NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A028100010035-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 20, 2016
• Document Release Date: March 21, 2006
• Sequence Number: 35
• Publication Date: September 22, 1975
• Content Type: REPORT

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Top Secret
National Intelligence
Bulletin
State Dept. review completed
Top Secret
September 22, 1975
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National Intelligence Bulletin
September 22, 1975
CONTENTS
LEBANON: Fighting slackens, following 1
announcement of "cease-fire" . . . . . . . . . . . . . . . . . . . . .
PORTUGAL: Expected effect of new 2
cabinet on government policies . . . . . . . . . . . . . . . . . . .
WEST GERMANY: Chancellor orders 4
review of German policy toward EC . . . . . . . . . . . . . . . . .
SOUTH AFRICA: Currency devalued . . . . . . . . . . . . . . ? .
ANNEX: South Vietnam Five
Months After the Fall
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National Intelligence Bulletin
September 22, 1975
Fighting slackened yesterday, following the announcement Saturday night of a
cease-fire. Skirmishing and sniper fire continue to make some suburbs of Beirut
unsafe, however, and prevent the reopening of some major roads out of the city. A
dusk-to-dawn curfew remains in effect.
The cease-fire reportedly is the first part of a two-stage agreement hammered
out Saturday by Lebanese and Palestinian leaders in discussions with Syrian Foreign
Minister Khaddam and chief of staff Shihabi.
The second stage provides that all parties to the conflict are to participate in
"national reconciliation" talks. These will include discussions on the possibility of
expanding the cabinet, consideration of the social and political demands of Lebanese
leftists, and possibly the question of Lebanese-Palestinian relations.
Khaddam and Shihabi, who are being given most of the credit for arranging the
reduction in the fighting, continued their rounds of intensive discussions with the
Palestinians and Lebanese political and religious leaders yesterday, apparently in an
effort to firm up the truce agreement. The US embassy in Beirut reports, however,
that there is considerable skepticism that real progress will be made soon, with such
intractable points at issue.
Growing concern in Beirut that the country's internal instability could lead to
more direct outside intervention may have played a part in convincing all sides to try
to calm the situation. The US embassy reports, for instance, that Khaddam's offer to
provide Syrian forces to patrol Beirut brought home to the Lebanese the gravity of
the situation.
Israeli Foreign Minister Allon's warning over the weekend that Damascus
should not assume it has a free hand to intervene in Lebanon-and his veiled threat
that Tel Aviv itself might feel constrained to do so if Syria did-received extensive
coverage in the Beirut press.
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National Intelligence Bulletin September 22, 1975
The democratic orientation and pragmatic economic outlook of the new
cabinet will bring positive changes in government policies, according to the US
embassy in Lisbon.
The anti-Communist majority in the cabinet will be reinforced in the
subcabinet. Negotiations are not yet complete, but the latest information indicates
that out of a total of 34 positions, the Socialists will receive 12 and the center-left
Popular Democrats 11.
The new government is expected to concentrate its efforts toward establishing
a strongly pro-Western foreign policy, instituting realistic economic measures to
retard further deterioration; diminishing Communist control in the media and labor
organizations; and planning for local, national assembly, and presidential
elections-which, according to Socialist leader Soares, Prime Minister Azevedo has
promised for February.
New Foreign Minister Antunes, who was formerly known to favor an alliance
with the Third World, appears to recognize the need for strong ties to Western
Europe at this time. Socialist leaders, who strongly support close relations with
European Social Democrats, have full confidence in Antunes' Western orientation.
Both Antunes and Foreign Trade Minister Campinos, a Socialist, have made
favorable impressions on European officials in the past and can be expected to begin
efforts to attract aid for Portugal from Western Europe and the US.
The new economic team, also dominated by the Socialists, will concentrate on
repairing the damage done to the economy by the radical initiatives of the Goncalves
regime. The team is not expected to rescind the nationalization and agrarian reform
measures already in effect, but it will attempt to consolidate and organize the
companies and land that now belong to the government.
The Socialists plan to call for long-term economic recovery measures after they
have received legitimate authority through elections.
The Socialists' scheme also calls for eliminating Communist strongholds in local
governments, labor, and the media. The three cabinet positions that bear on these
critical areas are held not by Socialists but by individuals who are judged by the US
embassy to be well qualified and strongly anti-Communist:
--Commander Almeida e Costa, the new interior minister, was largely
responsible for organizing the constituent assembly election in April; the
balloting was run fairly, despite heavy Communist influence in the government.
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National Intelligence Bulletin September 22, 1975
--Labor Minister Tomas Rosa, an army captain, told US embassy officials that
he intends eventually to remove all Communists from key positions in his
ministry.
--Information Minister Almeida Santos is, according to embassy contacts,
considered capable of weakening the Communists' domination of the press,
radio, and television.
Reaction to the new government has been light. The Socialists issued a
communique praising the cabinet and the prime minister. The Communists'
statement was defensive, explaining that they accepted one portfolio only to prevent
a right-wing government from taking control.
The Communists' grudging acceptance of the new cabinet is not shared by the
various extreme left-wing organizations. These groups have been critical of all
governments since the military coup, but there is concern now that distrust of a
Socialist-dominated government may lead to a wave of terrorist activity. Several
armed groups based in Lisbon were active during the Salazar and Caetano regimes.
Right-wing exile groups probably pose a more serious threat to the new
government. One of them, the Portuguese Liberation Army, has claimed
responsibility for the bombing yesterday of a navy building where Prime Minister
Azevedo was staying. The group is reportedly based in Spain and connected with
former president Spinola's forces.
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National Intelligence Bulletin September 22, 1975
WEST GERMANY
Chancellor Schmidt has ordered a general review of policy toward the
European Community. His main objective is to force the EC Commission to adopt a
more tight-fisted policy on financing Community programs. The German cabinet
will discuss various ministry recommendations at a meeting scheduled for September
29.
During the past year, the Chancellor has frequently expressed dissatisfaction
with the Commission's implementation of Community programs. Schmidt's
unwillingness to allocate funds for the two EC scientific research centers in Italy and
the Netherlands, in fact, triggered criticism from "European-minded" Free
Democrats in the cabinet and provided the impetus for the present policy review.
Schmidt has also been disturbed by the high cost of the common agricultural
policy. He has stated that Bonn will not allow European agricultural prices to be
pegged at the price levels of those community members which have much higher
rates of inflation than West Germany.
The Chancellor reaffirmed his hope to make the Commission more
"finance-conscious" in his opening speech to the Bundestag this week. This position
parallels the new budget austerities that Schmidt is recommending at home.
The agenda for the cabinet meeting will include a review of proposals to
improve the Community's agricultural price support program, the status of the EC
research centers, preferential trade arrangements with 46 underdeveloped countries
under the Lome Convention, and such institutional questions as strengthening the
E
uropean parliament in Stra ourg by popular elections of its deputies.
F7
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National Intelligence Bulletin September 22, 1975
South African Finance Minister Horwoocl has announced a currency
devaluation of 17.9 percent as part of an effort to curb that country's deteriorating
balance of payments. The devaluation, which becomes effective today, is of
unprecedented size; it follows by just three months a 5-percent devaluation.
Falling gold production and prices and stagnating exports have been forcing
Pretoria to rely extremely heavily on foreign borrowing to offset trade deficits.
South Africa, which accounts for more than 50 percent of world gold output, has
been counting on gold sales to finance a deficit from $3.5 billion to $4 billion.
International gold prices, however, have fallen from $195 an ounce in December
1974 to less than $140 last week.
Increasing working costs and depletion of the country's richest ore reserves
have been steadily depressing South African gold output, which is projected at about
700 tons this year compared to 760 tons in 1974. Pretoria already increased its
foreign borrowing to more than $2 billion in the year ending June 30, 1975.
The finance minister has also announced measures to tighten bank credit in an
effort to offset the inflationary impact of the devaluation. The inflation rate
currently is more than 12 percent annually. A recent South African study projected
a rate of 18 percent by the end of 1975.
The devaluation may force South Africa to delay some of its ambitious
industrialization plans. Some of the largest projects call for the expenditure over the
next several years of $2.9 billion for telecommunications, $5.5 billion for new
electric r stations, and $2.8 billion for expanding ports and other shipping
facilities.
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National Intelligence Bulletin
South Vietnam Five Months After the Fall
September 22, 1975
The end of the fighting in Vietnam ushered in a new period of uncertainty in
Southeast Asia, but today there is little doubt about the totality of the Vietnamese,
Lao, and Khmer communists' victories. Despite the continued existence of a
separate South Vietnamese political apparatus in the form of the Provisional
Revolutionary Government, de facto reunification of South with North Vietnam
was accomplished with the fall of Saigon.
Information is scarce on specific policies and actions of the new communist
administrations anywhere in Indochina. It has become clear, however, that the new
regimes will be preoccupied for some time by the enormous tasks of economic
reconstruction and political consolidation.
These problems, at least in the case of Cambodia and South Vietnam, were
greatly magnified by the very abruptness of the communist take-overs. The
Vietnamese communists, for example, did not anticipate the collapse of the former
South Vietnamese government last spring and were not prepared to assume
administrative control of the country. Initial euphoria following the fall of the Thieu
regime gave way quickly to a recognition of the serious economic and administrative
problems confronting South Vietnam.
Nearly five months after the fall of Saigon, South Vietnam remains under a
form of martial law. A "military management committee," headed by North
Vietnamese General Tran Van Tra, makes the day-to-day decisions and issues all
political, administrative, and economic directives.
The primary authority, however, appears to be Pham Hung, fourth-ranking
member of the North Vietnamese Politburo, who is in charge of party and military
affairs in the South.
The South Vietnamese Provisional Revolutionary Government, which
ostensibly serves as a national government, has no meaningful authority over either
Pham Hung or the military management committee.
Earlier communist promises about "national reconciliation and concord"
undoubtedly have been a bitter disappointment to the many former neutralists and
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National Intelligence Bulletin September 22, 1975
third-force personalities who had hoped to play a role in a new southern
government. People like General "Big" Minh are occasionally seen walking the
streets of Saigon, but they have no political role, meaningful or otherwise.
We have little exact information about the new government system being
developed throughout the country, although it does appear that the pace of forming
the new administration has been slow and will perhaps continue to be more
time-consuming than the communists anticipated.
Importing Officials
Immediately after the take-over, the communists moved to offset the lack of
capable and trustworthy administrators by importing large numbers of officials from
the North. Iwithin a few weeks
after Saigon's collapse, nearly one third o North Vietnam's bureaucracy had left for
the South. Many of these appear to have been former southerners who had come
north at the time of the 1954 Geneva accords.
The communists are also moving to "rehabilitate" former South Vietnamese
bureaucrats and return them to their old positions. In July, the communists began to
register their displeasure both with the small number of former government
personnel who had signed up for rehabilitation and with the results of the program
thus far. It was announced that the length of the course had been extended by two
months, meaning that the first graduates of the program may only now be moving
into the administrative structure.
Communist policies to date primarily have been aimed at the restoration of
order and economic recovery. On the first point, the communists adopted a
relatively conciliatory approach in order to mobilize support. But given the long and
bitter nature of the Vietnamese conflict and the abundance of firearms in the
country, it is hardly surprising that the communists are admitting to opposition
from a variety of sources:
--former government soldiers unwilling to take their chances in the new
communist society;
--religious sects;
--ethnic minorities in the highlands as opposed as ever to Vietnamese
domination of any stripe;
--South Vietnamese who have managed to elude the "re-education" process and
taken to banditry in order to survive.
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National Intelligence Bulletin
September 22, 1975
The economy probably is a far more worrisome problem. The communists
admit that it is still in bad shape. Low production and high unemployment have
reduced living standards in Saigon and the rest of the country.
Considerable help from Hanoi's foreign allies will be required to get the
economy on its.feet. The Vietnamese lack the fertilizer, machinery and parts, and
fuel to become self-sufficient in food for at least the next couple of years, despite
expanded farm acreage. Moreover, industry relies almost exclusively on foreign
materials, and the country's foreign-exchange reserves are insufficient to cover more
than a fraction of the South's needs.
The communists so far have not attempted to make fundamental or sweeping
changes in the South's economic structure. Some banks have been reopened, but on
a piecemeal basis. While the largest industrial enterprises have apparently been seized
by the state, the communists are depending heavily on private enterprises to revive
the economy.
Refugees, demobilized South Vietnamese troops, and other urban dwellers are
being sent to the countryside to resume farming, but so far a coordinated effort to
collectivize agriculture has been lacking.
The North Vietnamese did not begin to collectivize agriculture in the North
until two years after the 1954 Geneva Agreement. It will probably be at least as long
before the communists move in this direction in the South Vietnamese countryside.
Vietnamese officials, both North and South, proclaim formal reunification as
their foremost objective. At the same time, they make it clear that the process will
be a gradual one that will follow progress in developing an acceptable communist
administrative structure and in restoring order and economic stability.
In the meantime, the North Vietnamese can be counted on to keep a close eye
out for any show of Southern independence or of vested Southern interest in the
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National Intelligence Bulletin September 22, 1975
The Viet Cong's Provisional Revolutionary Government is functioning as a
"government" only in the diplomatic sphere, and is kept on a short leash even there.
Although the Provisional Revolutionary Government has established diplomatic
relations with over 80 countries, not one of these-even Hanoi's closest communist
allies-has been allowed to open an embassy in Saigon.
Hanoi has permitted some countries to accre
Saigon as well. Although this arrangement mig
fiction of an independent South Vietnamese st
dit their ambassadors to Hanoi and
ht be helpful in maintaining the
to there is no question but that
Vietnam is now one country with one policy.
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Top Secret
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