CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R000800020029-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 19, 2016
• Document Release Date: January 15, 2002
• Sequence Number: 29
• Publication Date: February 5, 1972
• Content Type: BULL

Approved for Rel+ as ,zp 51 61 9 ;,~IP~;R PSST0,0, 7 R 0, ~;0 (10029 7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800
No Foreign Dicrein
DIRECTORATE OF
INTELLIGENCE
Central Intelligence bulletin
State Dept. declassification & release instructions on file
secFet
N2 583
5 February 1972
Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
Secvel
TI:e CEN'I'Il1L INTELLIGENCE BULLETIN is produced by the
Director of' Central Intelligence to meet his responsibilities for providing
current intelligence bearing on issues of national security to the President,
the National Security Council, and other senior government officials. It
is produced in consultation with the Departments of State and Defense.
When, because of the tinic factor, adequate consultation with the depart-
ment of primary concern is not feasible, items or portions thereof are pro-
duced by CIA and enclosed in brackets.
Interpretations of intelligence information in this publication represent
immediate and preliminary views which are subject to modification in the
light of further information and more complete anaiys;s.
Certain intelligence items in this publication may be designated specifically
for no further dissemination. Other intelligence items may be disseminated
further, but only on a need-to-know basis.
WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sccticns 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is pri.tiibited by law.
GROUP 1
Excluded from automatic
downgrading and
declassification
Approved For Release 2005/06/0 E P85T00875R000800020029-7
 Approved For Release 2005/06/gtC* jpP85T00875R000800020029-7
No. 0031/72
5 February 1972
Central Intelligence bulletin
SOUTH VIETNAM: Recent reports indicate coming Commu-
nist offensive will include attacks on urban targets.
(Page 1)
USSR-EGYPT: Assessment of Sadat's visit to Moscow.
(Page 2)
LAOS: Assessment of Communist le&ders' message to
Souvanna. (Page 7)
COMMUNIST CHINA: Further signs of growing strength
of moderates in leadership. (Page 8)
SOUTH VIETNAM: Assessment of economic performance.
(Page 9)
EUROPEAN COMMUNITIES: Renewed efforts to achieve
cooperation on monetary questions. (Page 11;
EGYPT-SUDAN: Libya's Qadhafi seeks to ease strains.
(Page 12)
DENMARK: Defense reforms are deferred. (Page 13)
VENEZUELA: Proposal for meeting of oil rioducing
nations. (Page 14)
NICARAGUA: President Somoza agrees to OAS observa-
tion of elections. (Page 15)
LIBYA: Oil price talks (Page 16)
25X6
INTERNATIONAL MONETARY DEVELOPMENTS:
Gold price (Page 17)
USSR: Soviet delegation to CPUSA meeting (Page 18)
Approved For Release 2005/066RDP85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
SECRET
SOUTH 'VIETNAM: A growing number of reports
suggest that the Communists intend to mount commando-
type attacks on selected urban areas during the com-
ing offensive.
Earlier reporting iadicated that the funda-
mental objectives of this offensive will be to dam-
age the pacification program, to inflict defeats on
selected South Vietnamese units, and generally to
detract from President Nixon's trip to China. The
reports suggest the offensive is to involve sizable
military campaigns in the highlands and near the
DMZ in concert with sapper and guerrilla strikes
against selected military targets in the countryside
and a few urban areas.
The recent reports, however, indicate that the
Communists hope to achieve more of an impact on the
urban population by staging a large number of at-
tacks against military compounds near towns and
other key targets such as radio stations, utilities,
and vital highways and bridges. These operations
are to be carried out by newly infiltrated sappers
assisted by cadre already in place. According to
the latest reports, the enemy is cautioning its
forces not to alienate the people by indiscriminate
killings and destruction of property.
Among the specific major cities targeted are
Saigon, Da Nang, Can Tho, Da Lat, and Qui Nhon.
A number of lesser towns, including some district
seats, are also listed. It is unlikely that the
Communists expect to seize a major city for an ex-
tended time. If the enemy can carry off hit-and-
run raids, however, such attacks combined with
heavier military action in the more remote and less-
populated regions of the country, could give the
Communists a cone d ar:.ble propaganda return at a
relatively moderace Jost. (SECRET NO FOREIGN DIS-
SEM)
Central Intelligence Bulk `n. 1
Approved For Release 2005/0& . RIEi-'14DP85T00875R000800020029-7
 Approved For Release 2005/06/R#Cg11 P85T00875R000800020029-7
(1 USSR-EGYPT: Yesterday's Soviet-Egyptian commu-
nique, following President Sadat's three-day visit
to Moscow, was little more than a recitation of past
Soviet pledges of support. The communique also
called for "immediate" resumption of the Jarring
mission.
The joint statement recorded that the two sides
had "again considered measures" aimed at strengthen-
ing Egypt's defenses, and had "outlined a number of
concrete steps" toward this end. Sadat's public
statements before the trip strongly suggested that
he would use the occasion to ask the Soviets to sup-
ply Cairo with weapons to match Israeli offensive
capabilities. He has spoken often of the need to
exchange blows with Israel on a "depth for depth"
basis. Soviet leaders, however, fear that such
weapons would only increase the risk of renewed Arab-
Israeli hostilities, which Moscow wants to prevent.
The USSR has provided the Egyptians with sophisti-
cated conventional weapons systems without giving
Cairo a "retaliatory" capability against Israel.
Earlier Soviet statements in Moscow and at the
UN had indicated that the Soviets believe a resump-
tion of UN emissary Jarring's consultations with
Arabs and Israelis is the most hopeful approach to
a political settlement at this time. Moreover, the
Soviets have now countered the US-Israeli agreement
for "proximity" talks. Soviet leaders have become
increasingly uncomfortable with the US monopoly on
efforts to arrange a political settlement, and have
stressed that recent US aircraft commitments to Is-
rael have ended Washington's hopes to play an "hon-
est broker" role in the negotiations. In the past
few months the Soviets have also resurrected the
Soviet peace plan of 1969 to show their Arab cli-
ents that Moscow is prepared to become more active
in the search for a settlement.
The communique may not provide an immediate
answer to Sadat's dilemma. The Egyptian president
had emphasized that he was going to Moscow to set
5 Feb 72 Central Intelligence Bulletin
Approved For Release 2005/06 CRIDP85T00875R000800020029-7
 Approved For Release 2005/06/0g.EqftF
85T00875R000800020029-7
.'the "zero hour" for liberating the Sinai. He will
return to Cairo without any open expression of So-
viet support for a renewal of hostilities, although
the language of the communique allows Sadat -to ;:tress
that further military support will. be forthcoming.
The joint statement noted that Soviet party
chief Brezhnev had accepted an invitation to visit
Egypt at a date to be agreed upon later. (CONFIDEN-
TIAL)
5 Feb 72 Central Intelligence Bulletin
Approved For Release 2005/06I :Q P85T00875R000800020029-7
 25X6 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
Next 1 Page(s) In Document Exempt
Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
 Approved For Release 2005/06/08E85T00875R000800020029-7
)Government held location
E) Conununist held location
o Hirlhpoint
0 5
hliles
CONFIDE NVIAL
un Na
LONG pAAT
PNOU
PLA''~V "E 1-11,
Phou Sep DES
~Auong Pot JARR
('Jhn Tam EFoung
C>hou Phu Sao,
A10
Muong
f'ha
Khang ICh(3
Approved For Release 2005/06/09te lf 85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
SECRET
KLAOS: Lao Communist leader Souphanouvong's
latest message to Prime Minister Souvanna makes a
bid to resume a dialogue with the government.
The message's reference to earlier Communist
demand; indicates; that there has been no fundamental
change in the Communists' negotiating position. It
omits, however, any specific call for a US bombing
halt in Laos indicating that it was meant to be some-
what more acceptable to Souvanna, who has long in-
sisted that he could not agree to such a halt as a
precondition to negotiations.
The message of 27 January reiterates the long-
standing Communist formulation that the Lao war must
be settled in accordance with the 1962 Geneva Accords
and the "realities" of the current situation. The
letter states that if Souvanna adopts an "equivalent
attitude," the Communists' special envoy would re-
turn to Vientiane after a six-month absence to "con-
tinue our contacts." Souvanna has indicated that
he is drafting a conciliatory response, although
once again affirming that he will not knuckle under
to Communist demands.
The latest message suggests the Communists may
want to probe for some give in Souvanna's position.
As in the past, the Communists probably are also
interested in projecting a tone of reasonableness
at the very time that they are pressing hard mili-
tarily.
The government, meanwhile, is continuing to
strengthe.i and redeploy its forces in the Long
Tieng area. Four new irregular battalions from
Sava;inakhet are being moved into the Long Tieng
area to replace those withdrawn following the re-
cent heavy fighting on Skyline Ridge. The govern-
ment is continuing to move troops to the Pha Dong
area, and by 5 February expects to have some 4,000
men there. The remaining irregular forces--some
8,000 troops--are deployed around the Long Tieng
complex from Sam Thong to the new fire support
bases in the south. (CONFIDENTIAL)
5 Feb 72 Central Intelligence Bulletin
Approved For Release 2005/06/0$] fl 5T00875R000800020029-7
 Approved For Release 2005/06/T 81 A- ' ' 85T00875R000800020029-7
COMMUNIST CHINA: The growing strength of the
moderate forces in China's unsettled leadership co-
alition has been affirmed by the reappearance of
long-absent politburo member Hsu Shih-yu.
Hsu, a ranking conservative military leader,
made his first public appearance in eight months
earlier this week at a rally in Kiangsu Province.
He was identified as retaining all his previous
titles: member of the politburo, commander of the
Nanking Military Region, and first secretary of the
Kiangsu provincial party committee. Hsu''s lengthy
disappearance was probably related to the events
that precipitated the Lin Piao affair, and his polit-
ical fate almost certainly has been one of the :.lost
controversial personnel issues coafrontin:, the regime.
Hsu's reappearance coincides with indications
that the political fortunes of other -moderate mili-
tary leaders are on the upswing both at the provin-
cial level and in Peking. Two other conservative
military veterans, for example, have been playing
a prominent role in Peking since the funeral of
former foreign minister Chen I on 10 January. Both
these men--Hsu Hsiang-chien and Nieh Jung-chen--
were members of the pre - Cultural Revolution polit-
buro who came under heavy radical attack and were
subsequently defended by Premier Chou En-lai. Con-
versely, several civilian radicals on the present
politburo have been playing a less active role since
the Chen I funeral. (CONFIDENTIAL)
5 Feb 72 Central Intelligence Bulletin
Approved For Release 2005/06/ f6~ P85T00875R000800020029-7
 Approved For Release 2005/06/09 I,Q- P 5T00875R000800020029-7
SOUTH VIETNAM: Economic performance was notabiv
brighter on several fronts in 1971. Although pres-
sures may be more severe this year, Saigon has been
showing greater flexibility and resolution in deal-
ing with economic problems.
Real output from agriculture and industry
showed a significant increase in 1971. In addition,
forestry production, which will be a significant
element in export recovery, probably doubled. Al-
though private foreign investment continues to lag,
the Japanese showed grater interest in establishing
joint industrial ventures in South Vietnam. Addi-
tional resources became available to the civilian
economy in 1971 in the form of about 20,000 workers
released from the US sector most of whom were ab-
sorbed. Localized unemployment exists, however, in
the northern provinces.
The rate of inflation was the lowest since
1964, and there was a phenomenal increase in savings
in banks and other financial institutions. The in-
terest rate reform of late 1970 resulted in more
than a 100-percent increase in time and savings de-
posits in 1971. Retail prices rose only 14 percent
in 1971, compared with increases ranging from 30 to
55 percent during 1965-70. Most of the increase in
1971 occurred during August-December, mainly reflect-
ing some speculative activity prior to the presiden-
tial election in October and implementation of major
eccnomic reforms, including a devaluation, in.miu-
November.
At the outset of 1972 it appears that economic
problems will mount as a result of increased Commu-
nist military activity and the effects of the reduc-
tion in the US presence. As the US withdrawal con-
tinues, the release of labor from the US sector will
become more difficult to absorb. Government exFen-
ditures are expected to rise another 25 percent
Central Intelligence Bulletin 9
Approved For Release 2005/06/0%"85T00875R000800020029-7
 Approved For Release 2005/06/ 6_ FVP85T00875R000800020029-7
while more of the anticipated increase in revenues
depends an the very difficult task of increasing
domestic tax collections. The Thieu government's
much improved performance in economic policy matters
in the last 18 months, however, enhances its capacity
to cope with these problems. (CONFIDENTIAL)
5 Feb 72 Central Intelligence Bulletin 10
Approved For Release 2005/08 ~Eik XDP85T00875R000800020029-7
 Approved For Release 2005/06/OR(,,g ff ]P85T00875R000800020029-7
25X1X
25X1X
EUROPEAN COMMUNITIES: The EC is resuming its
efforts to foster monetary cooperation in line with
earlier commitments, caespite fundamental differences
in approach among the member countries.
At a Council meeting earlier this week, EC
Commissioner Barre again urged action on monetary
questicns without which, he stressed, the Community
would become "no more than an empty shell." Barre
emphasized the need to consider not only the nar-
rowing of margins between Community currencies but
also controls on capital inflows and some prelim41.-
nary formulations of a common reserve management
policy--if not yet a pooling of reserves. These
issues probably will be brought up at the meeting
of the EC central bank governors, scheduled for
mid-February, and at the EC Council session of fi-
nance ministers which may be held at the end of the
month.
The French indicated genera]. approval of Barre's
statement. Barre's toning down of earlier sugges-
tions for immediate establishment of a European
monetary cooperation fund reflected Paris' objec-
tions to supranational institutional arrangements.
The Germans, however, maintain their view that mon-
etary cooperation must be paralleled by effective
coordination of economic policies. Italy's posi-
tion represents a middle ground.
While these differences will make progress dif-
ficult, the international, monetary situation pro-
vides a stimulus to common action.
25X1X
I the US do Mir is trending
to the floor in mos exchange markets and central
banks are purchasing large amounts of dollars, there
will be a corresponding heightening of EC interest
in taking common monetary measures. (CONFIDENTIAL
NO FOREIGN DISSEM)
Central Intelligence Bulletin
Approved For Release 2005/06$WL4k DP85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
S]ECRE'L'
EGYPT-SUDAN: The purpose of Libyan Premier
Qadhafi s surprise visit to Khartoum this week ap-
parently was to ease the strains in Egyptian-Suda-
nese relations.
e dispute stems rom umayri s
irritation with a a 's Performance during his talks
in Moscow last October.
Numayri, because of the al ege ovie an local Com-
munist complicity in the effort to depose him last
July, took as a personal affront Sadat's call in the
Moscow communique for closer Arab-Soviet ties. The
communique also denounced anti-Communist propaganda
in the Arab world.
In this frame of mind, Numayri was not recep-
tive to Sadat's insistence that Sudan reoair its re-
lations with the Soviet Union arid defer the strength-
ening of ties with the West. Sadat succeeded to the
extent that Numayri did riot.--as had b en earlier
anticipated--broach the resumption of alplomatic re-
laticas with the US during Assistant Secretary New-
som's visit last December. The following week, how-
ever, Khartoum re-e:.,4ablishea ties with West Germany
%hich wero severed in 1965. Moreover, Khartoum con-
tinues to show a strong interest in expanded economic
and cultural relations with the West.
Even if Qadhafi, perhaps with an inducement of
financial aid, was able to convince Numayri to make
a gesture toward the USSR, the divergence between
Egyptian and Sudanese attitud ; toward the USSR is
likely to remain. Numayri may believe that Sadat
no longer supports his retention in power. More-
over, the failure in the past month of Egyptian and
Sudanese emissaries to reconcile differences does
not augur a rapid normalization of relations. (CON-
FIDENTIAL)
Central Intelligence Bulletin 12
25X6
25X6
Approved For Release 2005/0~kf-. &- DP85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
SFICRI;'T
DENMARK: Defense reform has been deferred at
least until 1973 to permit the nation to focus on
the issue of membership in the European Communities.
Parliament began debate of the Social Democratic
government's controversial military reform program--
one of Prime Minister Krag's five priority programs--
on 2 February and then routinely referred it for
committee consideration. During the floor debate,
the left-wing Socialist People's Party, which pro-
vides Kragg.'s minority government its parliamentary
majority, spoke against the measure. There were in-
dications, however, that the opposition Radical Lib-
erals might support a modified program. Krag may
accept more sweeping modifications in order to achieve
a four-party consensus which would include two other
opposition "bourgeoisie" parties.
The defense bill probably will not be considered
a second time until October--by which time the Euro-
pean Communities issue should be decided.
Krag's reform proposals envisage cutting the
standing army from 13,000 to 7,000 men, limiting the
navy to small vessels, and stripping the air force
of three of its nine tactical units. A reduction in
conscription from nine to six months is not part of
the reform package but is also under consideration.
NATO is concerned and the Danes have promised
to consult the alliance. It is likely that the Dan-
ish reform will be scrutinized in the Eurogroup--the
UK and all the continental members of NATO except
France and Portugal. The US proposal that the Euro-
group undertake such a review has been favorably re-
ceived initially by a number of Eurogroup members.
West German Defense Minister Schmidt, current head
of the group, probably will favor placing the item
on the group's agenda at a future session. (CONFI-
DENTIAL)
5 Feb 72 Central Intelligence Bulletin
Approved For Release 2005/06/C?E?RQW85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
VENEZUELA: Minister of Mines Perez has pro-
posed that Venezuela organize a meeting of Latin
American oil producing and exporting nations.
Perez believes that Venezuela's experience in
dealing with the international oil companies and its
familiarity with the market can be useful to other
countries in the hemisphere. The Caldera adminis-
tration is increasingly confident of its ability to
dictate terms to the oil companies, having recently
asserted a claim to considerable control over these
firms through legislation. Regional acknowledgement
of Venezuela's lead on petroleum policy could assist
Caldera in countering the fear of some domestic crit-
ics that he has carried his nationalistic policy
too far.
In addition to Venezuela's interest in per-
suading other countries not to offer the oil compa-
nies more favorable conditions than Caracas does,
an assertion of leadership on petroleum affairs
would be consistent with Caldera's activist foreign
policy. Late last year Venezuela organized and
hosted a conference of Caribbean foreign ministers
to gain support for its own position on the law of
the sea issue. Venezuela also has played a vigor-
ous role in the Organization of Petroleum Exporting
Countries. The Caldera government probably believes
that strong nationalist trends elsewhere in the
hemisphere provide a favorable basis for developing
a common front by the producing countries in future
negotiations with the international companies. (CON-
FIDENTIAL)
5 Feb 72 Central intelligence Bulletin 14
Approved For Release 2005/06 DP85T00875R000800020029-7
 Approved For Release 2005/06/09 : CIA-RDP85T00875R000800020029-7
SECRET'
NICAF.AGUA: President Somoza has finally agreed
to invite OAS representatives to observe Sunday's
balloting for the constituent assembly.
Althc.igh he had already agreed to the presence
of OAS observers for the 1974 general elections,
Somoza had resisted opposition pressure for observ-
ers during this election. There will be only three
to five OAS observers, but Somoza's concession to
opposition wishes should have a salutary effect on
the eleuLoral climate? His party is the largest
in the country and should win easily without fraud
or coercion.
An agreement signed by Somoza ani opposition
leader Aguero early last year guarantees the oppo-
sition 40 percent of the constituent assembly ,eats.
The assembly, which will convene in mid-April, will
not only revise the constitution but will serve as
a legislature during the 30-month interim govern-
ment. When Somoza's term ends on I May, a three-
man executive composed of two Liberals from Somoza's
party and one member of the opposition Conservative
Party, probably Aguero himself, will assume the ex-
ecutive functions. (CONFIDENTIAL)
5 Feb 72 Central Intelligence Bulletin
Approved For Release 2005/06/W-(GJ-R''85T00875R000800020029-7
 Approved For Release 2005/06/0 j ,9!A 1Rp.P85TOO875R000800020029-7
25X6
LIBYA: Talks between the oil companies and
Libya on increased revenues to compensate for dol-
lar devaluation may grow tougher next week when ne-
gotiators at the ministerial level take over from
technicians. The companies are expected to propose
a settlement conforming with the Geneva agreement
concluded last month with the Persian Gulf OPEC
members. The accord increased Gulf State revenues
by about 8.5 percent and contained a provision for
renegotiating the price of Persian Gulf oil piped
to Mediterranean outlets if a Mediterranean producer
achieves a greater increase. Libya, however, has
indicated it will seek a larger increase. Libya's
usual peremptory tactics may he