NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026800010050-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 22, 2016
• Document Release Date: July 9, 2012
• Sequence Number: 50
• Publication Date: August 15, 1974
• Content Type: REPORT

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Top Secret
2892-8 w-
National Intelligence
Bulletin
Top Secret
15 August 1974
N2 631
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National Intelligence Bulletin
August 15, 1974
CONTENTS
CYPRUS: Turkish forces yesterday made significant
gains in the northern part of the island. (Page 1)
CHINA: Senior diplomats recalled at unprecedented rate.
(Page 6)
CHINA-USSR: Weather adversely affects grain harvest in
both countries. (Page 7)
ITALY: Rumor government pushes through austerity tax
package. (Page 10)
ARGENTINA: Three Peronist veterans chosen for cabinet.
(Page 12)
CHILE: Government pledges to end executions. -(Page 13)
FOR THE RECORD: (Page 14)
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National Intelligence Bulletin
August 15, 1974
Turkish forces, intent on getting their "fair share"
of Cyprus, yesterday made significant gains in their ef-
fort to secure control of the northern part of the island.
The major Turkish thrust was a three-pronged, armored
drive from east of Nicosia toward Famagusta. By night-
fall, two columns reportedly had reached Lefkoniko and
Sinda, while the third was only five miles from Fama-
gusta. The Turks are expected to launch an assault
against Famagusta at dawn, and should take the city some-
time this morning.
During the course of yesterday's advance, the Turks
captured Tymbou airfield southeast of Nicosia, but the
Nicosia airport, while surrounded, remains in UN hands.
In Nicosia itself, a cease-fire went into effect last
night after a day of sporadic, but at times heavy, fight-
ing. To the west, Greek positions were heavily shelled
throughout the afternoon, but Turkish forces made only
moderate gains in their effort to seize control of the
western end of the Kyrenia Mountain range.
Turkish Prime Minister Ecevit told a news conference
yesterday that Turkey did not intend to annex the island
or upset the territorial integrity of Cyprus and that he
expected the operation to be brief. There is widespread
political backing in Ankara for the government's decision
to resume the fighting on Cyprus. The leader of the pri-
mary opposition party has publicly pledged his full sup-
port.
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National Intelligence Bulletin
August 15, 1974
In Athens, the Council of Ministers approved Prime
Minister Karamanlis' handling of the crisis to date. The
Prime Minister also received support from former Greek
political leaders as well as from exiled King Constantine.
~ The US embassy in Athens reported
iiat the Greek news media have claimed that the US is
encouraging the 'Turks and has "betrayed" the Greeks.
Leftist groups in Greece reportedly may take advantage
of growing anti-US sentiment to attack Sixth Fleet per-
sonnel.
A high-ranking Greek Foreign Ministry official told
US Ambassador Tasca that Athens' withdrawal from mili-
tary participation in NATO was a very serious matter.
He said the NATO facilities at Souda Bay and Namfi will
have to go and that all of the Alliance's facilities in
Greece will be subject to review.
The UN Security Council is scheduled to meet at
1100 today. The Cypriot representative requested a
special meeting :Last evening, but was unable to table
any proposals in preliminary consultative sessions.
The Soviets' brief, factual media treatment of yes-
terday's events and Soviet UN delegate Malik's failure
to condemn Turkey by name in the renewed Security Coun-
cil debate indicate that the USSR, deeply concerned
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National Intelligence Bulletin
August 15, 1974
about partition of the island, still is inclined to
avoid open criticism of Ankara. Malik is pushing again--
with no apparent success--the Soviet call for a special
Security Council mission to Cyprus. Pravda today reiter-
ates the standard Soviet line that developments on the
island result from NATO's interference. The article
calls for unspecified UN action and the withdrawal of
all foreign troops from Cyprus.
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National Intelligence Bulletin August 15, 1974
USSR-FEDAYEEN
The Soviets took a cautious line with fedayeen
leader Yasir Arafat during his visit to Moscow early
this month, stressing that Soviet recognition of a
future Palestinian government-in-exile would be linked
to Arab backing of such a regime and to Palestinian
unity.
Any Soviet assurances on future recognition may have
been aimed at cushioning PLO disappointment with Moscow's
failure to give it more forthright public endorsement.
The Soviets were said to have emphasized, however, that
progress by Palestinians toward forming a government-in-
exile was essential before the Geneva conference could
be resumed,
The Soviets did not seek to play on recent strains
between the PLO and Egypt,
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National Intelligence Bulletin
August 15, 1974
Peking since spring has called home senior diplomats
at a rate unprecedented in recent years. More than half
of China's heads of mission and either the chief. or
deputy from all. important missions have returned for
several weeks at a time. Still more are scheduled to
return in the near future. About 20 percent of China's
ambassadors went home during a comparable period last
year.
Only a small percentage of this year's returns seem
to be for routine medical reasons, home leave, or reas-
signment. Some are connected with foreign policy de-
velopments: the ambassador to Moscow returned prior to
the Nixon-Brezhnev summit, and the ambassador to Tokyo
returned during a lull in Sino-Japanese commercial nego-
tiations.
The return of the majority of these people, however,
is unexplained. The possibility cannot be ruled out
that the recalls were caused by some change in the lead-
ership situation or in China's foreign policy. There
has been no evidence of this, however, and the spacing
of the visits--early May through late July--suggests
such developments were not responsible0
There have been numerous developments both in China
and abroad in recent months that, cumulatively, might
cause the leadership to call in its senior overseas rep-
resentatives for briefings and consultations: the energy
crisis, the Middle East situation, leadership changes
in the West, continued Sino-Soviet hostility, and, in
particular, the anti-Confucius campaign and Chou En-lai's
illness, both of which. still seem to preoccupy the lead-
ership. Indeed, a relatively large number of envoys
returned in May, shortly after Chou's health problems
first caused a reduction in his workload. Another large
group returned in July after Chou's hospitalization and
at a time when the anti-Confucius campaign entered one
of its lulls.
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National Intelligence Bulletin August 15, 1974
CHINA-USSR
Unfavorable weather conditions in the USSR and China
have diminished prospects for favorable grain harvests
in both countries.
Because of dry weather in July, the Soviet crop is
likely to be less than 200 million tons this year. A
crop of this size would be the USSR's second largest,
but would barely meet rising requirements. Estimates
of Soviet domestic needs and export commitments range
from 198 to 211 million tons.
East of the Urals, the rains failed over a wide
area when the grain reached its critical heading stage.
Hot, dry conditions prevailed over parts of Kazakhstan
and western Siberia, resulting in an estimated loss of
about eight million tons of grain.
West of the Urals, rains were heavy and winds
strong at the start of the wheat harvest. Early this
month, the rate of harvesting was substantially below
last year's, and poor field conditions will reduce the
milling quality of the wheat. The reduced quality will
compound the problem of a smaller harvest--an estimated
85 million tons of wheat this year, compared with 110
million tons in 1973.
China's grain crop also appears unlikely to reach
record levels. Even if the weather were unusually
favorable for the rest of the year, the chances of out-
put increasing as fast as population--by 2 percent, or
5 million tons--are small.
Early harvested grain crops--which normally account
for 40 percent of grain output--were poor because of
drought in the north and unseasonable frost in the south.
Erratic spring rains, together with unusually low tem-
peratures, have forced changes in acreage patterns that
will adversely affect fall-harvested crops. Also, the
growth of domestic fertilizer production has slowed,
and deliveries from Japan--China's major source of im-
ported fertilizer--have been reduced.
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National Intelligence Bulletin August 15, 1974
In the USSR, the reduced crop does not necessarily
signal an increase in imports, because Moscow can draw
on its stocks. The quality of wheat stocks and the
price of imports will be major factors in Moscow's de-
cision whether to import. Grain prices on the world
market are high, and they probably will remain so if
US harvest prospects do not improve.
China's grain imports are increasing. Contracts
for delivery of 9.6 million tons of grain in FY 1975--
20 percent more than in FY 1974--have already been signed,
and more purchases are likely.
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National Intelligence Bulletin August 15, 1974
ITALY
After lengthy discussion and considerable amendment,
the Rumor government succeeded in pushing through its
austerity tax package before parliament recessed for the
summer yesterday.
With intervention on behalf of the lira resuming in
August after a six-week hiatus, the government may shortly
follow up ratification of its austerity program with for-
mal applications for long-term loans from other industrial
nations. The amendments, many of which were advocated by
the labor unions and the Communist Party,, aim to lessen
the tax burden on lower income groups at the expense of
corporations and higher income groups, They probably will
not change substantially the government's $407-billion
revenue goal,,
In the process of ratifying the program, the coalition
parties were able to trade off measures that reduced tax
revenues for those that increased them,, Some important
features of the government'"s original tax package, such as
higher utility rates, apparently were retained.
The parliamentary amendments reportedly include:
--a one-time surcharge on incomes over $15,000;
--a boost in the corporate income tax rate from
25 to 35 percent? instead of the 30 percent orig-
inally suggested;
--an expanded list of luxury goods subject to the
new value-added tax rate of 30 percent;
--increased tax exemptions on wage and salaried
income;
--a reduction in the number of beef and veal
products that the new value-added tax on beef
and veal applies to;
--the extension of a value-added tax break on
some food items into 19750
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National Intelligence Bulletin August 15, 1974
Even assuming that the government's revenue estimates
are on the high side, this tax package, combined with a
currently tight monetary policy, will have a sharply de-
flationary impact on the economy over the next 12 months.
Domestic demand will decline, although export sales will
probably prevent a drop in the GNP. The drop in domestic
demand will moderate and eventually reduce inflationary
pressures.
The amendments to the program, however, may distrib-
ute the impact of the tax package somewhat differently
than the government would like. A number of the changes,
such as the tax surcharge on incomes over $15,000, could
adversely affect savings and investment more than con-
sumption, and add to an anticipated rise in unemployment
over the next 12 months.
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National Intelligence Bulletin August 15, 1974
ARGENTINA
President Peron yesterday chose three Peronist
veterans to replace the cabinet ministers whose resig-
nations she accepted on Tuesday. All are conservative
bureaucrats, apparently picked for their devotion to
the Peronist movement.
For the politically sensitive post of education
minister, Mrs. Peron chose the 79-year-old Oscar Ivanise-
vich, who had held the post when Juan Peron was over-
thrown in 1955. Student leaders then were instrumental
in stimulating the coup, and Ivanisevich's reinstatement
is surely to meet with an icy reception among today's
students.
The new interior minister is Alberto Rocamora, a
former Peronist congressional leader who is a staunch
opponent of left-wing Peronism. He will be responsible
for the security organizations charged with the fight
against terrorism.
Adolfo Mario Savino is the new defense minister.
He served in a number of economic posts under Juan Peron
in the 1950s.
Social Welfare Minister Lopez Rega, Mrs. Peron's
controversial adviser, most likely had a decisive role
in selecting the new ministers. Should they turn out
to be subservient to him, the breach in the unstable
Peronist movement will surely widen.
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National Intelligence Bulletin August 15, 1974
CHILE
Junta President Pinochet has pledged an end to ex-
ecutions and declared that severe disciplinary action is
being taken against military men who have ignored govern-
ment guidelines on the treatment of prisoners.
The government has followed a tacit "no execution"
policy since early this year, and there have been vague
references to punishment of overzealous interrogators,
but Pinochet's statements to the Associated Press put
the government on record. Increasing concern that Chile's
international image will have a negative impact on its
arms procurement program--especially on possible Congres-
sional attempts to cut US credits and sales--may have
prompted the move.
Pinochet also indicated that trials of high-ranking
officials of the Allende regime and leftist party leaders
will be "semi-public," i.e., open to the press but given
limited publicity. Pinochet said details of when and
how these prisoners will be tried are still bein worked
out .
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National Intelligence Bulletin August 15, 1974
Dominican Republic: Joaquin Balaguer will be in-
augurated on August 16 for his third consecutive four-
year term as president. He enjoys considerable popular
support and military backing, and is not likely to alter
his goals and programs significantly. Businessmen favor
him because his stable administrations have attracted
large amounts of foreign investment and have spurred
unprecedented economic growth. His support in rural
areas has been enhanced by the government's land reform
program.
Panama: In Panama, National Guardsmen made no at-
tempt yesterday to prevent a demonstration by some 300
rock-throwing students at the US embassy. The Guards-
men broke it up only after embassy officials asked the
government to act. A student demonstration at the em-
bassy last week was peaceful. A government-controlled
television station has deplored the violence, but the
government is likely to continue to use demonstrations
and abrasive articles in the government-controlled press
to build a case against the US-owned United Brands Com-
pany. General Torrijos has been trying to get the com-
pany to pay a $1--per-box tax on banana exports and was
irritated when the company recently decided instead to
stop exports.
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Top Secret
Top Secret
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