CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026400130001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 25
• Document Creation Date: December 15, 2016
• Document Release Date: May 14, 2004
• Sequence Number: 1
• Publication Date: May 10, 1974
• Content Type: REPORT

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Central Intelligence Bulletin
State Dept. review completed
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C 308
May 10, 1974
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May 10, 1974
Central Intelligence Bulletin
CONTENTS
KOREA: Two US helicopters fired on near demilitarized
zone. (Page 1)
SPAIN-PORTUGAL: Implications of Portuguese coup de-
bated in Madrid. (Page 2)
DENMARK: Parliamentary maneuvering delays call for
early elections. (Page 5)
CSCE: Western heads of government likely to be
pressed to attend final phase of CSCE. (Page 7)
USSR-CHINA: Soviets increase media coverage of heli-
copter incident on China border. (Page 11)
JAPAN-CHILE: Japanese business interests increase
involvement in Chile. (Page 13)
LAOS: Rightists unhappy over Prime Minister's deci-
sion not to convene National Assembly. (Page 14)
MALAYSIA-CHINA: Stage set for opening of diplomatic
relations. (Page 15)
VIETNAM: More fighting in store for the highlands.
(Page 17)
FOR THE RECORD: (Page 21)
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U S Helicopters Harassed by Fire
Sibyon-ni
?
Kumch'on
Kaesong
DEMARCATION,SU of hostile fire
LIVE -
i ) XSite of precautionary landing
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KOREA: Two US helicopters were fired upon early
yesterday morning while flying a routine reconnais-
sance mission near the demilitarized zone. One heli-
copter sustained minor damage and made a precautionary
landing; the other was undamaged.
No US casualties were reported, although Seoul
claims that one civilian was injured. The pilots re-
ported tracer fire from North Korea and estimated
that over 500 rounds were expended against them. Pre-
liminary reporting indicates that the helicopters were
over South Korean territory when fired upon and that
they did not violate North Korean airspace.
Pyongyang's apparent willingness to fire on these
aircraft is probably an isolated incident similar to
several that have occurred in the past few years. In
this case, the firing may have been a reaction to re-
cent unfounded charges by Seoul that the North has
fired artillery shells across the DMZ.
The North Koreans have already reacted to this
incident. Pyongyang claimed last night that the
South Koreans had sent a helicopter on an espionage
mission over North Korean territory near the Yimjin
River estuary, where it drew fire from ground forces.
The incident is certain to draw countercharges
from Seoul, but neither side is likely to take any
additional action.
May 10 , 1974 Central Intelligence Bulletin
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SPAIN-PORTUGAL: The Director General of the
Spanissi Foreign Ministry told a US Embassy officer
recently that the Spanish Government is divided over
the implications for Spain of the overthrow of Por-
tugal's right-wing government.
in general, it appears that those opposed to
the tight control Franco maintains in Spain are draw-
ing encouragement from the coup in Portugal. The
more conservative members of the establishment, on
the other hand, see it as a further reason to proceed
cautiously with the liberalization program that Pre-
mier Arias announced three months ago. For the
Spanish, Portugal, in effect, has become a proving
ground for both points of view.
Opposing points of view have also been aired in
public speeches and the media. Initial press cov-
erage in Spain of General Spinola's takeover was
uniformly favorable. Within a few days, however,
commentators began mentioning the possibility that
events in Portugal might get out of control because
of the increasing influence of the left. Some Span-
ish correspondents are still featuring Spinola's in-
tentions to democratize Portugal, presumably to draw
attention to the advisability of a similar course
in Spain.
Recent statements by three prominent political.
figures have added to the controversy. Two of the
statements defended the conservative point of view
and warned against the machinations of "false lib-
eras" and the evils of formal political associations.
The other statement, made by a cabinet minister,
criticized those who wish to remain immobile and
encouraged the Spanish establishment not to "enclose
itself in a defensive bunker."
The debate in Spain on these issues may inten-
sify in the near future. Yesterday, Spanish police
routed thousands of Madrid University students who
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were demonstrating in favor of the new regime in
Lisbon. Spanish hard-liners are certain to point to
disorders of this kind to illustrate the dangers of
a sudden relaxation of controls.
There is some evidence, however, that a number
of Spanish officials are impressed by the pledges of
support Portuguese Socialist :Leader Mario Soares re-
ceived during his recent tour through Western Europe.
If Spinola's reforms succeed in Portugal and pave the
way for entry into the European Community, proponents
of a similar liberalization in Spain will multiply.
May 10 , 1974 Central Intelligence Bulletin
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*DENMARK: Some adroit parliamentary maneuvering
by Prime Minister Hartling has delayed the calling
of a new election. Parliament, however, still has
to vote on the Prime Minister's controversial tax
measures next week.
After an all night debate on Hartling's tax pro-
posals, parliament adopted an unusual confidence mo-
tion in the government. A number of members who
have announced their opposition to the tax increases
voted for the resolution.
The Social Democrats and Mogens Glistrup's anti-
tax party, Denmark's two biggest political parties,
have refused to go along with the minority govern-
ment's sweeping tax changes. The Prime Minister had
threatened an early election as a calculated gamble
aimed at winning the support of the other opposition
parties, who are fearful that an early election will
further erode their parliamentary standings.
In last December's election, all the established
parties lost ground. Glistrup's anti-tax party, how-
ever, was one of the few gainers. Since that time,
only his party and the Social Democrats have shown
improvements in the public opinion polls.
Hartling's minority government holds only 22 of
the 179 parliamentary seats. It has managed to sur-
vive since December with the informal backing of two
other small parties and the Social Democrats.
Hartling's taxes are aimed at reducing imports,
the second time in two weeks that an EC country has
adopted such measures. The government imposed a
sales tax surcharge on a wide range of consumer dura-
bles and luxury goods, many of which are imported.
The surcharge will increase the consumer price of
television sets by 50 percent, home appliances by
33 percent, and automobiles by 25 percent.
(continued)
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A 25-percent tax was also imposed on electricity
consumption to reduce demand for imported coal and
oil. Danish electric utilities depend almost en-
tirely on these fuels to generate power. The higher
cost of oil and coal imports has helped to boost
Denmark's first quarter trade deficit to $700 mil-
lion, double that for the same period last year.
EC officials reportedly are annoyed by the Dan-
ish measures, viewing them as a move toward in-
creased protectionism similar to the Italian import
surcharge. Community spokesmen admit, however, that
the Danish move is legal under the EC treaty. Bonn
announced yesterday that it will not take counter-
measures to the actions by either Rome or Copenhagen.
I
*Because of the shortage of time for preparation of this item, the
analytic interpretation presented here has been produced by the
Central Intelligence Agency without the participation of the Bureau
of Intelligence and Research, Department of State.
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CSCE: Western heads of government are likely to
be under strong pressure to attend the third and con-
cluding phase of the CSCE, which Moscow is anxious
to crown with a final summit agreement. Many West
European participants strongly oppose the Soviet
plan unless Moscow makes substantial concessions,
especially on freer movement of persons and ideas.
Western delegations now are more pessimistic
than ever about prospects for a rapid or successful
conclusion of the CSCE, because the expected Soviet
concessions on freer movement have failed to materi-
alize. Although Moscow was expected to hold back
on concessions until the last minute, many Western
delegates are now saying that unless the Soviets
make a move soon, it may be too late to convince
Western opinion to accept the results as being worth
a summit conclusion.
Despite the prevailing air of pessimism, a re-
cent review of the outlook for the final phase of
the CSCE by the US delegation concludes that atten-
dance by most heads of government at the signing
ceremonies is likely. The review notes that a con-
sensus of all delegations is required to implement
plans for the level of participation in the final
phase. The Warsaw Pact nations have already declared
that they will oppose a final phase at the foreign
ministers' level. The most likely outcome therefore
will be general agreement to allow each participant
to determine the level of their participation.
A decision by the Warsaw Pact and nonaligned
heads of government to participate in the final phase
of the conference, however, would create external
and internal political pressures to attend that few
West European leaders could resist. The ensuing
summit meeting of most of the leaders of the 35 par-
ticipating European and North American states would
be regarded as evidence that the West considered the
conference a complete success. The EC Nine have
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recognized this danger in a draft position paper,
which recommends against leaving it up to each par-
ticipant to decide the level of its delegation to
the final phase.
Some Western participants are still confident
that Moscow will make concessions, if for no other
reason than that the Soviets desire a summit finale
and completion of the conference this summer. Real-
ization of this goal is increasingly unlikely, despite
the substantial progress made during the pre-Easter
session. Most of the major issues remain unresolved,
and if the West continues to hold out for further So-
viet concessions it will probably take most of the
summer to complete an agreement. An early fall date,
possibly October, for the final session thus appears
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USSR-CHINA: After two months of relative re-
straint, the Soviets have begun a press campaign on
the incident last March that resulted in a helicopter
crew being held by the Chinese. In the last few days,
there have been two articles in Literary Gazette, one
in the military newspaper Red Star', and several radio
commentaries
The coverage, which seems aimed at getting the
Soviet version of the helicopter incident firmly on
record, suggests Moscow has lost hope of getting the
crewmen back any time soon, It may also indicate
that the Soviets have little hope of preventing Peking
from holding a show trial.
The campaign is not yet 'very extensive, but it
could develop into a full-fledged, anti-Chinese cam-
paign. Moscow will probably stop short of that, how-
ever, for fear that heightened Sino-Soviet tensions
could be exploited by the US at the coming Soviet-US
summit.
The commentaries portray the Soviet helicopter
crew as innocent victims of China's anti-Sovietism.
Some new details, allegedly based on transcripts of
tape recordings of the pilot's remarks just before
landing, are offered to buttress the Soviet case that
the helicopter was on a legitimate mercy mission.
One article on the family of the helicopter commander
made a mawkish appeal for public sympathy.
The articles reiterate the warning made in Mos-
cow's formal protest to the Chinese on May 2 that
China will face the "inevitable consequences" if the
helicopter crew is not immediately returned. The
articles made no threat of specific action, however,
and China issued a similar warning when it protested
t:ze incident on March 23.
China has turned aside Moscow's "demand" of May
4 that Ambassador Tolstikov in Peking be allowed to
meet with the Soviet crew. Chinese officials in Mos-
cow maintain that Tolstikov was told only that the
May 10 , 1974 Central Intelligence Bulletin
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crewmen would be dealt with according to "Chinese
law." Peking has not responded yet to the new Soviet
campaign. It has not answered Moscow's last two pro-
tests and has privately equivocated on the question
of a trial of the Soviet airmen. Given the current
political tensions in China, the Chinese may still be
undecided about how to play the incident.
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JAPAN-CHILE: Japanese business interests are
increasing their involvement in Chile.
Private Japanese investment in Chile now totals
about $65 million in loans and equities, but this
figure will probably increase substantially in the
next few years. Japanese firms are prepared to spend
close to $60 million to resume development of an
iron ore deposit--suspended since 1970--and another
$30 to $50 million to finance construction of an
iron ore pelletizing plant, another delayed venture.
In return for the pelletizing plant, Chile will pro-
vide Japan 7.5 million tons of concentrates over a
three-year period. Japan already buys most of Chile's
iron ore production. The Japanese are also leading
buyers of Chilean copper, and they may invest in
copper enterprises in return for increased supplies
of refined copper.
A leading Japanese automaker.,,the Nissan Motor:
Company, is about to begin assembling autos in Chile
in a joint venture with Santiago. Nissan may pro-
vide a $22-million loan for the enterprise and has
promised to invest an additional $9 million to build
an automobile parts plant. Plans call for output
of 14,000 cars annually by 1980.
A Japanese trading company recently provided $12
million in commercial credit to finance Chilean pur-
chases of Japanese equipment. This loan, the first
of its type since the fall of the Allende government
last September, will likely be followed by more.
Financing by Japan's Export-Import Bank, however,
will probably await resumption of US Exim Bank lend-
ing to Chile.
Tokyo is not now considering concessionary aid
to Santiago. Such aid may eventually be extended,
however, to help develop Chile's resources and in-
frastructure, to facilitate shipment of raw materials
to Japan, and to promote exports of Japanese equip-
ment. Tokyo has granted concessionary aid to other
countries in the past for imilar purposes.
F Is
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LAOS: Right-wing elements are disturbed over
Prime Minister Souvanna's recent decision not to open
the National Assembly tomorrow. The US Embassy re-
ports that conservative politicians are bitter about
Souvanna's concession to the Lao Communists on this
matter and are unhappy that rightist cabinet ministers
failed to defend their interests. The rightists also
reportedly believe that their defeat on the first
major political issue faced by the new coalition gov-
ernment reflects the lack of unity and leadership on
their side.
Defense Minister Sisouk was particularly depressed
about the political portents of the assembly affair.
He indicated to the US ambassador earlier this week
that it was unlikely that the disorganized rightists
could pull themselves together and try to regain the
political initiative from the Communists.
Souvanna, meanwhile, appears confident that any
last-minute efforts by the rightists to persuade the
King to reverse the decision on the assembly will fail.
According to Souvanna, the King has reacted calmly to
the decision and has assured the Prime Minister that
he was ready to accept any and all recommendations
made to him by the new government.
May 10 , 1974 Central Intelligence Bulletin
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MALAYSIA-CHINA: The stage is set for the opening
of Sino-Malaysian diplomatic relations. A joint com-
munique on recognition was initialed late last week
following protracted negotiations at the UN. Malay-
sian Prime Minister Razak will visit Peking at the
end of the month for the signing of the communique.
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Malaysia will be the only member of the Associa-
tion of Southeast Asian Nations (ASEAN) to have diplo-
matic relations with Peking. Other members are not
likely to follow its lead soon. Indonesia and Singa-
pore have strong reservations about ties with Peking,
the new civilian leadership in Thailand is following
a measured pace in resuming a dialogue with the Chi-
nese, and the Philippines has expressed interest but
taken no concrete steps.
Razak intends to explain Malaysia's move to the
other members of ASEAN and try to ease their fears
of subversion staged from a Chinese diplomatic mission
in Kuala Lumpur. He has already met with Indonesian
President Suharto and has
Yew to visit Kuala Lumpur
May 10, 1974
invited Singapore's Lee Kuan
in the next few weeks.I
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More Fighting' in Store for the Highlands?
The North Vietnamese over the past few months
have augmented their combat forces in the central
highlands of South Vietnam's Military Region 2. Com-
munist combat units have shifted closer to Kontum
and Pleiku cities over the past few weeks, and skirm-
ishing around these provincial capitals is probably
a Communist effort to keep the government on the de-
fensive and away from important base areas and infil-
tration routes.. The relatively slow pace of infiltra-
tion to the highlands this dry season, however, suggests
that the North Vietnamese are not planning a large-scale
offensive in this region in the next few months.
At various times, both sides have had the initia-
tive in the highlands since the cease-fire. Aware
that the North Vietnamese were understrength, General
Toan, the MR 2 commander, has conducted operations
along the fringes of Communist-held territory in an
attempt to draw the enemy into the open where he could
use his air and artillery firepower. Toan's strategy
has generally failed. North Vietnamese strategy, on
the other hand, seems to have centered on protecting
their infiltration routes and eliminating isolated
government outposts. They have made only a few
attempts to occupy some contested or government-con-
trolled territory.
The first of these confrontations took place last
June when government troops moved to reoccupy the vil-
lage of Trung Nghia in Kontum Province, which had been
seized by the Communists shortly after the cease-fire
of January 1973. After three months of heavy fighting,
the South Vietnamese retook the village.
In late September, North Vietnamese tanks and
infantry troops, supported by artillery fire, forced
the government to abandon an outpost at Plei Djereng
in nearby Pleiku Province. The base remains in Com-
munist hands, despite government attempts to recap-
ture it.
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Last fall, heavy fighting broke out in Quang
Duc Province. The Communists used a mixed force of
armor, artillery, infantry, and sappers to drive
South Vietnamese units from several outposts alonq
the Cambodian border. The bases were close to the
new infiltration route that the North Vietnamese were
then building through that sector, and the Communist
objective was to secure the route from government
harassing attacks. Thus far, the South Vietnamese
have managed to recapture only one of the positions,
the Dak Song outpost. Two others remain in Communist
hands
In more recent fighting around Kontum City,
limited government attempts to cut Communist roads
have resulted in severe North Vietnamese reaction.
These counterattacks, plus more recent attacks in
Pleiku Province, may indicate a North Vietnamese
attempt to keep the South Vietnamese relatively dis-
persed.
Communist Buildup
Since the cease-fire in January 1973, the North
Vietnamese have steadily enlarged their combat forces
in the highlands, where they now have 25,000 troops,
compared to 38,000 for the military region as a whole.
These new troops are enabling the Communists to re-
build understrength units and begin to establish a
manpower pool. The infiltration total, however, is
considerably lower than in past years--an indication
that the North Vietnamese are not preparing for a
large-scale offensive any time soon.
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The buildup in air defenses has already caused
the South Vietnamese Air Force to change its inter-
diction tactics. Some government aircraft attacking
Communist targets in heavily defended areas of Kontum
and Pleiku provinces are now dropping their bombs
from as high as 20,000 feet, significantly reducing
their effectiveness.
The South Vietnamese have approximately 78,000
men under arms in MR 2, including two infantry divi-
sions, seven Ranger groups, and one armored brigade.
The South Vietnamese Air Force provides tactical
support to these forces. The bulk of the government's
combat forces (45,000 men) is :Located in the western
half of the region.
Although the government holds a significant ad-
vantage over the Communists in terms of troop strength,
many of the government units have very poor combat
records. A number of MR 2 units also have high
desertion rates.
The South Vietnamese now find themselves manning
defensive positions in Kontum, Pleiku, Darlac, and
Quang Duc provinces. Many government positions, in-
cluding those around the provincial capitals of Kontum
and Pleiku, are difficult to resupply and reinforce.
The roads pass through rough terrain and are easily
interdicted.
(continued)
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Although the Communists are obviously better
off than they were a year ago, they still lack a
clear military superiority. In fact, neither the
government nor the Communists seem to have much of
an edge. Even now, Saigon has nearly twice as many
combat troops in the highlands as the Communists
have, although this advantage is partly offset by
North Vietnamese firepower.
As long as this balance remains relatively intact,
neither side is likely to make any large-scale combat
commitment of its forces. The government, however,
may be more cautious in its operations into Communist-
held territory now that the North Vietnamese units
are operating at close to normal strength. For their
part, the Communists still seem primarily interested
in defending their territory, rather than in launching
a major offensive. They may well be content to feign
attacks toward the provincial capitals of Kontum and
Pleiku in an attempt to tie down the South Vietnamese
and keep them on the defensive.
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Ethiopia: Prime Minister Endalkatchew has ac-
cepted the resignation of Foreign Minister Minassie
Haile, one of the few holdovers from the previous
cabinet. His resignation will probably have little
effect on foreign relations, but it may be the fore-
runner of additional cabinet resignations that could
lead to the fall of the present government.
May 10 , 1974 Central Intelligence Bulletin
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