NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026800010004-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 29
• Document Creation Date: December 20, 2016
• Document Release Date: March 23, 2006
• Sequence Number: 4
• Publication Date: July 19, 1974
• Content Type: REPORT

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Top Secret
r? C. 3
National Intelligence
Bulletin
State Dept. review completed
Top Secret
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National Intelligence Bulletin
July 19, 1974
CONTENTS
CYPRUS: Makarios to address UN Security Council today.
(Page 1)
EGYPT-JORDAN: Husayn wins concession on right to nego-
tiate return of West Bank. (Page 4)
USSR - MIDDLE EAST: Soviets discuss Middle East issues.
(Page 8)
IRAN: Firm's need for capital opens way for Iranian
purchase of stock in West German steel firm. (Page 9)
EUROPEAN COMMUNITIES: Finance ministers fail to agree
on handling of oil-related trade and payments problems.
(Page 10)
CAMBODIA: Government forces retain initiative on sev-
eral battlefronts. (Page 13)
SOUTH VIETNAM: Communist logistic and tactical military
activity increases in the northern part of the country.
(Page 15)
PHILIPPINES: Marcos orders reassessment of counterin-
surgency programs in Muslim south. (Page 17)
PHILIPPINES: Negotiations on new economic agreement
end abruptly. (Page 19)
PORTUGUESE AFRICA: More evidence that Lisbon's control
over territories is eroding. (Page 20)
PERU: Government reportedly preparing to assert con-
trol over press. (Page 23)
CUBA-PANAMA: Countries may soon initiate air link. (Page 24)
CHILE: Christian Democratic Party challenges government
on censorship. (Page 25)
FOR THE RECORD: (Page 26)
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National Intelligence Bulletin July 19, 1974
CYPRUS
Archbishop Makarios' appearance before the UN Se-
curity Council this afternoon will raise the curtain on
the Council's first detailed consideration of the Cyprus
crisis. An earlier meeting on Tuesday was inconclusive.
Makarios will ask for a resolution declaring him
the legitimate head of the government of Cyprus, call-
ing for the withdrawal of the Greek officers in the
Cypriot National Guard, and pledging nonrecognition of
the new Cypriot government.
The US mission to the UN reports that withdrawal--
not just replacement--of the Greek officers of the
Guard has become the "irreducible minimum" that nearly
all Security Council members want in any resolution.
The draft being circulated by five nonaligned members
of the Council contains that provision but avoids the
question of Makarios' legitimacy.
The Soviets want to make the resolution tougher by
referring to Makarios as President of Cyprus, alluding
to Greek interference in Cyprus' internal affairs, and
demanding the immediate cessation of Greek military
intervention. The UK is also proposing amendments to
toughen the resolution.
Cypriot representation at today's Council session,
however, is likely to be confused. Although he has
been dismissed by the Sampson government, Makarios' UN
ambassador continues to function as the Cypriot repre-
sentative. Meanwhile, the Sampson government is send-
ing its own delegation to the UN.
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Athens has told NATO that Greek officers put at the
disposition of the Cypriot government will. be replaced
in stages. Athens appears to be referring to the Greek
officers in the National Guard who were involved in the
coup, rather than the Greek mainland contingent sched-
uled to be replaced today during its semi-annual rota-
tion.
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July 19, 1974
Greek Cypriot troops have launched a massive man-
hunt for left-wing and pro-Makarios supporters. More
than 1,000 have been arrested, according to press ac-
counts.
In a press conference yesterday, newly installed
President Nicos Sampson said he would visit Athens soon
for consultations with the Greek President. He deni-
grated the Makarios regime but pledged to continue its
foreign policies, including "enlarged" talks between
the Greek and Turkish communities on the island. In an
attempt to create a responsible image for itself, the
new government has been broadcasting a report that
Glafcos Clerides, Makarios' constitutional successor,
has agreed to continue as the Greek Cypriot representa-
tive in these talks. The Yugoslav ambassador to Cyprus
told the US embassy, however, that Clerides had categor-
ically denied to him that he would be willing to serve
as representative of the Sampson government.
Turkish Prime Minister Ecevit returned to Ankara
this morning from talks in London and said he was
"closer to finding a solution." Parliament will recon-
vene on Saturday to discuss the Cyprus problem. F_
The Turkish government can expect a strong endorse-
ment from all political parties if it recommends inter-
vention. Its armed forces remain in an advanced stage
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National Intelligence Bulletin
July 19, 1974
King Husayn won a major concession from President
Sadat yesterday in his effort to assert Jordan's right
to negotiate for a return of the Israeli-occupied West
Bank without Palestinian interference.
A joint communique, issued at the conclusion of
Husayn's three-day visit to Alexandria, notes that both
Jordan and Egypt agree on the need for a disengagement
agreement on the Jordanian front as the next step toward
a settlement. Husayn has been pressing this position
himself, but because it implies exclusion of the Palestin-
ians in the next stage of negotiations,Sadat had previously
avoided confronting the issue directly. The communique
appears to accede to Husayn on Palestinian representation
at the Geneva peace conference, giving the Palestine
Liberation Organization the status of legitimate represen-
tative of Palestinians outside the Kingdom of Jordan.
The wording does not precisely define the limits of
"Jordan," omitting specific reference to the West Bank,
which both Jordan and the Palestinians claim. This ambi-
guity could allow Sadat to claim that he considers the
PLO as the spokesman for West Bank Palestinians. Husayn
can and will claim the opposite, however, and, taken in
conjunction with the call for disengagement negotiations
in Jordan, the statement in effect commits Sadat to
Husayn's position.
In the joint statement Husayn supports the need for
an independent PLO delegation at Geneva, but the commu-
nique puts this off until an unspecified "appropriate
time" and refers only to the Palestinians' right to
"self-determination." Husayn is on record as ready to
allow Palestinian self-determination after he has nego-
tiated the territorial question, whereas the PLO considers
itself the only proper negotiator for the West Bank.
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By its imprecise wording, the communique allows
Sadat an out on this question as well, but again he appears
implicitly on Husayn's side. He may now hope to be able
to persuade the Palestinians to accept Husayn's views,
in the expectation that the PLO can work for an independ-
ent state after an Israeli withdrawal from the West Bank.
The communique marks Sadat's first attempt to take
a clear public stand in his controversial effort to coor-
dinate the conflicting Jordanian and Palestinian positions.
It affirms Egypt's and Jordan's agreement that "continued
and regular" coordination must take place with the Pales-
tinians and Syria, but Sadat faces bitter criticism from
the Palestinians, who will interpret his accord with
Husayn as an abandonment of their cause.
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National Intelligence Bulletin July 19, 1974
USSR - MIDDLE EAST
The Soviets have reiterated their interest in recon-
vening the Middle East peace conference and have.restated
their position on a middle East settlement. The state-
ments suggest that neither the forthcoming visit to Mos-
cow by PLO chief Arafat nor the abrupt cancellation of
the Fahmi visit signals a change in Moscow's line on
the Middle East.
Recent conversations between Soviet Middle East
experts and US officials indicate that Moscow wants the
conference reconvened in September, after the proposed
Arab summit. Soviet First Deputy Foreign Minister Kuz-
netsov told Ambassador Stoessel that the Geneva confer-
ence should not be postponed because of uncertainty over
Palestinian participation.
The Soviets say that lack of unity among the Pal-
estinians remains a problem, although some progress has
been made in recent months. The Soviets are planning to
receive a Palestinian delegation headed by Yasir Arafat
during the summer, but the date evidently is not set.
One knowledgeable Soviet Foreign Ministry official
asserts that the Arafat visit, as in the past, will be
"unofficial," with the Afro-Asian Solidarity Committee,
not the government, serving as host. The Soviets say
they will not permit a permanent PLO'office to open in
Moscow at this time. Nevertheless, Moscow has been
edging toward formal recognition of the PLO as the s okes
man for the Palestinians.
The Soviets are being reticent about the postpone-
ment of Egyptian Foreign Minister Fabmi's visit.
Moscow may not be ready to drop its em-
-aargo on arms shipments or to agree to a Brezhnev-Sadat
hmi's agenda.
F
a
summit. Both sublects were to be high on
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National Intelligence Bulletin July 19 , 1974
Tehran's deal for a quarter interest in Fried Krupp
Huttenwerke A.G., the steel and engineering subsidiary
of the giant West German complex, involves the purchase
of about $60 million of preferred stock. The firm,
reportedly in need of capital, broke its long-standing
ban on foreign participation in ownership by agreeing
to the Iranian purchase. Under the agreement, Iran will
have a member on the supervisory board of the parent com-
pany and a member on the board of the subsidiary.
Both sides are setting up a
point investment company in Zurich to finance future foreign
investments by Krupp and carry out projects of interest
to Krupp and Iran. Krupp presently is committed to the
expansion of Iran's steel industry, but is also interested
in a number of other projects, including cement, vehicle
transmissions, and foundry parts for the car industry.
This latest move comes on the heels of the Shah's
cooperation agreement with France, which outlines some
$4 - $5 billion in industrial projects for Iran. In that
deal, the Shah broke precedent by agreeing to advance
$1 billion to France over three years in prepayment for
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IIo the Shah has indicated that the wou~t
i in in advance payments, presumably for contracted
industrial goods and other items yet unordered. These
arrangements with Krupp, France, and the UK further the
Shah's plan to use his vast oil-induced financial sur-
pluses, which this year may reach $7 billion, for indus-
trial development.
The Shah's actions could help France and the UK cope
with their balance-of-payments problems. Moreover, the
transfer of oil money into long-term investments is some
help to the international banking community, whose long-
term lending now is inhibited by an imbalance between
long- and short-term deposits from oil Producers. f
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The Council of Finance Ministers, at a restricted
meeting in Brussels this week, failed to adopt new meas-
ures for jointly handling Europe's oil-related trade and
payments problems. The delegates focused on three pro-
posals:
--Coordinating domestic monetary and fiscal pol-
icies by member states.
--Floating a Community-backed loan to provide finan-
cing to countries unable to borrow from the Euro-
dollar market on terms that are politically accept-
able.
--Increasing members' official reserves by revalu-
ing national gold stocks.
Discussion centered on recommendations prepared by
the EC Commission that members with current account defi-
cits take restrictive domestic measures, while those in
surplus stimulate domestic economic growth. London,
which is faced with a large deficit, excess industrial
capacity, and growing unemployment, is determined to
avoid a commitment to an anti-inflationary policy. Bonn,
with an enormous surplus, is unwilling to expand economic
activity until inflation is brought under control. The
Commission's proposal was watered down at the insistence
of the UK so that it does not restrict member governments.
Representatives of West Germany and the UK stressed
that the resources of the International Monetary Fund and
private capital markets should be fully utilized before
Community funding is undertaken. Bonn's opposition made
agreement in principle on joint financing impossible
because Bonn would be the principal guarantor of any
EC undertaking.
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National Intelligence Bulletin July 19, 1974
A French proposal that member states collectively
revalue gold reserves was rejected by the UK, Germany,
and the Netherlands. The UK representatives argued that
this would amount to the EC's unilaterally establishing a
new official price. The ministers reaffirmed the informal
understanding reached at the meeting of the Group of Ten
in Washington last month permitting the use of gold
reserves as collateral.
Significant new Community initiatives in any of the
areas covered in the discussions are unlikely in the near
future. The ministers did agree to pursue their dialogue
in monthly meetings; the next is scheduled for September
9.
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CAMBODIA
Kompong
Chhnang
BALE DE
Iff)MPONG SOM
.Kompong Sam
Kaippo
Sover ment
de ing f
oper tioKs,
Prey
Vena
SOUTH
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PHNO ;`;
PENH
Government push
Kompong
Seila
Statt9 Chintf
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National Intelligence Bulletin July 19 , 1974
Government forces are taking the initiative on
several battlefronts.
Cambodian army units northwest of Phnom Penh pushed
out from Oudong on July 16 and killed 180 Khmer Commu-
nist troops in stiff fighting just south of the town.
To the northeast, army commanders are reinforcing posi-
tions on both banks of the Tonle Sap River, which is now
open to both civilian and military traffic. A large
civilian river convoy moved 5,000 tons of foodstuffs
from the provincial capital of Kompong Chhnang to Phnom
Penh early in the week.
Government clearing operations are continuing along
the Bassac River just southeast of Phnom Penh and along
the lower stretches of the Mekong River. A recently
completed army operation near the provincial capital of
Prey Veng, 25 miles east of the capital, resulted in
over 60 insurgent casualties and only light government
losses.
On the Route 4 front, the government task force
that last month relieved an isolated garrison west of
Kompong Speu city is now pushing on down the highway
toward Kompong Seila. That encircled town has been un-
der steady attack since mid-May, and over half of its
2,000 defenders have been killed or wounded. Farther
south, army units at the coastal city of Kampot are
moving to retake several outposts abandoned in the face
of insurgent ground attacks late last week.
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V ALlA ,_OEM/LITAR2ED ZONE
J MILES
Qua;ng Tri
Hue
Communist
Route 14'
,,
.Da Nang
ApprOVeU-
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National Intelligence Bulletin July 19 , 1974
North Vietnamese logistic units are now conducting
a major resupply effort to build up stockpiles. At the
same time, Communist forces are increasing tactical ac-
tivity in northern South Vietnam. While the fighting
is likely to be heavy at times, it is not expected to
escalate into a large-scale offensive. So far, it has
occurred primarily in areas contested by both sides
since the cease-fire.
North Vietnamese combat units have intensified their
attacks west and south of Hue in the past week. On July
11 and 12, Communist forces attacked South Vietnamese
Marine positions in northwestern Thua Thien Province
and captured four outposts. Some attacks stemmed from
government troops' pushing into contested areas.
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There also has been some heavy fighting in the
southern part of Military Region 1. Late reports indi-
cate that Communist forces overran a number of regional
force positions in southern Quang Nam Province on July
18, forcing the government to send reinforcements to
the area. The commander of the region has kept his
forces on the move
The new fighting in Quang Nam may,
ere ore, e erected at tying down government forces.
Communist forces renewed their attacks in the high-
land provinces of Kontum and Pleiku early this week and
have overrun a number of government outposts. The South
Vietnamese are anticipating heavier action during the
coming week but feel confident that government forces
can contain the Communists. F_ I
pp.
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PHILIPPINES
President Marcos has ordered a reassessment of gov-
ernment counterinsurgency programs in the Muslim south.
He is concerned that the rebels have again seized the
initiative, despite months of concerted political, eco-
nomic, and military efforts by the government.
Muslim rebels increased their attacks in early June,
apparently to attract the attention of world Muslim
leaders prior to the Islamic foreign ministers' confer-
ence held recently in Kuala Lumpur. Since the conference,
the rebels' military campaign has continued. Government
forces have taken substantial casualties, leading to
morale problems among the troops and bickering among
commanders. In addition to the usual hit-and-run attacks
on government forces and civilians, the Muslims are now
carrying out sabatoge attacks against government instal-
lations.
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July 19, 1974
Marcos may well decide that, with the Islamic con-
ference safely over, he can risk taking a harder line
in the south. He is not giving up the idea of negotia-
tions, however
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The first round of negotiations with the US on a
new economic agreement ended. abruptly this week when
Finance Secretary Virata indicated that Manila would
give US proposals "careful study," but he made no firm
commitment as to when t~Llk$ might resume. The Filipinos,
realizing that US negotiators lack legislative authority
to deliver on trade concessions, will probably await
passage of the US Trade Reform Act before continuing
negotiations.
US negotiators had hoped for a new economic pact
to replace the Laurel-Langley Agreement, which expired
earlier this month ending a 20-year period of special
economic relations, The agreement included reciprocal
trade preferences and a highly controversial parity
clause that provided for Americans to be treated equally
with Filipinos in the use of public lands and natural
resources.
The breakdown of the talks is bound to cause con-
cern among some US investors in the Philippines who,
having lost parity treatment, will have to comply with
Philippine constitutional restrictions on land ownership
and retail trade activities by the end of next May.
Most of the affected firms, however, either have met
or are in the process of meeting Philippine requirements.
The overall impact on US holdings, which account for
three fourths of total investment in the Philippines,
will be small, since most of these are in nonparity
areas.
Lack of formal treaty guarantees will probably have
little effect on future US investment. Marcos has pains-
takingly sought to improve the Philippine investment ,
climate, and it is highly unlikely that he would now
take action that would cut the flow of investment funds
necessary to maintain the momentum of the economy.
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National Intelligence Bulletin
PORTUGUESE AFRICA
July 19, 1974
An upsurge in rebel activity in Mozambique and
racial disturbances in Angola are the latest reminders
to President Spinola's regime that its control over the
two territories is eroding and that Lisbon may be forced
to reach political settlements there sooner than it had
hoped.
In Mozambique, insurgents of the Front for the Lib-
eration of Mozambique are expanding their operations in
a clear attempt to put increased pressure on the Portu-
guese government at a time of political uncertainty in
Lisbon, and to convince the territory's population that
the front is the dominant power there. Intensified guer-
rilla attacks on transportation lines in Tete district
near the large Cabora Bassa hydroelectric power project
have interrupted the flow of supplies to the construction
site. These transportation links have been a favorite
rebel target for several years.
Over the past week, guerrillas also moved into Zam-
bezia district in eastern Mozambique, an area in which
they had not operated since the late 1960s. Although
their operations in the district so far have been minor,
their presence has created panic among some white resi-
dents and sparked unfounded stories that at least one
major town in the district had fallen to the rebels.
The Portuguese military in Mozambique;have adopted
a defensive posture. They see a political settlement
as inevitable and are therefore reluctant to take risks.
The insurgents are exploiting this in an effort to force
Lisbon to transfer political power to the front and give
up plans for an eventual referendum in Mozambique.
In Angola, Lisbon is likely to face more pressures
from the civilian population than from the insurgents,
who remain divided and unable to initiate military op-
erations. The murder of a white taxi driver in Luanda
last week sparked racial clashes and demonstrations by
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both blacks and whites for greater protection. About
20 persons were killed before the authorities restored
order. Renewed racial violence in Luanda on July 17
reportedly resulted in five more deaths.
A special commission of inquiry will soon arrive
from Lisbon to investigate the disturbances. Meanwhile,
local officials are disarming Luanda's taxi drivers,
almost all of whom are white and quick on the trigger.
The authorities are also trying out a plan to give blacks
in the security forces greater responsibility in Luanda's
black sections.
White and black Angolans appear more uneasy about
their future than Mozambicans, most of whom assume that
an accommodation with the insurgents and independence
are only a matter of time. In Angola, the absence of a
clearly definable insurgent threat and Lisbon's failure
to show support for increased local autonomy and polit-
ical activity has prompted many Angolans to fear that
Lisbon has no intention of loosening its grip on the
territory.
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President Velasco appears to be preparing to bring
the press under government control. Such a move, which
may be announced during his National Day speech on July
28, would be a major step toward authoritarian control
and a victory for radical elements in the government.
Freedom of the press has been the single most conten-
tious issue within the regime since it came to power in
1968, and the time may now be ripe for a decisive move.
Two of the strongest proponents of at least limited free-
dom of dissent are no longer in the cabinet: Admiral
Vargas was forced to resign in May and General Morales
Bermudez is serving as army chief of staff. In 1973,
these two played crucial roles in blocking the takeover
of El Comercio, Peru's most prestigious daily. Moreover,
in recent months Velasco has displayed an exaggerated
sensitivity to criticism of his policies, spurred in
part by counsel he has received from his more radical
advisers.
The new controls would be directed primarily at the
few remaining independent dailies, some of which are
still controlled by members of Peru's old oligarchy and
have opposed the government's more radical programs.
The papers with leftist orientation, which already sup-
port the regime and defer to its wishes, would probably
also come under closer government scrutiny.
The government probably would not itself take imme-
diate control of the press. Instead, a presidential de-
cree might outlaw private ownership of newspapers and
invest control in quasi-government companies composed of
representatives of the government and various worker-
controlled organizations. Later, control might be trans-
ferred to the government itself.
Civilian opponents are likely to decry such a move,
but any significant opposition would have to come from
moderates within the military. Even if the moderates
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unite on this issue, however, Velasco'ss current strong
support within the army is likely to prevent serious
short-term opposition. Over the longer term, complete
government press control will increase moderate officers'
dissatisfaction, undermine what little civilian sup-
port the regime now has, and possibly frustrate Velasco's
efforts to carry out other important domestic policies.
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CUBA-PANAMA
Cuba's national airline may soon initiate regular
service to Panama City. The service would greatly facil-
itate travel for the increasing traffic between Cuba and
Latin America which, unless specially chartered flights
are available, must now go by way of Lima, Mexico City,
Europe, or the eastern Caribbean.
The airline, which already has regular nonstop
flights between Havana and Lima, signed a new passenger
traffic rights agreement with the Peruvian government
on June 13 that may provide for stopovers in Panama.
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CHILE
July 19, 1974
A dispute over radio censorship is deepening the
estrangement between the military government and the
Christian Democratic Party and could drive the party
into outright opposition. This was revealed when the
government press office released two letters exchanged
between the former interior minister and the leader of
the party.
Early last month the government ordered what it
considered offensive programming to be removed from the
major station of the Christian Democrats' radio network.
Party president Aylwin sent a strongly worded letter of
protest to then Interior Minister Bonilla as a result
of this directive. Bonilla replied in kind, bluntly
reprimanding Aylwin for engaging in conduct inappropri-
ate for the leader of a "recessed" political group.
The tone of his response may have been stimulated by
Bonilla's desire to regain favor with the military, some
of whom had been critical of his performance as interior
minister and had accused him of being overly sympathetic
toward the Christian Democrats.
Why the government press office chose to make both
letters public this week is unclear, but it may have been
the work of right-wing civilian advisers who have been
trying to stir up trouble between the armed forces and
the Christian Democrats. The party now is awaiting the
government's response to a second letter it sent Bonilla.
It anticipates replying to this response with yet an-
other--this one to be signed by all former Christian
Democratic congressmen--that will probably include broad
criticism of the government's policies.
The government's next move may take the form of a
letter from General Cesar Benavides, the new interior
minister. Bonilla was moved to the Defense Ministry
during the cabinet shake-up earlier this month. In con-
trast to his predecessor, Benavides is known as a strict
disciplinarian who has no special ties to the Christian
Democrats.
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July 19, 1974
Relations between the party and the government have
approached the brink before, but up to now neither side
has wanted to risk an open break. This time, however,
the dispute appears to have taken on a momentum of its
own, and both sides may have gone too far to back down.
Movement of the Christian Democrats into opposition
would seriously erode the military government's claim
to mass civilian support and would have a negative im-
pact on the ?unta's already poor international image.
I I
France: The third French nuclear-powered ballistic-
missile smar?ine, Le Foudroyant, is now operational.
The submarine was turned over to the French navy on June
6, according to press reports. Le Foudroyant will prob-
ably take up the patrol cycle of Le Redoubtable, which
is scheduled for a 15-month overhaul. France's fourth
missile submarine, L'Indomptable, will be launched in
mid-September. French missile submarines carry 16 mis-
25X1
11
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Approved For a ease UU-1107MG-i 11111 ''1 -
 Approved For Release 2007/03/06 : CIA-RDP79T00975AO26800010004-0
Top Secret
Top Secret
Approved For Release 2007/03/06 : CIA-RDP79T00975AO26800010004-0