NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A028700010014-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 20, 2016
• Document Release Date: July 14, 2006
• Sequence Number: 14
• Publication Date: March 8, 1976
• Content Type: REPORT

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Top Secret
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National Intelligence
Bulletin
Top Secret
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DIA & DOS review(s) completed.
N2 678
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National Intelligence Bulletin
March 8, 1976
CONTENTS
WESTERN SAHARA: Morocco, Mauritania
sever diplomatic relations with Algeria . . . . . . . . . . . . . .
PORTUGAL: Legislation against
foreign revolutionaries . . . . . . . . . . . . . . . . . . . . . 3
NATO-IBERIA: Allied plans to draw
Spain and Portugal closer to NATO . . . . . . . . . . . . . . . 4
WESTERN EUROPE - CUBA: Havana's
Angolan involvement prompts no
radical change in relations . . . . . . . . . . . . . . . . . . . 6
JAPAN-AUSTRALIA: Attempts to
improve relations . . . . . . . . . . . . . . . . . . . . . . . 7
PERU: Navy seeking to dissociate
itself from government . . . . . . . . . . . . . . . . . . . . . 9
USSR: Move to centralize control
of foreign economic relations . . . . . . . . . . . . . . . . . . 10
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National Intelligence Bulletin
March 8, 1976
Morocco's decision yesterday to sever diplomatic relations with Algeria
underscores Rabat's anger over Algiers' continuing opposition to the
Moroccan-Mauritanian take-over of Western Sahara. Mauritania, which jointly
administers the territory with Morocco, followed Rabat's lead and broke with
Algiers within hours of Morocco's move.
As. explained in a lengthy government communique from Rabat, the break in
relations was precipitated by Algerian recognition on Saturday of the Saharan
Democratic Arab Republic, proclaimed on February 27 by the Algerian-backed
Polisario Front. Rabat has condemned the so-called Polisario "state" as an Algerian
creation.
Algerian recognition followed by a day the Front's announcement that it had
also formed a "government," a move calculated to strengthen its shaky political
credentials and to gain international support. The new "government" controls little
territory and is in effect a government in exile.
In announcing its recognition of the new Saharan "state," Algiers again pledged
to give the Polisario Front its full political, moral, and material support in the
struggle for self-determination for Western Sahara. Only Algeria and two African
states, the Malagasy Republic and Burundi, have so far recognized the new Saharan
"state."
Egyptian President Sadat, in a statement released yesterday, urged restraint
upon both Morocco and Algeria and cautioned against taking steps that would
"complicate the situation." Sadat's remarks suggest Cairo is prepared to resume its
mediatory role if the parties are receptive. Last month, Egyptian Vice President
Mubarak shuttled between Rabat and Algiers in an effort to help find some formula
to prevent the dispute from getting out of hand.
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The government is preparing harsh legislation to deal with foreign
revolutionaries who try to help their Portuguese counterparts delay legislative
elections by inciting civil disturbances.
Under the new legislation, which probably will become effective next week,
foreign citizens can be expelled for violating national security or public order, or for
participating in political activities without permission.
The legislation is also aimed at reassuring the Portuguese people, who are
uneasy about recent newspaper reports that there is a growing number of Cubans in
Portugal. The current spate of rumors apparently stems from the alleged presence of
Cubans and Italians at disturbances last week in the Communist stronghold of
Setubal, some 20 miles south of Lisbon.
Many Portuguese are sensitive about Cuban involvement in the former colony
of Angola and fear some attempt may be made to aid the leftist cause in Portugal.
The nearly 400,000 Angolan returnees are particularly alert to the Cuban presence,
attributing the problems they are having in Portugal to the Marxist Popular
Movement for the Liberation of Angola and its Cuban supporters.
Military leaders have discounted the stories of "thousands" of Cubans entering
Portugal, but no accurate figures are available. Lisbon military region commander
Lourenco has told reporters that the estimates are inflated because Spanish-speaking
persons are often mistakenly presumed to be Cubans. One newspaper has warned of
Cubans passing themselves off as Chilean exiles.
Government authorities have recognized the need for measures to control
radical exiles who have flocked to Portugal since the overthrow of the Caetano
regime in April 1974, but have done little, until now, to solve the problem. Since the
collapse of leftist influence on November 25, foreign radicals have reportedly taken
a more provocative stand than local leftists in clashes with authorities. Attempts to
round up exiles after November 25 were ineffective.
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National Intelligence Bulletin March 8, 1976
The Western allies are proceeding with plans to draw Portugal and Spain closer
to NATO.
For Portugal-already an Alliance member-the task is one of finding an
appropriate role for the armed forces and aiding in their modernization. In the case
of Spain, a number of NATO members believe that it would be desirable to
encourage Madrid's unofficial participation in Alliance activities until such time as
West European opinion is prepared to consider formal membership.
Portugal
The effort to develop an Alliance role for the Portuguese armed
forces-particularly the army-parallels Lisbon's efforts to reduce the army's
political role and to limit its mission to the defense of Portugal and its island
possessions. Portuguese military leaders see this revised role for the army as an
important first step toward the development of a democratic political system. They
contend the armed forces must assume a more traditional role, now that Portugal
has relinquished its colonial empire.
The allies want to help clarify the Portuguese army's role in NATO and
modernize the armed forces in order to strengthen Lisbon's ties to the Alliance and
reinforce anti-Communists in the government. The first step in this process will be to
gain formal allied approval in NATO of a force development program for Portugal. A
lack of resources and planning experience in Portugal make more direct allied
assistance essential.
A British representative has suggested the creation of an ad hoc NATO group to
exchange information on military needs, float ideas, and consider alternative
Portuguese force development programs. In an attempt to expand allied bilateral
military assistance, Bonn has taken steps to broaden its training support for the
Portuguese air force. The US has doubled its military assistance program for
Portugal.
These initiatives, if supported by the other allies, could lead to multilateral
assistance under the supervision of an ad hoc NATO steering group. Such a group
would have the dual task of harmonizing the various bilateral arrangements and
making them consistent with NATO initiatives.
Spain
Despite Spain's position outside the North Atlantic Alliance, Western military
planners believe it has an important role to play in bolstering the defense of the
southern flank and the western Mediterranean.
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National Intelligence Bulletin
March 8, 1976
From Madrid's perspective, closer association with the Alliance is desirable
because it provides an opportunity to strengthen ties with other European countries.
Spain's ultimate goal is EC membership, which it believes would strengthen domestic
forces committed to a democratic political system.
The recently revised US-Spanish defense treaty, which put relations on a new
basis of greater reciprocity, is regarded as the initial step toward establishing closer
relations with NATO. The treaty anticipates enhanced coordination with NATO and
looks toward increased Spanish contacts with other Western governments.
Foreign Minister Areilza, in talks with NATO representatives in Brussels last
month, discussed how Spain might proceed to develop an early and visible
connection with the Alliance. F_ 1~ the talks
focused on early Spanish participation in various NATO-related military activities
and establishment of liaison relationships with Alliance institutions.
Some observers, more keenly aware of the strong undercurrent of opposition to
closer ties to Spain still existing in many West European countries, have
recommended that Spain not push forward too hard and too fast. A high-ranking
West German official maintains that a gradual and cautious approach to Spanish
association and stepped-up bilateral efforts would prove more effective than highly
visible initiatives by Secretary General Luns.
The West German supported the position taken by Areilza that closer military
contacts with NATO will lead the Spanish military to take a more favorable attitude
toward democratization and increase their professional competence. A NATO
official has suggested that Madrid place more emphasis on its strategic position in
discussing closer ties to NATO with other European countries.
The latter course seems to fit in well with current West European attitudes
toward Spain and may very well become part of Spanish policy in the near future.
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WESTERN EUROPE - CUBA
Cuban involvement in Angola has so far not prompted West European
governments to alter radically their political and economic relations with Havana.
Existing West European commercial credits to Cuba do not appear to have been
affected. There is, however, growing domestic pressure on some governments to
reduce their development aid programs to the Castro regime.
The larger West European countries, with the exception of West Germany, have
had diplomatic relations with Havana for a decade or more and do not want to take
actions that might adversely affect their share of the Cuban market. The smaller
West European countries have little at stake, politically or economically, in Cuba
and see no need to alter their relationship with Havana.
West Germany, which resumed diplomatic relations with Cuba only last year,
last week announced cancellation of a projected aid program amounting to
$120,000. The decision was taken in part in response to criticism from opposition
parties in parliament, and in part in connection with a foreign aid realignment to
funnel funds to the poorest developing countries.
Sweden and Norway, major West European donors, provided more than 80
percent of the approximately $12 million in development aid Havana received from
Western Europe in 1974. Although both governments are under domestic pressure to
reduce development aid to Havana, they will honor existing commitments.
The Social Democratic government in Stockholm, which has sympathized with
some leftist regimes in the underdeveloped world and which has been Cuba's largest
donor in Western Europe, will make every effort to continue aid. Prime Minister
Palme, however, is nervous about the possibility of a political backlash and has asked
Castro to postpone his trip to Sweden until after the national election in September.
Similar domestic pressure has emerged in Belgium and the Netherlands, but
neither government has felt compelled to change its policy. The Hague, in fact,
initiated its first aid program to Cuba three months ago, and the Belgian minister for
foreign trade hopes to visit Havana this month to sign a bilateral economic
cooperation agreement.
All the West European aid programs are modest in scope and even sharp
reductions or phaseouts would have little impact on Cuba. Several
countries-among them France and Great Britain-have given virtually nothing since
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National Intelligence Bulletin
JAPAN-AUSTRALIA
March 8, 1976
Japanese-Australian relations seem likely to improve, following a relatively
abrasive period caused by the economic recession and the policies of the former
Whitlam government. Although Tokyo is still cautious, the recent visit by Australian
Deputy Prime Minister Anthony has given Japanese leaders a clear impression that
the new Fraser government is considerably more eager than its predecessor to
encourage a Japanese economic role in Australia, particularly in the development of
natural resources. Trade problems will remain, but should diminish in intensity.
Anthony's trip, the first overseas visit by any senior minister in Prime Minister
Fraser's cabinet, seemed designed to underscore the importance the new Australian
government attaches to relations with Japan-Australia's largest trading partner.
Partly because Australia is Japan's second largest supplier of raw materials, the
Japanese responded with a top-level reception. Anthony met with most of Japan's
top cabinet ministers, including Prime Minister Miki.
During the Whitlam administration, trade and the development of Australian
resources were contentious issues in relations with Japan. Some of the difficulties
stemmed from problems long built into the relationship-Japan's desire for
guaranteed access to Australian raw materials, and at the same time, a relatively
unhindered market for Japanese manufactured goods. These objectives have run
headlong into Australia's traditionally protectionist policies on manufactured
products, and more recently, have conflicted with growing nationalistic sentiment
against foreign "exploitation" of Australia's natural wealth.
Both sides engaged in discriminatory trade practices, partly in an effort to
counter recessionary pressures. Tokyo caused an uproar in 1974 by banning imports
of Australian beef, closing off a major market for Australian producers. Last year,
some imports were resumed, but not nearly enough to satisfy Canberra. Japanese
companies caused additional irritation by asking Australian mineral producers to cut
back agreed-upon shipments because of the downturn in the Japanese economy.
The Japanese, for their part, have been unhappy over Canberra's efforts to
influence prices in contract negotiations between private Japanese and Australian
companies. Tokyo is also vexed over import restrictions imposed by Canberra on a
wide range of products, particularly automobiles. The trade balance is heavily in
Canberra's favor, which adds to Japanese dissatisfaction.
Much to the pleasure of Japanese leaders, Anthony indicated that the Fraser
government is committed to private sector development of resources-including
uranium, which was off-limits to foreign participation under Whitlam. According to
Anthony, the conservatives view 50-percent Australian equity as a suitable target. In
the case of uranium, however, Canberra wants a higher percentage of Australian
ownership.
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National Intelligence Bulletin
March 8, 1976
As for trade, Anthony reportedly expressed his government's intention to
retain, with some adjustments, several key policies instituted by Whitlam:
--Government review of privately negotiated commodity agreements, but
henceforth only in cases where the "national interest" was at stake.
--Maintenance of most import restrictions, at least through the end of the
current fiscal year.
--"Benign" Australian membership in primary commodity producers'
organizations.
One Australian embassy official admitted that Anthony's description of
Australian-Japanese economic interdependence as a source of strength, rather than
vulnerability, constituted a significant evolution in Canberra's thinking. Japanese
officials for their part believe that it is too early to evaluate fully the new
government's attitudes, but seem generally optimistic. They point to a
"pro-business" attitude on the part of the Fraser government, as well as Anthony's
frequent references to "market prices and forces" in his conversations with Japanese
leaders. The Japanese are also hopeful that the worldwide economic recovery will
ease protectionist inclinations in Canberra.
Another source of encouragement to Tokyo is Canberra's renewed desire to
conclude a basic relations treaty. Talks on a treaty have foundered for several years
because of differences over economic issues.
There is some concern in Tokyo that the Japanese business community will
overreact to the conservative victory in Australia and fail to give due regard to the
basic nationalistic undercurrent still running strong in Australia. Insensitive behavior
by Japanese firms in the difficult negotiations coming up on raw materials prices, for
example, could diminish the good will of the new Australian government.
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Senior naval officers are seeking support for a plan to dissociate the navy from
the government of General Morales Bermudez and to rally conservative opposition
to government policies.
The apparent unwillingness of President Morales Bermudez to reassert his
earlier moderate leadership against leftist influence in the government has been
fanning the flames of discontent for weeks among nearly all conservative sectors.
Some naval officials are so concerned about the leftward drift of the administration
that they have reportedly drafted a manifesto which attacks the government's
political orientation and would dissociate the navy from present policies.
High-ranking naval officers, possibly including the navy minister, support a plan
to publish the manifesto on March 8 or 9 and to sail the fleet out of Lima's port of
Callao to reinforce their argument. A similar maneuver by the navy last year
succeeded in forcing the ouster of an unpopular navy minister.
Some naval officers have talked of plans to oust Morales Bermudez in order to
get rid of Prime Minister Fernandez Maldonado, the leading advocate of
anti-capitalist policies in the government. They claim to have support from some
army officers and from leaders of the major opposition party, the American Popular
Revolutionary Alliance.
Statements attributed to the navy minister on March 4, however, suggest that
the navy does not have sufficient backing from the other services to mount a coup.
The alerting of key army units in the capital at the beginning of the weekend was
more likely a government precaution against a coup than an indicator of army action
against the administration.
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National Intelligence Bulletin
March 8, 1976
According to a senior economist at the Institute of World Socialist Economy in
Moscow, efforts will soon be made to centralize and improve the control structure
for Soviet foreign economic relations. The planning and implementation of these
changes will be difficult and may take as long as two or three years. Moreover,
tremendous bureaucratic resistance is expected from the Ministry of Foreign Trade.
Improved efficiency and better management will be the major objective,
especially in the area of foreign trade. The entire spectrum of foreign economic
activity will be affected, however, including finance, CEMA integration, aviation,
and shipping. This will require the development of a new, long-term economic
strategy and some new concepts and management mechanisms, particularly in
foreign trade.
It is not clear where this super authority will reside, nor exactly what changes
are envisioned. The Soviet economist mentioned more realistic foreign trade prices
and more active participation in foreign trade by the industrial ministries as possible
changes. Experts from Gosplan, the Ministry of Foreign Trade, the Institute of
World Economy and International Relations, and the Institute of World Socialist
Economy will meet early this week to begin discussions. The two institutes have
been in the forefront in arguing for reorganization of the Soviet foreign trade system
and for a more active role for foreign trade in the Soviet economy, including a
greater Soviet participation in the international division of labor.
The reorganization was alluded to by General Secretary Brezhnev in his speech
of February 24 to the 25th party congress. Brezhnev said,"Politics and economics,
diplomacy and commerce, industrial production and trade are all intertwined in
foreign economic relations. Consequently, the approach to them and their
management must be integrated, tying up into one knot the efforts of all
departments, and our political and economic interests. This is exactly how this
important issue is regarded by the party's Central Committee."
Arguments for reorganizing the Soviet foreign trade mechanism have persisted
for many years, but the relatively small role of foreign trade in the Soviet economy
limited the development of an "issue" and allowed the Ministry of Foreign Trade to
maintain its monopoly position. The rapidly growing role of foreign trade (about 10
percent of GNP in 1975, compared to about 5 percent between 1965 and 1970) and
the special and growing role of "compensation projects" with both communist and
Western trading partners require a fresh examination of foreign economic relations.
Moreover, the fact that foreign trade may account for more than 20 percent of
Soviet GNP by 1980 imparts a sense of urgency to the need for reform. Changes
already have been made in Gosplan, which places great importance on the role of
"compensation agreements" in the development of the Soviet economy.
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