legitimacy of Viet Cong and Sihanouk "govern-
ments." (Page 8)
-CHILE: Major Western creditors meet today to con-
sider Chile's request for debt relief. (Page 9).
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JAPAN: Government expected to freeze prices of 20
aas- c materials and products. (Page 16)
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EGYPT: Sadat's Inter-Arab Policy. (Page 18)
FOR THE RECORD: (Page 24)
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ISRAEL: Prime Minister Meir will keep the door
ope or the National Religious Party to join the
cabinet as she attempts to form a minority coalition
government with the Independent Liberal Party. Her
minority government will control 58 of the 120 Knesset
seats.
The Prime Minister informed President Katzir of
her decision last night after the National Religious
Party, citing the refusal of the Chief Rabbinate
Council to approve the last-minute compromise worked
out with the Alignment on the religious issue, decided
not to join the cabinet. She clearly hopes to induce
the party to reverse its decision. Mrs. Meir said
that she would hold open the cabinet seats originally
earmarked for the National Religious Party until the
deadlock on the religious issue is broken. The Na-
tional Religious Party is not bound by.the rabbinate?s
decision and the party's central committee may recon-
sider when it meets on February 24.
President Katzir has given the Prime Minister
one more week to form a cabinet. She must then pre-
sent it to the Knesset for a vote of confidence.
Foreign Minister Eban told Ambassador Keating last
week that the Alignment had quietly obtained the
agreement of the orthodox Agudah Religious Front to
throw its five votes to the government on votes of
confidence, which would give her the necessary Knesset
majority.
Defense Minister Dayan has apparently also closed
ranks with the Prime Minister, who told reporters
yesterday that she has requested Dayan to continue to
serve in his post. Earlier yesterday it was reported
d
i
r an
that Dayan had said that he would give Mrs. Me
any government she formed his fullest support, and
had indicated that he might be willing to serve in a
new cabinet.
The new minority government should be able to
continue to conduct peace talks with the Arabs. The
Feb 21, 1974 Central Intelligence Bulletin
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Prime Minister can probably count on sufficient sup-
port for the government from the liberal and leftist
parties to ensure a majority in the Knesset on Middle
East peace issues. Nevertheless, she is probably
extremely uncomfortable with the present unstable
state of affairs and can be expected to continue to
seek a solution that will give her a workable majority
in the Knesset.
Feb 21, 1974
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EUROPEAN COMMUNITIES: European Community
finance ministers will meet soon to discuss com-
mission and French proposals for coordinating for-
eign borrowing to finance members' higher oil import
bills.
The commission proposes that the EC's European
Monetary Cooperation Fund work with member central
banks to coordinate the timing of member borrowing.
It also suggests that the fund borrow money to lend
members seeking capital. Although the commission
does not indicate where the funds should be obtained,
it is against extensive use of the Euromoney market.
The French proposal calls for EC members to deal
directly with oil producers to obtain needed capital.
The French feel that such direct dealing would yield
better terms than members could obtain individually
in the free market.
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LATIN AMERICA: The inter-American meeting of
foreign ministers now under way in Mexico City moves
into its sessions with Secretary Kissinger today
amid a sense of expectancy among some of the Latin
and Caribbean participants that the outcome will
represent a turning point in US-Latin American rela-
tions. Some representatives are concerned, however,
that differences of opinion among the Latin Americans
may prevent agreement on many basic issues.
A strong sense of nationalism underlies each of
the eight topics the Latin Americans have raised for
discussion with the US, and nearly all reflect the
Latins' desire for US concessions that would enhance
their national sovereignty. Five items basically
concern pressing economic issues that the Latins be-
lieve the US can and should do something about:
--Greater access to US development resources
and markets;
--No economic coercive measures against govern-
ments that act against foreign-based companies;
--Higher prices for raw materials and better
terms of trade;
--"Codes of conduct" for multinational companies;
--Greater access to US technology.
The other Latin items seek review and revision of the
existing inter-American system, Panamanian sovereignty
over the canal, and a general review of the current
state of US - Latin American relations. Two items
added by the US are a review of the international sit-
uation and a, discussion of the energy crisis.
Cuba is not participating directly, and the
Cuban question is not on the agenda but is bound to
come in for a good deal of attention. Seven of the
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participating nations have full relations with
Havana, and several others favor relaxing the multi-
lateral sanctions against Cuba imposed by the Organ-
ization of American States in 1964. Havana has dis-
patched a number of journalists and at least one
diplomat to Mexico City to cover the conference and
has already made it plain that it will be paying
closer attention to this meeting than to any similar
hemispheric gathering in the last decade.
Although the participants have displayed an
unprecedented degree of unity already--especially
on the sovereignty-related agenda items--the many
differences of opinion among them will be only slightly
less evident during the final proceedings than they
were in the preliminaries. The Cuban issue islaaacase
in point: a number of Latin Althe recommendations
Brazil and Chile, strongly oppose
of the group led by Peru and Argentina that favors
full ties with Cuba. The energy crisis is likely to
prove another Latin bugaboo. Oil-exporting countries
like Venezuela and Ecuador may take positions on pe-
troleum pricing and shortage problems that are at
sharp variance with those of oil-importing nations.
Regional and subregional antagonisms and bilateral
problems abound and will intrude indirectly. By com-
mon consent, the participants have barred the addition
of new items to the already ambitious agenda.
Latin and Caribbean delegates will enter the
final stages of the conference somewhat buoyed by
news of solid progress recently on two touchy areas
of US - Latin American relations. The approval on
January 7 of a statement of principles governing the
drafting of a new canal treaty between the US and
Panama should remove much of the heat from the dis-
cussion of this issue at Mexico City. President
Nixon's announcement on February 19 of the resolution
of a number of pending investment disputes with Peru
may likewise help moderate the:Latins' voices on the
items dealing with economic coercion and transna-
tional enterprises.
(continued)
Feb 21, 1974
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Judging from past inter-American conferences,
tangible accomplishments will probably prove dif-
ficult to pinpoint. There will probably be many
intangible gains, however, which will flow not so
much from the formal conference proceedings as from
the corridor conversations and other private bi-
lateral contacts. At this point, optimists and
pessimists appear fairly evenly divided among the
Latin participants. Even the skeptics, however,
are eager to hear what Secretary Kissinger has to
say. Further, there appears to be general recogni-
tion that the meeting offers the best opportunity
yet to raise frankly and openly with a senior US
official those issues in relations with the US that
most trouble its Latin and Carih an neighbors.
Feb 21, 1974
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VIETNAM-CAMBODIA: The Conference on the Law of
War now under way in Geneva is the latest forum for
efforts to legitimize the Viet Cong's Provisional
Revolutionary Government (PRG) and the "government"
of Cambodia's Prince Sihanouk.
Hanoi's efforts to seat the PRG have dominated
backstage maneuvering at the conference, which is
being held to bring the Geneva Conventions of 1949
up to date. If the PRG is seated, it will gain an
especially effective rostrum for publicizing alleged
US and South Vietnamese "war crimes."
The US delegation thinks the final vote on the
PRG, which may be held as early as today, will be ex-
tremely close. Saigon has received only lukewarm
support from neighboring nations such as Indonesia,
Thailand, and the Philippines in trying to block the
PRG. Hanoi has been aided by other Communist states
and radical-leaning African states, which have had
some success in influencing uncommitted delegations.
A vote on the proposal to seat Prince Sihanouk's
representatives, put forth unexpectedly on February
19 b
AL", 1M.L geria, and others, may be held today.
Feb 21, 1974 Central Intelligence Bulletin
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CHILE; Chile's major Western creditors, the
Paris Club, are meeting today to consider Santiago's
request for relief of its current debt obligations
to that group of $640 million. Chile, which paid less
than one third of its debt amortizations in 1973,
faces total debt service payments of some $740 mil-
lion this year. In 1972, Paris Club members, who
hold $2.2 billion in Chilean debts, rescheduled pay-
ments of $426 million.
Creditor attitudes toward the new government
have shown marked improvement in the last several
months as a result of the junta's efforts to bring
about economic recovery, success in negotiating a
standby credit from the International Monetary Fund,
progress in arranging compensation for nationalized
industries, and completion of the bilateral renego-
tiation of its 1971-72 debt to the US. Moreover,
Chilean officials have conducted extensive bilateral
discussions during the past few weeks and have left
favorable impressions in Bonn, Paris, London, and
Madrid. Nevertheless, political factors continue to
cloud European relations with the Chilean junta.
With the exception of Italy, all Paris Club mem-
bers are attending the meetings and generally favor
some kind of debt settlement. The US, Spain, and
Canada favor rescheduling all debt payments due in
1973-75, while most other members prefer a less gen-
erous settlement.
The Japanese, British, and Danish delegations
probably will accept an 85- to 90-percent rescheduling,
despite their preference for less generous terms.
Bonn and Paris, on the other hand, have indicated
difficulty in accepting anything less than 20 percent
in cash. The Dutch appear to be sharply divided on
their position, with some elements violently opposed
to any settlement that would appear generous. As a
result, some Dutch negotiators may attempt to use the
ttacks
l
i
a
ca
Paris Club meetings asa forum for polit
on the Chilean regime. If this develops, French,
German, Belgian, and Swedish delegates might ff 'oin in
and thus cause negotiations to break down.
Feb 21, 1974
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JAPAN: Tokyo is expected to freeze prices of
20 basic industrial materials and consumer products
this week. The affected items include steel products,
cement, artificial fibers, synthetic rubber, polyvinyl
chloride, tires, paint, and detergents. Price fixing
will force firms to absorb sharp cost increases, stem-
ming in part from oil price hikes, and cause them to
cut back investment that is needed to counter the
sharp slowdown in economic activity expected this
year. With wholesale prices some 35 percent higher
than a year ago and consumer prices up nearly 25 per-
cent, the Japanese Government regards inflation as
the country's most pressing economic problem.
The Tanaka government is anxious to slow price
increases in order to undercut labor's demands for
wage hikes this spring and mollify voters before the
Diet elections this summers. Until now, the govern-
ment has regulated the prices of only four consumer
products, relying primarily on broad monetary and
fiscal measures, campaigns against monopolistic
practices, and appeals to hold the price line to
fight inflation.
Feb 21, 1974
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EGYPT: SADAT'S INTER-ARAB POLICY
The prospect of peace in the Middle East and
the beginning of the first serious negotiations to
that end have induced President Sadat to assess
Egypt's relationship with fellow Arabs even more
closely than before he went to war in October.
Despite the political capital Sadat gained in the
war, his freedom of action is still restricted by
inter-Arab politics. He is dependent on the good
will of most Arabs. From some, he needs financial
assistance, and from others, restraint from under-
mining the negotiations. He cannot move forward
without regard to their views.
A somewhat similar, but more serious problem
confronted Sadat in 1971 when the weakness of his
position within the Arab world ultimately forced
him to give up on negotiations with Israel and the
US for an interim agreement on reopening the Suez
Canal. He could not, at that time, pursue lengthy
negotiations and retain his credibility. He was
new in office and lacked the strength to buck the
general Arab opposition to any dealings with the
Israelis.
A Stronger Hand
Egypt's overall success in the war in October
has given Sadat the prestige to face down the charges
of surrender that have resulted from his decision to
negotiate. The military success was not enought,
however, to induce automatic acceptance of his pol-
icy of negotiating. The disengagement agreement
concluded with Israel, moreover, precipitated charges
against Sadat of seeking a unilateral settlement
with Israel at the expense of the Arab cause as a
whole.
Sadat cannot at this point treat the latter
charges lightly, and he cannot afford to let those
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in a position to do serious harm to a peace settlement
remain uninvolved in the negotiations. Sadat's
strategy calls for approaching each Arab state and
each group of Arabs on a different basis as he at-
tempts to win support or at least tolerance for his
negotiating policy.
Some states, such as Libya and Iraq, have by
their radicalism largely isolated themselves from
their neighbors; Sadat can ignore their bombast,
but he does have to worry about their influence on
radicals in Syria and on the fedayeen. Sadat may
hope that President Qadhafi's recent efforts to
smooth over his difficulties with Egypt will also
force the Libyan leader to temper his public ap-
peal to the radicals.
Others on the periphery of the Arab-Israeli
conflict, such as Algeria, are skeptical of nego-
tiations; they are important enough in the Arab
world that he cannot ignore them, but they seem
satisfied as long as he keeps them informed of what
he is doing.
Sadat cannot be so free with some of the others.
For widely varying reasons, the cooperation of Syria,
Saudi Arabia, Kuwait, the fedayeen, and Jordan is
critical to the success of the next phase in the
negotiations, to a peaceful post-settlement atmos-
phere, and to Egypt's political and economic future.
The Syrian Obstacle
At the Arab summit before e Geneva peace con e -
ence opened last December, Sadat won a tacit go-
.ahead for negotiations. Syria was then on record as
intending to go to the conference, and few Arab
leaders could justify loud opposition when the two
states that had borne the brunt of the war chose to
continue the struggle by peaceful means.
(continued)
Feb 21, 1974
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The Syrians undercut Sadat when they boycotted
the talks. Without Syrian participation, support
for Sadat's negotiating policy has diminished. The
Syrian move did not alter Sadat's determination to
go on with negotiations for the preliminary disen-
gagement agreement, but it has prevented him from
going any further.
Syria and virtually all other Arab states have
interpreted the successful conclusion of the Egyp-
tian-Israeli disengagement accord as a sign that
Egypt intends to abandon the Arab cause and nego-
tiate its own settlement with Israel. As a conse-
quence, Sadat cannot pursue talks on Egyptian as-
pects of a settlement until Syria has matched Egypt's
progress. Nor can he take too much public satis-
faction from the disengagement agreement lest he
give the impression that this is all Egypt wants
from negotiations.
The Economic Backers
Sadat must take account of the long-range politi-
cal and economic repercussions that could result if
he actually attempted to reach a separate peace. He
does not want to find himself in the isolation that
Jordan's King Husayn has suffered since he drove the
fedayeen out in 1971. Today, Husayn would probably
follow suit if Egypt decided to proceed unilaterally
to negotiate a separate settlement, but the result-
ing arrangements would be partial and the peace un-
stable.
Sadat is well aware, moreover, that his isola-
tion would not be only political. Pursuit of a uni-
lateral settlement would seriously endanger the fi-
nancial and economic assistance from Saudi Arabia,
Kuwait, and other Arab oil producers on which Egypt
relies heavily. Sadat's relations with King Faysal
are close, but he could expect considerably less
help if, in Faysal's view, Egyptian determination
in the pursuit of total Israeli withdrawal, partic-
ularly from East Jerusalem, appeared to slacken.
(continued)
Feb 21, 1974
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Reconciling Palestinians and Jordanians
Sadat's relations with Jordan, on the one hand,
and with the Palestinians and fedayeen organizations,
on the other, are also dictated by a concern for
avoiding damage to Egypt's post-settlement position
in the Arab world. Sadat is faced here with a dual
problem. He must induce the Palestinians to join
the Geneva peace conference and give up their strug-
gle for the annihilation of Israel; at the same time,
he must reconcile their participation with Jordan's
fear of being upstaged by an independent Palestinian
delegation.
Once he has the two involved in the conference,
Sadat would not be likely to intervene on issues
involving Jordan's West Bank unless they threatened
other aspects of an over-all settlement. He does
not care whether Palestinians or Jordanians control
the West Bank once it is freed from Israeli occupa-
tion. He does not want to be burdened with the re-
sponsibility for resolving Palestinian or Jordanian
difficulties either with Israel or ultimately with
each other.
Sadat believes, however, that a stable peace
cannot be achieved without some Palestinian partic-
ipation. On the other hand, he knows that without
Jordanian participation, the Israelis cannot be
brought to deal with the Palestinian problem in a
manner at all satisfactory to the Arabs.
Sadat's present policy toward the fedayeen is
designed not so much to support them as to involve
them so deeply in settlement efforts that it would
be difficult for them to upset the peace. In at-
tempting to clear the hurdles to Palestinian partic-
ipation put up by the fedayeen themselves and by
Jordan, however, Sadat has necessarily concentrated
on the fedayeen, to the apparent detriment of Husayn.
Sadat has agreed, in concert with the other Arab
leaders, to recognize the Fatah-dominated Palestine
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Liberation Organization as the sole spokesman for
Palestinian interests, thus undermining Husayn's
claim to speak for the Palestinian inhabitants of
the West Bank. He has supported the establishment
of a Palestinian government-in-exile, thereby back-
ing Fatah leader Arafat's call for a Palestinian
state consisting of the West Bank and the Gaza
Strip.
The difference in Sadat's treatment of the Pal-
estinians and of Jordan--the difference between os-
tensible support for one and apparent neglect of the
other--lies in the position each occupies in the Arab
world. The fedayeen can undermine a settlement; Jor-
dan is unlikely to do so. The Palestinian cause com-
mands enough support in the Arab world to make its
abandonment dangerous; Husayn is so isolated that
disregard for his interests wins Sadat no black
marks from his Arab neighbors.
Sadat's relations with the Arabs thus require a
delicate balancing and a careful weighing of pri-
orities. Sadat wants a peace settlement with Is-
rael, but to get it he has begun a process that is
regarded with suspicion by the Arabs on whom the
stability of that settlement and the future of
Egypt depend.
He must balance Egypt's need for peace against
the requirements of economic and political support
from the other Arab states. Peace with Israel is
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not a recognized goal of the Arab cause, and Sadat
must maneuver carefully as he attempts to convince
the other Arabs that the time has come for a seri-
ous attempt to achieve a viable settlement of the
25-year conflict with Israel.
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FOR THE RECORD
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ISRAEL-EGYPT: Israeli forces are expected to
complete their withdrawal from the west bank of the
Suez Canal today as scheduled under the disengage-
ment agreement signed on January 18. The separation
of forces, which has proceeded smoothly, is to be
completed on March 5, when the Israelis are to with-
draw to the designated disengagement line in the
*Because of the shortage of time for preparation of this item, the analytic
interpretation presented here has been produced by the Central Intelli-
gence Agency without the participation of the Bureau of Intelligence and
Research, Department of State.
Feb 21, 1974
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