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December 15, 2016
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March 30, 2004
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March 14, 1974
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Approved For Release 2004/07/08 : CIA-RDP79T00975A026200190001-0 Top Secret Central Intelligence Bulletin Top Secret 38 c March 14, 1974 DIA and DOS review(s) completed. 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975A026200190001-0 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Approved For Release 2004/07/08 : CIA-RDP79T00975A0262001P0001-0 25X1 I 25X1 Central Intelligence Bulletin 25X1 LAOS - NORTH VIETNAM: Hanoi signals its support for coalition government and its satisfaction with effec- tiveness of cease-fire. (Page 2) PORTUGAL: State of alert lifted. (Page 3) OIL: Arab oil ministers' conference recesses. (Page 5) VENEZUELA: President wants new arrangements with foreign-owned oil companies. (Page 6) ECUADOR: Tough oil policy discourages new explora- tion. (Page 7) CHILE: Junta reaffirms plans for major changes prior to resumption of civilian rule. (Page 8) CHILE: Government and nationalized copper company reach agreement on compensation. (Page 10) WESTERN EUROPEAN UNION: French rebuffed at meeting this week. (Page 11) 25X1 FRANCE: Efforts made to extend life of aging stra- tegic bomber force. (Page 15) USSR-JAPAN: Progress made toward completion of joint coal-mining project. (Page 17) SPAIN: Government to stimulate economy. (Page 18) FOR THE RECORD: (Page 19) 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975A026200190001-0 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Next 1 Page(s) In Document Exempt Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Approv LAOS - NORTH VIETNAM: The surprise return of North Vietnamese Ambassador Le Van Hien to Vientiane yesterday after an effective absence of nearly ten years is a further manifestation of Hanoi's support for a coalition government and of its satisfaction with the results of the Laos cease-fire. Hien's presence should buoy the spirits of Prime Minister Souvanna, who has been discouraged over the recent lack of movement toward forming the new government. Soviet Ambassador Vdovin told the US ambassador earlier this week that Hien's arrival is linked to the early establishment of a coalition. The North Vietnamese have supported the Vien- tiane peace agreement Despite e ovie Ambassador's comments, however, Hanoi probably sees little reason to pres- sure the Pathet Lao to move more briskly in the ne- gotiations over implementation of the agreement. Hanoi seems to have judged it prudent to permit the Pathet Lao to move at their own measured pace toward a coalition because the North Vietnamese al- ready have gained a number of advantages through the cease-fire agreement that they do not wish to see jeopardized. These include an unchallenged buffer zone contiguous to North Vietnam and unim- peded use of the eastern Lao panhandle for logistic activity. Mar 14, 1974 Central Intelligence Bulletin 25X1 25X1 25X1 25X1 Approved For Release A4 proved For Release 2004/07/08 : CIA-RDP79T00975AO26209 *PORTUGAL: The state of alert in Portugal, during which troops were confined to their barracks, has been lifted. There are indications, however, that younger officers who sympathize with General Spinola, an advocate of greater autonomy for the overseas ter- ritories, are being quietly posted as far away from Lisbon as possible. The US defense attache reports This dispersal of officers suggests that right- ists are attempting to undercut Spinola's support in the military. Once this is achieved, they may feel more secure about disposing of Spinola himself. The reaction from Angola, one of the overseas territories, is mixed. Most civilian and military leaders seem relieved that Spinola's suggestion about self-determination has run into trouble. Some officials, concerned about a regression to the Salazar era, say that Portugal's African policy can never be the same, now that Spinola has spoken out. The media in Angola have supported Prime Minister Caetano's handling of the affair, although one edi- torial criticized the National Assembly for endorsing Caetano without having fully debated the issues. A communique issued after a cabinet meeting on Tuesday emphasized the country's economic problems and did not even mention the disruptive dispute over Mar 14, 1974 Central Intelligence Bulletin Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Appro the overseas territories. There have been rumors, but no confirmation, that a decision to revamp key cabinet ministries was made at the meeting. The government's reluctance to announce any such changes may be attributable to its concern that the informa- tion would increase tensions between the militar and the government. *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. Mar 14 , 1974 Central Intelligence Bulletin 25X1 25X1 Approved For Release Approl *OIL: The Arab oil minister's' conference in Tripoli recessed Wednesday evening without making any announcement about the oil embargo or future oil-production levels. It will reconvene on Sunday in Vienna, where the Organization of Petroleum Ex- porting Countries will be meeting to discuss oil prices. The official reason given for postponement: was to allow time for the ministers to consult with their governments. According to a report from the US Embassy in Tripoli, the conference ended apparently in a dead- lock. There appeared to be a chance for an agree- ment up until the last moment, when Libya and Syria decided to hold out against lifting the embargo. A high Libyan official, however, told the press after the conference that the ministers had, in fact, de- cided to end the embargo. Nine of the ten member-nations of the Organiza- tion of Arab Petroleum Exporting Countries were rep- resented at the Ti oli meeting. Ira boycotted .the conference. *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 ol' Intelligence and Reseutrch, Department of State. Mar 14, 1974 Central Intelligence Bulletin 25X1 25X1 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975A026200190001-0 Appr~ved For Release 2004/07/08 : CIA-RDP79T00975A026200110001-0 25X1 VENEZUELA: President Carlos Andres Perez told a visiting US official this week that his administra- tion is planning to work out a new arrangement with the foreign-owned oil companies operating in Venezuela. Perez said it would be impossible to continue the present concessionary arrangements until they be- gin to expire in ten years, and that some change would be necessary. Nevertheless, he expressed hope that the oil companies would make the first move by pre- senting their ideas on the subject, and he promised that his administration would respond. Perez' remarks--in private as well as during the campaign and in his inaugural speech this week--indi- cate that he intends to proceed at a deliberate pace, disregarding leftist and nationalist calls for imme- diate nationalization., He appears willing to con- sider recommendations of the oil companies as well as advice from a broadly based commission that he in- tends to set up to advise the government on possible alternatives for operating the oil industry. Once he has these recommendations, Perez is expected to draw up legislation to take over the industry. The President has set no timetable, but he clearly does not intend to allow the talks with the oil companies to continue indefinitely. Mar 14, 1974 Central Intelligence Bulletin 25X1, Appr1oved For Release 2004/07/08 : CIA-RDP79T00975A02620q190001-0 ECUADOR: Only two foreign firms have,bid for new oil-exploration rights in Ecuador. The-lack of interest among other companies is one of the dis- couraging effects of Quito's highly nationalistic petroleum policy, which the companies feel overly, restricts foreign investors. It may forebode the political eclipse of Gustavo Jarrin, the influential minister of natural resources and author of the mil- itary government's oil policy. Because of the high prices for petroleum, Quito had expected keen competition in the bidding, but of the 35 firms that had expressed interest, only the Argentine and Polish state oil. companies actually submitted bids. The other companies apparently con- cluded that the areas offered for exploration did not have the potential to justify acceptance of. Quito's terms. The terms are stiffer than those for Texaco-Gulf, the only current producer in Oriente, the eastern region of Ecuador. Last August, Texaco- Gulf signed a 20-year contract which, in accordance with the 1972 hydrocarbons law, provides that all oil company property, including machinery and equip- ment, will revert to the state at no cost when the contract expires. Since the Rodriguez government took power in 1972, Quito has dramatically increased its control over the petroleum industry. During ..this period, little additional petroleum of commercial quantity or quality has been discovered. In addition to Texaco-Gulf, other foreign-owned companies. are ex- ploring in Oriente, but only one is likely to enter production--and only on a modest scale--within the next few years. . A sharp increase in petroleum revenues--esti- mated at over $600 million for 1974--will ease pres- sure for immediate changes in the government's na- tionalistic policies. Even without further oil de- velopment, total government revenues this year could be two and a half times those of 1972. Nevertheless, the low turnout of bidders will contribute to an eventual modification of exploration policy. Mar 14, 1974 Central Intelligence Bulletin 25X1 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Appr7 *CHILE: Pronouncements marking six months of government by the armed forces and carabineros strongly reiterate the regime's determination to re- structure Chile's political, economic, and social systems before allowing a return to civilian rule. These statements outline the regime's plans for the creation of a "social democracy" free of the partisan politics of the past. The military and police will eschew reliance on any organized polit- ical group and attempt to create their own base of mass popular support through a highly structured chain of command extending from the junta to neigh- borhood councils. Participation will be compulsory. Junta President Pinochet emphasized the regime's sympathy with the low-income groups that are bearing the brunt of the economic recovery program. He de- clared that further privations lie ahead, but he promised that "the same generation will reap the fruits of these sacrifices." Pinochet also noted that new taxes will spread the burden more evenly and warned "those who seek only their own profits and ignore their social duties" that drastic penal- ties will be imposed for violations of economic regulations. Former Christian Democratic Party head Eduardo Frei was the only living ex-president not present to hear Pinochet's speech. He reportedly had planned to attend but changed his mind following publication of the social development paper, a portion of which strongly attacked his party, (continued) Mar 14, 19 74 Central Intelligence Bulletin 25X1 25X1 25X1 Appro Nevertheless, yesterday's press confirmed that the document did not come from the junta. This pub- lic disclaimer seems to represent a significant ges- ture toward the Christian Democrats on the part of the government. 25X1 25X1 *B CC,[ ISC of the shortage 01' time for prep ration of tilis item, t I I C analytic interpretation presented here has been produced by the Central Intelli- gence Agency without the participation of' the Bureau of Irltclligcnce and Research, Department of' State. Mar 14, 1974 Central Intelligence Bulletin 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Appro CHILE: Santiago has signed a $41.8-million com- pensation agreement with Cerro Corporation for copper investments nationalized by the Allende government in 1971. The Allende government had agreed to compensate Cerro but was ousted before a settlement could be con- cluded. A cash payment of $3.2 million was made to Cerro at the signing on March 12, and the remaining $38.6 million is to be paid within 17 years. Santiago agreed to Cerro's request that payments be free from Chilean taxes. Cerro has managed the nationalized mines since expropriation, and plans to continue this relationship. Talks continue with two other US copper firms, Anaconda and Kennecott, whose properties were also nationalized. The two firms value their assets at around $600 million, but Santiago reportedly is of- fering far less. Negotiations are likely to be more protracted than those with Cerro, because there are substantially larger sums involved and the issues are more complicated. A timely settlement would pave the way for renewed activity by Anaconda in the Chilean copper industry through technical assistance and management contracts. Kennecott, on the other hand, has evinced no interest in returning to Chile. The accord with Cerro should encourage new for- eign investments and credits. It will also reassure major Western creditors as March 25, the date the Paris Club members are to sign a draft accord on Chilean debt reschedulin , draws near. Mar 14, 1974 Central Intelligence Bulletin 25X1 25X1 Approved For elease / 0 `1 - Approved For Release 2004/07/08 : CIA-RDP79T00975A026;00190001-0 WESTERN EUROPEAN UNION: The French failed at the annual foreign-ministers' session of the seven- nation Western European Union this week to win ap- proval for reactivation of the moribund Standing Armaments Committee. The participants decided to refer the French proposal to the union's permanent council for further study. The French wish to share in the lucrative European arms market but want joint European arms procurement to be discussed in the union rather than in the NATO Eurogroup, from which Paris has excluded itself. The other six members of the union supported armaments cooperation in the Eurogroup, with only Italy showing any sympathy for the French position. The French contended that it was politically impos- sible for them to cooperate in the Eurogroup because of its close link to NATO. The others chose not to discuss a proposal made by Belgium at a previous meeting to use French interest in the European arms market to edge Paris toward some linkage between the union and Eurogroup. Despite its formal status as a meeting of foreign ministers, the only partici- pants of ministerial rank who were present were Dutch Foreign Minister van der Stoel, the host, and Luxem- bourg Foreign Minister Thorn. A West German Foreign Office official has in- dicated that Bonn takes a somber view of the pros- pects for European defense cooperation. The West Germans see the armaments field as the most promising area for progress toward defense cooperation. De- spite French attempts to persuade the other six to deal with arms questions in the union rather than in the Eurogroup, the West Germans plan to continue pressing forward in the latter arena. In order to prevent the isolation of France, however, Bonn plans to continue to examine the possibility of armaments cooperation between the Eurogrou and the union's Standing Armaments Committee. F 25X1 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975A026200190001-0 Mar 14 , 1974 Central Intelligence Bulletin 11 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Next 1 Page(s) In Document Exempt Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Approved For R Iease 2004/07/08 : CIA-RDP79T00975 026200190001-0 25X1 Approved For Pelease 2004/07/08 : CIA-RDP79T00915AO26200190001-0 FRANCE: The French may modify their aging Mirage IV strategic bomber force to extend the serv- ice life of these aircraft to about 1985. According to recent press reporting, the government has asked the air force general staff to study how the bomber fleet can be kept in service until that date. Pres- ent plans ca 1 for the aircraft to remain in service until 19 80 . 25X1 25X1 The first Mirage IV squadron entered service some ten years ago, and the entire fleet is suffering from maintenance and aging problems. Four bombers crashed. during a seven-month period last year; at least two of the accidents were attributed to mechan- ical failure. In addition, the bombers have been subjected to greater stress than planned because of a change in mission-flight profile. The Mirage IV, which was designed for high-altitude use, has been flown as a low-altitude attack bomber since 1969, with resulting strain on the aircraft structure. The. change in flight profile was required in order to de- crease the bombers' vulnerability to Soviet air de- fenses. The French apparently. have no plans for a fol- low-on strategic bomber, although they expect to have a multipurpose tactical fighter with a deep-strike 25X1- 25X1 capabilitV operational by the of this decade. Mar 14, 1974 Central Intelligence Bulletin 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Appro Japanese Interested In Siberian Resources .1 1 25X1 25X1 Approved For Release 2004/07/08: CIA-RDP79T 09 - Appr USSR-JAPAN: The USSR and Japan initialed a document last week that could pave the way for one of their biggest economic deals. If final agreement is reached, the Japanese will provide $400 million to help finance a coal- mining project in Yakutsk. In return, Japan will get more than 5 million tons of coking coal annually for 16 years, beginning in 1983. The terms of the Japanese credit and the price of the coal are among the important details that have to be worked out at negotiations in Tokyo later this month. The Japa- nese, who found the Soviets more disposed to nego- tiate than before, are confident that an agreement will soon be reached. The Yakutsk project thus seems closer to getting off the ground than the other prospective projects in Siberia. The outlook is not so favorable for joint development of oil, gas, or timber. The project with the next best chance of suc- cess involves exploration for Sakhalin oil. Soviet trade and banking officials are expected in Tokyo soon to.discuss Japanese loans for this project. The USSR has been asking for $200 million; the Japanese have been offering substantially less. The preliminary agreement on the Yakutsk coal project is the first tangible sign that the long deadlock between the USSR and Japan over exploration of Siberian resources may have ended. Just before the Japanese delegation arrived in Moscow to nego- tiate the coal agreement, General Secretary Brezhnev sent Prime Minister Tanaka a message urging joint development in Siberia. Their desire to press ahead also suggests the Soviets are concerned that Tokyo's relations with Moscow are taking a back seat to its relations with Washington and Peking. Serious obstacles nevertheless remain. The Japanese need US equipment to undertake the Yakutsk oil and gas project, but US participation is threat- ened by restrictions on Export-Import Bank financing for the USSR. The Soviets, for their part, think that because Japan has been hit hard by the energy crisis it will eventually have to meet Moscow's terms. Mar 14 , 1974 Central Intelligence Bulletin 17 25X1 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 App 25X1 SPAIN: Spain stands almost alone among West European countries in its decision to stimulate the economy in order to counter the adverse effect of high petroleum prices on demand. Madrid hopes to lift the growth rate this year above 5 percent, one of the most ambitious targets in Western Europe. The shift in Madrid's policy will cause a sub- stantial budget deficit instead of the small surplus anticipated earlier. The government will spend an additional $500 million to subsidize petroleum pro- ducts as a means of shielding the private sector from the effects of price increases. On the tax side, the government will reintroduce the investment tax credit that was used successfully in 1971 to stimulate the economy. Monetary policy will also become more expansion- ary. The growth rate of bank credit--extremely high last year--will probably be increased again this year. A more effective export-financing program designed to help reduce the trade deficit and boost the domestic economy is also planned. Although the new, expansionary measures will lift the growth rate, they will also add pressure to the rate of inflation, already among the highest on the continent. Moreover, a high growth rate will stimulate imports, thus worsening the balance-of-pay- ments deficit. Madrid apparently expects to meet this problem by borrowing abroad and drawing down is substantial foreign reserves. Mar 14, 1974 Central Intelligence Bulletin 25X1 25X1 25X1 Ap proved For Release 2004/07/08 : CIA-RDP79T00975AO262001 German : The two German governments today will sign the protocol authorizing the exchange of permanent missions. Bonn's mission will pro- vide full consular services for West Berliners. Mar 14, 1974 Central Intelligence Bulletin 25X1 25X1 25X1 Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 25X1 pproved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0 Top Secret Top Secret Approved For Release 2004/07/08 : CIA-RDP79T00975AO26200190001-0