NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029100010004-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 21
• Document Creation Date: December 20, 2016
• Document Release Date: September 18, 2006
• Sequence Number: 4
• Publication Date: July 2, 1976
• Content Type: REPORT

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op ecret
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Access to this document will be restricted to
those approved for the following specific activities:
Friday July 2, 1976 CI NIDC 76-155C
1
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
25X1
DIA State Dept. review(s) review completed.
completed Top Secret
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National Intelligence Daily Cable for Friday, July 2, 1976.
25X1
I IT he NID Cable is for the purpose of informing
senior US officials.
//Lebanese Christians yesterday launched what
they expect to be the final attack on the Tall Zatar refugee camp.
The Palestinian defenders of the camp, whom we estimate to num-
ber 6,000, have reportedly been ordered not to surrender despite
the fact that most Palestinian leaders expect the camp to fall
soon.//
Concern over Reprisals
25X1 Fear of Palestinian and leftist reprisals has gripped
Beirut, as the battle for Tall Zatar enters its final stage. The
greatest concern is for some 70,000 Christians living in Muslim-
controlled areas of Beirut and its environs.
25X1 A high-ranking Christian militia officer told US offi-
cials yesterday that he--and apparently others--are frustrated
with the principal Christian leaders, who apparently have shown
little concern over the repercussions of their actions. The offi-
cer accused Camille Shamun and some Phalanges leaders of trying
to establish partition, and in so doing, jeopardizing the lives
of many of their fellow Christians.
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Muslim leftist leaders and Salah Khalaf--the ranking
Palestinian leader during Yasir Arafat's absence from Lebanon--
are reportedly trying to prevent unauthorized acts of venegence.
They have promised publicly that "peaceful" Christian enclaves
will not be attacked. Neither Palestinian nor leftist leaders,
however, are able to control the numerous undisciplined factions
operating throughout Beirut, and they no doubt fear that they
may soon be faced with a major cycle of uncontrollable violence.
Jumblatt
apparently told an Arab League official on Wednesday that he was
prepared to consider any form of negotiation if the Christians
would withdraw to their former positions around Tall Zatar.
Arab League Efforts
Arab League Secretary General Riyad and his two-man
peace committee left for Beirut yesterday by way of Damascus,
despite the fact that their call for a cease-fire yesterday has
been completely disregarded. The committee will have virtually
no impact on the situation until the Christians have achieved
their victory over Tall Zatar, and even then the prospects for
negotiating a truce are bleak.
The Saudi and Sudanese contingents of the League's
security force have entered Lebanon. Unconfirmed press reports
say they were stationed yesterday on the outskirts of Beirut.
The Saudis, however, have all but declared publicly that their
chief concern is the safety of their troops--not the imposition
of a cease-fire--and that they will not become embroiled in the
fighting.
The League apparently has called for other members who
had not previously agreed to contribute to the peace-keeping force
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to send troops to Lebanon immediately. So far, only Iraq and,
reportedly, North Yemen have indicated they would respond; the
Iraqi offer, of course, would be unacceptable to both Syria and
the Lebanese Christians.
Soviets and Others Leave Beirut
The plight of Beirut residents worsens daily, and
oreigners as well as many Lebanese continue to leave the city.
Only small quantities of drinking water are available in most
areas of the city, and food, fuel, and medicine are in dangerously
short supply. The American University Hospital has apparently
been hard hit by shortages of water and electricity, and now
depends on receiving its most urgently needed supplies overland
from Damascus.
A Soviet diplomat in Damascus told a US official yes-
terday that the Soviets are planning to evacuate some of their
nationals by sea from the southern city of Sidon. He gave no de-
tails on the timing and size of the evacuation. According to the
Reuter press service, which is generally accurate in its coverage
of Lebanon, the Soviet evacuation was under way yesterday.
//Earlier this week, the Soviet defense attache in
Damascus told the US defense attache that the total number of
official and unofficial Soviet citizens in Lebanon was no more
than 100 and that most dependents and non-essential personnel
had been sent home some time ago. The Soviet attache expressed
his personal view that both the US and the USSR should try to
maintain some sort of presence in Lebanon, despite the current
difficulties.//
The resignation yesterday of Prime Minister Arias, re-
portedly at the bidding of King Juan Carlos, could give a boost
to the Spanish government's reform program. The move came as a
complete, surprise to the cabinet, which must also resign.
The King probably hopes to make the cabinet more cohe-
sive. Arias has reportedly been at loggerheads with key members
of the government like Interior Minister Fraga and Foreign Min-
ister Areilza over the reform program.
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I IJuan Carlos has reportedly been displeased for some time
with Arias' failure to provide strong leadership for the govern-
ment's liberalization efforts but has hesitated to replace him.
The King must select a new prime minister from a slate of three
names drawn up by the rightist-dominated Council of the Realm--a
17-man senior advisory body.
When General Franco died last November, Juan Carlos was
reportedly blocked in his attempt to replace Arias because he
could not be sure that the Council would include a candidate on
its list favorable toward reform. The King apparently feels more
confident now that he can prevail on the Council to nominate a
man of his choice. The Council, which met yesterday, must submit
its list within 10 days.
The King's secretary told Ambassador Stabler that the
new prime minister would be a member of the present cabinet.
The most likely candidate at this stage appears to be
Fraga, the chief architect of she reform program and the dominant
force in Arias' government. He has made many enemies with his
forceful personality, however, and he has recently been criticized
by both the right--for his strong support of liberalizing reform--
and the left--for his role as chief of the internal security
forces.
Areilza, another candidate, is more popular abroad than
at home, where he is distrusted by the right and the military be-
cause of his image as a strong liberal.
If both men are cons=idered too liberal by the Council of
the Realm, someone who is further to the right but still in favor
of gradual reform might be chosen as a compromise candidate--for
example, the young and dynamic minister of the National Movement,
Adolfo Suarez.
If the King is unable to get the civilian of his choice,
he mig t opt for a progressive military leader like the new chief
of the army general staff, Lieutenant General Gutierrez Mellado.
Lieutenant General Santiago y Diaz de Mendivil, deputy
prime minister and minister for defense affairs, has been named
acting prime minister until a new one is sworn in.
25X1
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Violence erupted yesterday following the Peruvian gov-
ernment s announcement of severe economic austerity measures.
The military regime reacted swiftly to quell demonstrations and
strikes in Lima and its port, Callao. By afternoon the disturb-
ances had been brought under control.
Some violence has occurred in the southern city of
.Arequipa; a general strike is reported under way there.
The violence does not appear to have been widespread;
on y isolated and apparently uncoordinated incidents, such as
the burning of buses and cars, rock-throwing, the setting of
bonfires, and some looting, have been reported.
The government has established a 30-day state of emer-
gency which suspends certain personal freedoms. It also imposed
a curfew for Lima and Callao and declared today a "non-work day."
In addition, riot police and military armored cars are patrol-
ling the capital.
I
cause further problems. The measures include:
--Wage freezes for a year, after a small initial increase.
--Lifting of price controls and removal of subsidies from
many basic items.
--Doubling the price for petroleum products and raised
fares for public transportation.
--A budget reduction of $218 million that will cause a
drastic cut in public investment and eliminate new employ-
ment and promotions.//
//The government weathered yesterday's outbreaks
we. , but workers idled by the "non-work day" may engage in fur-
ther protests against the austerity program. The government may
have to react harshly to control new anti-government demonstra-
tions.//
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//The unpopularity of the economic measures will
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The state of emergency imposed on June 19 appears to
be hastening political polarization in Jamaica and solidifying
Prime Minister Manley's alliance with the radical wing of his
party.
On June 26, Security Minister Munn announced that 353
persons had been arrested, of whom more than 130 have been im-
prisoned. Many reportedly are leaders and organizers of the op-
position Jamaica Labor Party. We know of only one official of
Manley's People's National Party who has been detained.
I ILabor Party leader Seaga has denounced the govern-
ment's actions as a "political witch hunt" aimed at assuring a
victory by Manley and a majority of his party's candidates in
the election to be held by next spring. Pearnell Charles, a
Labor Party senator and its deputy leader, has been arrested
and indicted under the emergency orders. Seaga says three of
his party's candidates and many of their workers have also been
arrested.
The blatantly partisan enforcement of the state of
emergency is causing public opinion to turn against the govern-
ment, in the opinion of the US embassy in Kingston. Manley's
failure so far to establish a tribunal to review the cases of
persons detained--as required by law--has damaged the govern-
ment's credibility.
Manley took the offensive against his critics on Tues-
day in a televised speech in Parliament. He said the security
forces have uncovered evidence of subversion and terrorism aimed
at overthrowing his government. He read from documents that al-
legedly brand him and the government as communist. A subsequent
government-sponsored propaganda campaign has attempted to link
the Labor Party with these "plots" against the government.
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Manley's campaign against Seaga and the Labor Party
undoubtedly has been urged on him by the increasingly influen-
tial radical wing of his party. A member of that group was
sworn in as parliamentary secretary in the Ministry of National
Defense on June 21. This is one step in what is likely to be a
series of moves to bring the military and constabulary forces
more under the control of the left wing of the government and
Manley's party.
I //Jamaica's economic problems--declines in bauxite
output, reduced tourist trade, lower sugar prices, and a dearth
of private investment--have resulted in serious foreign exchange
difficulties and a further reduction in economic activity.//
which would have no choice but to raise bauxite and alumina
prices. We believe other Caribbean bauxite producers as well
as Guinea would follow any price increase by Jamaica. These
producers account for about 75 percent of US bauxite and alumina
imports.//
//The only easy recourse for Prime Minister Manley's
government would be to raise taxes on the aluminum companies,
//When the left-leaning Manley became prime minister
in 1972, the country had excellent growth prospects, especially
in aluminum and tourism. At first the economy did well under
Manley, but in the past 18 months it has deteriorated rapidly:
--Government pressure against the aluminum companies have
caused a sharp decline in bauxite and alumina investment.
--Manley's socialist rhetoric and his rapprochement with
Cuba have scared other foreign investors away and led to
large capital flight.
--Strikes have brought on a 30-percent drop in bauxite and
alumina output in the first half of 1976.//
--Violent crime, on the rise for years, has recently taken
an anti-foreign turn leading to a sharp drop in tourism.
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 Approve
//In the first half of 1976 the price of sugar,
one of Jamaica's main exports, fell 50 percent from the 1975
level.//
25X1 I /The Jamaican economy slumped badly in 1975 when
real gross national product dropped 2 percent, and the slump
worsened this year.// Despite the government-imposed import
restrictions, Jamaica had a record current-account deficit of
$192 million during the first six months of 1976.
vate business. These measures are intensifying the impact of im-
port restrictions on business output and employment. The govern-
ment has prevented unemployment from increasing beyond the 20 to
25 percent rate prevailing since 1970 only through padding public
employment rolls by 40 percent.
the hope of offsetting declines in business output. To limit
inflationary pressures, he has increased income and property
taxes and has instituted stringent controls on credits for pri-
Manley has stepped up public investment spending in
//Rising world demand for aluminum and the end of
the bauxite strikes will probably allow bauxite and alumina
exports to increase by 50 percent in the second half of this
year. We expect no improvement in earnings from sugar; we
anticipate a drop in tourism receipts. With continued import
restrictions, the current-account deficit for the second half
should fall by $100 million to perhaps $92 million.//
Jamaica could finance this deficit with the recent
$87-million loan from its Caribbean Common Market partners and
additional aid from the World Bank and other official sources.
This, however, would largely exhaust Jamaica's borrowing potent-
ial and would leave imports 15 percent below the 1975 level.
//In order to increase imports from present
restricte levels, Jamaica will have no choice but to raise
bauxite taxes and prices. An average price hike of 30 percent
for bauxite would be required to allow imports to rise to the
1975 level. The likelihood of a price increase will grow with
the approach of the national election late this year.//
//The aluminum companies probably will not resist
further tax increases, particularly in the face of rising demand.
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In the short run, the companies cannot readily shift sources of
supply, since US alumina refineries are built to process a part-
icular type of ore. A large share of company alumina capacity
is in the Caribbean--17 percent in Jamaica alone.//
be passed on to consumers, particularly since bauxite is only
about 15 percent of the total cost of aluminum metal. For
example, a 30-percent rise in bauxite prices would increase
//Company resistance would expose $850 million in
investment to expropriation. In any event, increased costs can
aluminum prices by 5 percent, or 2 cents a pound.//
//The Pinochet government reportedly is gratified
with the outcome of the recent meeting of the OAS General As-
sembly in Santiago, from which it derived a measure of badly
needed respectability.
//The Chileans made a good impression on most of .
the visitors, some of whom departed expressing skepticism about
charges of human rights violations. The apparent order and sta-
bility did much to convince Latin American delegates that alle-
gations of continuing repression are exaggerated.//
//During the meeting Chile also succeeded in forg-
ing an informal alliance with countries having similar ideologi-
cal leanings. Foreign ministry officials were pleased by the
support Chile received from what they describe as the "anti-
Marxist bloc" consisting of Brazil, Argentina, Uruguay, Para-
guay, Bolivia, and Nicaragua. These groups can probably be
counted on to come to Chile's defense on the human rights issue.//
While international criticism of the Pinochet regime
will continue to cause problems for Chile, it may begin to abate
somewhat. The measures it has taken to ease up the worst aspects
of its detention procedures and to release prisoners are likely
to win it at least grudging acceptance.
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Judging by past performance, improvements in the
,
treatment of political prisoners and dissidents will be slow,
and retrogression is a distinct possibility.
Italy's Christian Democrats, in their first official
proposal for a post-election government, have called for another
coalition with the Socialist Party and offered the Communist op-
position a limited consultative role in the formulation of gov-
ernment policies.
Christian Democratic chief Zaccagnini, in a statement
,
approved unanimously this week by the party directorate, said that
such a coalition would also be open to the smaller parties except
He emphasized, however, that the Socialists
the neo-fascists
.
would be the Christian Democrats' key partner and promised the
Socialists that they would be treated as political equals by the
Christian Democrats--a recognition that only the Socialists, with
about 10 percent of the seats in parliament, can guarantee the
Christian Democrats a non-Communist majority.
Zaccagnini made it clear that the Communists would be
consu to on the new government's program but insisted that they
would have to remain in the opposition rather than becoming part
of the government's working majority in parliament, as the So-
cialists have been demanding. The Socialists want to tie the
Communists as closely as possible to the government's program in
order to limit the Communists' ability to exploit their opposi-
tion status.
'le Zacca nini was vague about the format for discus-
Wh
i
V
he implied that the negotiations would
ith the Communists
,
sons w
take place in parliament. The Christian Democrats have in the
past resisted the idea of negotiating openly with the Communists
in parliament on the grounds that such an arrangement would tend
to blur the distinction between the governing majority and the
opposition.
an obvious effort to make the proposal more palat-
I
n
Zaccagnini did not exclude the possi-
ists
C
h
,
ommun
e
able for t
bility of the Communists acquiring the presidency of either the
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senate or the chamber when the new parliament convenes on July 5.
The Communists have insisted that their increased numbers in the
legislature entitles them to one of these offices, which have al-
ways been the preserve of the governing parties.
The Christian Democratic leader argued against the in-
stallation of a temporary caretaker government. 25X1
be willing to form
the Christian Democrats would
such a government if it appears that the So-
cialists need more time to sort out their options.
may emerge from a meeting of the party directorate today. The
Socialists are likely to have trouble formulating a united response
due to internal divisions stemming from their failure to score any
gains in the election. There are increasing signs of a revolt
against party leader De Martino, and an authoritative Socialist
answer to the Christian Democrats may have to await the outcome of
a leadership struggle in the party.
Although serious negotiations will not begin until after
parliament is seated, some indication of the Socialist attitude
role in the next government.
The Communists may take up the Christian Democratic
proposal during a central committee meeting that opens today. The
Communists have so far avoided committing themselves to specific
formulas, although the party press has reacted favorably to sug-
gestions that the Communists be given an indirect consultative
More details are available about the disturbances
in Poland last week over proposed price hikes on food.
The mayor of Radom, where the party headquarters
building was gutted, said Wednesday that 75 militiamen had been
hurt in the "fighting." He added that two demonstrators were
accidently killed by their own comrades but did not say how
many dissidents had been injured. The mayor said that some of
those detained had already been sentenced and all would be
punished. The authorities appear to be avoiding general criticism
of the demonstrators, concentrating instead on those incidents
where violence was most evident.
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I The US embassy in Warsaw has received a report that
wor ers took over one of the steelworks in Nowa Huta near Krakow
and threatened to burn it down if police interfered.
Polish party leader Gierek will make a "major" speech
today in his home town of Katowice, according to a Polish foreign
ministry official. It will be Gierek's first public appearance
in Poland since the eve of the riots last Friday.
The violence and the regime's decision to withdraw
its price package have undoubtedly prompted Gierek to reassert
personal leadership. He can be confident of a large and warm
welcome in Katowice, where he was party chief for 13 years. He
will probably defend the continuing need for price increases
but will also say that party and government leaders are carefully
considering workers' proposals. In addition, he is likely to
criticize those who resorted to violence and to call on Poles
to rally behind him and the part in these difficult times.
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The USSR reportedly has bought about 1.5 million tons
of US and Brazilian soybeans for delivery this fiscal year. It
bought a similar amount from the US and Brazil during the fiscal
year that ended on June 30. The new purchases are in addition to
about 12 million tons of grain bought so far this calendar year.
I IThe Soviets can use the imports to rebuild their live-
stoc herds after the distress slaughtering of last year when
inventories of hogs and poultry dropped 20 percent and 15 per-
cent, respectively. Soybeans contain large amounts of protein
that are particularly important for swine and poultry. The USSR
also can use the soybeans to cover any shortfalls in vegetable
oil output this year.
Co bean prices have been strong recently, and we do
y
not expect them to drop soon. A recent pick-up in world demand,
including a Chinese purchase of 100,000 tons of beans from Bra-
zil, could have spurred the Soviets to buy now.
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African leaders who attend this year's summit meeting
of the Organization of African Unity, which opens today in Mau-
ritius, will focus primarily cn South Africa and Rhodesia. Only
nine heads of state will be present; the others are to be repre-
sented by stand-ins.
I I The participants will include newly independent Sey-
c e es, which has been admitted as the OAU's 48th member. In
keeping with OAU tradition, the host, Mauritian Prime Minister
Ramgoolam, will probably be named chairman of the organization
for the coming year, replacing Uganda's President Amin.
Proposals calling for tightened economic and political
sanctions against South Africa and for increased support to Rho-
desian, Namibian, and South African insurgents reportedly top
the agenda drawn up by the foreign ministers in the preparatory
conference that ended yesterday. South Africa was strongly con-
demned for its handling of the recent riots.
The ministers also proposed that an OAU fund be cre-
ated to help compensate Mozambique for applying UN sanctions
against Rhodesia. They recommended that Arab states be approached
to provide the bulk of the financing.
We do not know what, if any, measures the foreign min-
isters recommended on Western Sahara and the French Territory of
the Afars and Issas. Wrangling over diametrically opposed reso-
lutions on the FTAI offered by Ethiopia and Somalia forced the
ministers to extend their session by two extra days.
South African Prime Minister Vorster's visit to Israel
earlier this year had a strong impact in black Africa, and few
African leaders would resist a move by Arab OAU members to have
the summit endorse the resolut_.on equating Zionism with racism
like the one adopted last year by the UN General Assembly.
The summit will also review the proposals for closer
Afro-Arab cooperation advanced last April at the Dakar confer-
ence of Arab and African foreign ministers and may try to arrange
a definite date for a future Afro-Arab summit uld put the
proposals into action.
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uth Africa has been experiencing a foreign exchange
S
o
bind that is likely to persist for several more months.
I The government has little choice but to continue meas-
ures to discourage imports and hope that gold prices do not sag
further. The economy as a result will probably grow only about
2 percent this year.
osition began to deteriorate
nts
'
p
s payme
South Africa
in late 1974 as imports rose rapidly and nongold exports remained
sened in early 1975 as gold prices
i
on wor
stagnant. The situat
began to fall, resulting in a record $1.1-billion current-account
deficit in the first half of 1975. Even when South Africa devalued
its currency by 4.8 percent in June 1975, the deficit remained
high because gold prices continued to slide, and in September
the government was forced to devalue by an additional 17.9 per-
cent.
I Foreign exchange reserves were rebuilt temporarily
after devaluation, but this year conditions again deteriorated
because of a drop in gold prices, continued weak demand for ex-
ports, and a continuing high level of military purchases.
t has borrowed heavily and rolled over
The governmen
short-term loans obtained in 1975 to increase capital inflows.
tions in dealing with its payments
's o
i
f
p
ca
r
South A
problems have narrowed. Shaky prospects for world gold prices
rule out any abrupt increase in sales of gold from stocks. //The
international market already is absorbing increased Soviet sales,//
and periodic IMF auctions will add to internat30nalrsupplies.
Industrial demand for gold is running roughly
its 1971 peak level. Speculative demand, which accountedlfodown
slightly more than half of free world demand last year,
sharply because of moderation in inflation and. an upturn in real
interest rates.
With domestic inflation again edging upward to more
to stimulate prices
illin
g
than 10 percent, the government is unw
further by another devaluation. It is also reluctant to impose
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additional import controls or to pile more restraints on a slug-
gish economy. It already has stiffened monetary and fiscal
measures during the past six months and has repeatedly tightened
foreign exchange rules to relieve speculative pressures on its
currency. It does not want to cut foreign military purchases.
Exports probably will not begin accelerating appreci-
ably until the fourth quarter. By then, the Western economic
recovery may be making itself felt, and major new coal and iron
ore export projects will have started paying off. By continued
scrimping and borrowing, the government should be able to muddle
through unless gold prices sag badly. Foreign borrowing will be
more expensive, however, because South Africa's economic and
political problems have weakened its credit rating.
Ethiopia held a military exercise near its border with
Somalia and the French Territory of the Afars and Issas on.Tues-
day. Press reports from Addis Ababa say the exercise took place
near Aysha, some 10 kilometers (6.2 miles) from the Somali bor-
der.
Ethiopia does not normally have units stationed in the
tri- order area, but the US defense attache has reported that
troops and materiel have been shipped there by rail from the
capital over the past two weeks. The exercise was conducted pri-
marily by Ethiopia's Third Division, located along the Somali
border, and the air force reportedly provided air support.
The presence of Ethiopian units in the tri-border area
almost certainly concerns Somalia. A source of the US attache in
Addis Ababa. says Somalia ordered three battalions to move to the
--
The maneuvers apparently were to show Ethiopia'
resolve to contest any Somali moves into the FTAI.
025X1
25X1'
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//General Teferi Benti, the council's chairman,
expressed Ethiopia's concern over Somalia's intention to Ambass-
ador Hummel this week. Teferi said Mogadiscio has begun moving
troops and making other preparations to take the territory by
force. He also said that Somali-supported insurgent activity in
southern Ethiopia is increasing. This was the first official Ethi-
opian reference to the infiltration across the southern border.//
//Teferi said the Ethiopians considered "less
than satisfactory" private Soviet assurances to Addis Ababa that
Moscow would do its best to restrain Somalia. He urged US-Soviet
collaboration to preserve peace in the area.//
FORN, ORCON)
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