NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029300010032-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 20, 2016
• Document Release Date: May 11, 2006
• Sequence Number: 32
• Publication Date: September 20, 1976
• Content Type: REPORT

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Monday September 20, 1976 CI NIDC 76-221C
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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National Intelligence Daily Cable for Monday, September 20, 1976
CONTENTS
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LEBANON: Situation Report
CHINA: Leadership Appearance
Page 1
Page 4
PORTUGAL: Moving Against Squatters
Page 4
PANAMA:
Weekend Calm
Page 7
CHILE:
Problems With Andean Pact
Page 8
USSR:
Yakubovsky Ill
Page 9
USSR - EAST GERMANY: New Tank
Page 10
EAST GERMANY: Credits for Grain Purchases
Page 10
Page 12
SWEDEN: Social Democrats Upset
Page 13
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LEBANON: Situation Report
I I The failure of yesterday's tripartite Lebanese talks
s arp y reduces the prospects that the Syrians and Palestinians
will be able to reach any kind of accommodation without further
fighting. President-elect Sarkis, Palestine Liberation organiza-
tion chief Yasir Arafat, and Syrian Deputy Defense Minister
Jamil have announced that they will meet again on Friday after
Sarkis' inauguration ceremony but this announcement was proba-
bly intended only to mask the fact that their talks had ended
in a deadlock.
I I Arab League mediator al-Khuli admitted privately be-
tore the session yesterday that he had tried in vain to per-
suade Arafat to agree to an unconditional withdrawal of Pales-
tinian forces from the Mount Lebanon area. Both Sarkis, repre-
senting the Christian side, and the Syrians reportedly had in-
sisted on that provision being included in any new cease-fire
accord.
Al-Khuli indicated that he did not believe Arafat
possesse the strength to impose such a compromise on his own
forces because of opposition from extremist members of the Re-
jection Front and from Fatah hard-liners lead by Salah Khalaf.
Each side apparently only rehashed its standard posi-
tion at yesterday's meeting. Baghdad radio reported that Arafat
offered to withdraw from the mountains but only if the Syrians
and Christians would make comparable withdrawals and agree to
allow displaced persons to return to their own areas, particu-
larly to the Tall Zatar refugee camp overrun by the Christians
last month. Neither the Syrians nor the Christians could be ex-
pected to agree to such a,condition.
Yet another meeting to resolve the Lebanese conflict
ILLY JDe- U er consideration, this time in Saudi Arabia. An-Nahar,
a reputable and usually well-informed Lebanese newspaper, re-
ported yesterday that Sarkis and several other prominent Leba-
nese leaders who visited Cairo recently are pressing for a
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four-power Arab summit conference in Jidda to promote a recon-
ciliation between Egypt and Syria that would facilitate efforts
to end the Lebanese civil war.
I I Presidents Sadat and Asad are said to be agreeable to
such an approach, under the auspices of the Saudi and Kuwaiti
monarchs, who have been trying for months to patch up relations
between Egypt and Syria. An-Nahar said that no date had been
set yet, but that Sadat had indicated he was willing to attend
such a meeting on Friday or Saturday, immediately after Id al-
Fitr, the Muslim holiday celebrating the breaking of the month
of fasting, Ramadan.
I ISarkis is also reported to have asked Sadat--allegedly
with Syrian approval--to contribute troops to the Arab League
peace-keeping force now in Lebanon.
Should the proposed summit talks go well, Sarkis and
Ara fa might be asked to join them, according to An-Nahar. Al-
though Asad and Sadat may have agreed to meet, we are highly
skeptical that they are ready to put aside their differences in
order to resolve the Lebanese conflict.
The article may reflect the wishful thinking of some
Lebanese leaders, perhaps encouraged by the Egyptians. Sadat
could well be receptive to such an idea because it would place
him on a par with Asad as a final arbitrator in any Lebanese
political settlement--a status that until now has eluded him.
I IThe USSR is at least trying to create the impression
that it is involved actively behind the scenes during the talks
among Lebanese, Palestinian, and Syrian officials. PLO political
chief Qaddumi left Moscow on Saturday, following several days
of talks with Soviet officials, including Foreign Minister
Gromyko.
Soviet press commentary over the weekend suggests
that Soviet spokesmen are urging the Palestinians to compromise
in order to reach a negotiated settlement in Lebanon. Tass, in
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describing the talks, said that all progressive Arab forces
must cooperate to end the crisis, which indicates that Palestin-
ians as well as Syrians should be forthcoming at the talks.
I Pravda has emphasized the importance of a political
solution and made no mention of the need for a Syrian troop
withdrawal, a major obstacle to any settlement. Soviet press
commentary has recently been stressing the importance of a Syr-
ian withdrawal, and Soviet officials have also been taking the
same line in private. Moscow may have decided to importune the
Palestinians at this juncture.
I The USSR is also in touch with Syria. The Soviet rep-
resentative at the Geneva conference on the Middle East, Vladi-
mir Vinogradov, arrived in Syria on Friday and consulted with
Deputy Prime Minister and Foreign Minister Khaddam the following
day. Vinogradov customarily travels to the Middle East during
periods of Arab negotiations so that Moscow can be informed of
Arab policies. He performed this function during the disengage-
ment talks in 1974 and 1975.
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CHINA: Leadership Appearance
All active members of the Politburo, including those
based in the provinces, attended the memorial service for Mao
on Saturday in Peking's Tienanmen Square. This was the first
time since May 1971, Mao's last public appearance, that the en-
tire leadership appeared before the Chinese people.
The leaders were arranged in strict protocol order,
revealing no changes in the alignment. Mao's unpopular wife,
Chiang Ching, stood in political rank order with the rest of the
leadership and was accorded no special status--for the public
record, at least--as Mao's widow.
I IPremier Hua Kuo-feng, who was identified as first vice
cnairm. of the party and premier, posts he has held since
April, delivered a 20-minute eulogy. Hua's remarks, touching on
all aspects of the Chinese political scene, seemed designed to
placate civilian and military leaders of all political stripes
and suggested that no single faction in the leadership had the
upper hand in drafting the eulogy.
Hua included a low-key reference to the current cam-
paign o criticize the ousted Teng Hsiao-ping, praised the mil-
itary, took several swipes at the Soviet Union, and mentioned
the need to carry on Mao's revolutionary foreign policy line--a
codeword for the opening to the US.
An abbreviated list of others who attended the memorial
service shed no new light on the status of several officials
who have come under attack since the anti-Teng campaign began.
Although almost the entire party Central Committee, including
most of the province chiefs, appeared in Peking during the mourn-
ing period, very few were mentioned on the list. Presumably,
most of these people attended the memorial service and will re-
main in Peking for a major party meeting to begin the arduous
process of arranging for a successor leadership.
PORTUGAL: Moving Against Squatters
//Portuguese Prime Minister Mario Soares is
said to e preparing to evict pro-Communist farm workers from
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land they illegally occupied after the 1974 coup. If he goes
through with the plan, it would be his government's first
important test of strength.//
Soares' decision probably reflects the increasing
pressure he has been under to show some progress in straighten-
ing out the Portuguese economy. Although the squatters have
generally maintained production, they evidently have run the
farms very inefficiently and used the profits to subsidize Com-
munist Party activities rather than repaying sizable agricul-
tural loans to the state. The government approved legislation
on September 14 authorizing forcible collection of these loans,
thereby putting further pressure on the Communist rural workers'
union.
I ICommunist resistance on the farms themselves would
not be the only problem for the government. The Communists will
oppose the present plan in the parliament, where they control
the agricultural committee. They could create further trouble
in the Agriculture Ministry, where party members occupy some
posts. The Communists might also use their influence in the
Portuguese labor movement to stir up workers in other parts of
the economy.
Left-wing leaders in Soares' own Socialist Party--
led by Agriculture Minister Lopes Cardoso--reportedly are
opposed to pressing the Communists too hard. Soares thus might
even split his own party if the government moves forcefully.
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//Panama was calm over the weekend as officials
met with student leaders to explain the country's economic
situation. The government softened its accusation that US in-
telligence services were behind last week's disturbances. The
US citizen arrested by the Panamanians is still being held.//
/The four days of demonstrations against govern-
men -impose price increases highlighted the growing economic
difficulties, which may become Torrijos' most serious challenge.//
//The protests by several thousand people were the
largest an i-government demonstrations since General Torrijos
came to power in 1968. The National Guard finally intervened to
halt looting; property damage amounted to millions of dollars.//
//Although students incited the protests, the dem-
onstrations attracted significant additional support. Two organ-
izations that generally back the government, the major student
group and the communist-dominated labor federation, publicly
called for price rollbacks.//
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/Some of Parama's economic problems are beyond
orrijos control. The world recession triggered Panama's eco-
nomic slump two years ago. Recently, a serious drought has
dimmed prospects for the agricultural sector, the only area of
significant economic growth last year.//
//In addition, the government's uneasy relations
with the private sector have probably contributed to the sharp
drop in local investment. Large public expenditures and am-
bitious long-term projects necessitated foreign borrowing,
which will probably also contribute to the economic problems.//
/Panama's public debt, most of it external, is
already high and projected to rise to $250 million or $300
million by 1980--giving Panama one of the highest per capita
debt rates in the world. According to the US embassy, direct
debt service obligations would then amount to one third or
more of central government revenues. Panama has initiated a
number of major revenue-producing projects, but none will take
effect before 1980.//
//Panama's ability to secure foreign loans has
emsen its financial burden in the past, but there could be
growing questions about the government's creditworthiness. Re-
cent, more pessimistic economic projections and the government's
failure to conclude negotiations for a new canal treaty will
complicate the search for loans.//
//The government has tended to neglect its domes-
tic problems, emphasizing instead Torrijos' forays abroad in
search of support for Panama's stand on treaty issues. The
demonstrations may persuade Torrijos that he must pay greater
attention to domestic needs, convince the public that some belt-
tightening is necessary, and--in the absence of an economic
turnaround--secure a new canal treaty.
CHILE: Problems With Andean Pact
//Despite official denials, Chile reportedly
has decided to quit the Andean Pact, the six-member common mar-
ket that includes Bolivia, Colombia, Ecuador, Peru, and Vene-
zuela.//
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Chile is convinced that Pact rules on foreign invest-
ment have greatly hampered its ability to attract foreign capi-
tal and that complete termination of controls on foreign in-
vestment will be required to enable Chile to obtain the neces-
sary foreign capital to accelerate economic growth.
The Andean Pact Commission adjourned prematurely on
Thursday after failing to resolve the impasse reached in early
August when Chile resisted proposed compromises on delays in
tariff reductions and on direct foreign investment controls.
Pact officials have characterized the Chilean position as ir-
reconcilable with those of the other members.
I //During the past month, Chile has attempted to
prepare public opinion for an early withdrawal from the Pact.
At the same time, Chile is taking steps to increase economic
ties with Argentina, Uruguay, Paraguay, and Brazil, countries
with which Chile already has a strong political alignment.//
Withdrawal from the Andean Pact will not cause Chile
to tor eit the benefits of intra-common market trade concessions
already received.
USSR: Yakubovsky Ill
Warsaw Pact Commander in Chief Marshal Yakubovsky
was not mentioned in Soviet news coverage of the recently con-
cluded Pact joint exercise, "Shield-76." This tends to corrob-
orate a report that Yakubovsky has been seriously ill since
spring.
I IAn obituary for a retired general in Krasnaya Zvezda
on September 14 has Yakubovsky's name in its usual position
immediately after Minister of Defense Ustinov. This indicates
that Yakubovsky has not been replaced as Soviet first deputy
minister of defense and commander in chief of Pact armed forces.
The Soviet reporting of "Shield-76" also fails to
identify anyone occupying the late General Shtemenko's former
post as first deputy commander in chief and chief of staff of
Pact armed forces.
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It may be difficult to find replacements who have
the proper military qualifications and who are also politically
acceptable to non-Soviet Pact members. Defense Minister Ustinov
and representatives of Pact member states probably used the
opportunity presented by "Shield-76" to discuss the question.
Even though there may be further delay in making the appoint-
ments, the Soviet leadership will have the decisive voice.
I lengthy delay in the selection of these replace-
ments could further retard progress under way since 1969 to
enhance the Pact's command and control posture.
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the USSR's newest medium tan --th e T- --has been
introduced into the Soviet ground forces in East Germany. The
tanks were seen at Bernau just northeast of Berlin. This is
the first time that the T-72 has been seen in units outside
the Soviet Union.//
]the T-72 has a
large-caliber, smooth-bore gun with an automatic loading sys-
tem that requires one less crew member than other Soviet tanks.
The tanks reportedly have improved armor and a better suspen-
sion system and are lower and faster than the present tank
models in East Germany. Development of the T-72 began in the
1960s, and full-scale production has been under way since 1974.
I lEast Germany is reportedly seeking up to $400 million
in cre i s from Western banks to finance large imports of grain
and fodder. Severe drought has destroyed a large portion of this
year's harvest.
I We estimate East Germany's total grain import
requirements to be at least 4 million tons, valued at $600 to
$700 million. About 3 million tons will probably be acquired
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from the US; purchases of US wheat and corn already exceed 2.2
million tons. The balance will have to come from other Western
suppliers.
The need to import large amounts of grain on credit
will ad-d--substantially to East Germany's debt. Western banks
may be willing to finance these purchases, although at higher
rates than normally charged to East Germany.
East Germany's hard currency debt has risen substan-
tially in recent years--from $1 billion at the end of 1970 to
$3.8 billion at the end of 1975. It still has a comparatively
low debt service ratio and should have no difficulty meeting
its current obligations.
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Thanom Kittakhachon's ordination as a Buddhist monk
may dampen, student reaction to his return yesterday to Thai-
land, prompted by the apparently imminent death of his father.
The former prime minister was accepted into the monkhood within
hours of his arrival.
//Thanom's return was sanctioned by the govern-
, w is approved a visit of seven days. His stay is likely
to be indefinite, however, unless it leads to a repeat of the
violence caused last month by the return of Thanom's former
deputy, field marshal Praphat.//
//Although leftist student leaders are considering
demonstrations,// they may find it difficult to gather much
support. Thanom never inspired the intense dislike that was
felt toward Praphat. Thanom's entry into the monkhood is a
gesture that undoubtedly meets with general approval, and one
hard for the students to oppose.
Moreover, the deaths and injuries that resulted from
the confrontations last month should have reduced student ea-
gerness to take to the streets. Some demonstrations will prob-
ably take place, but they are not likely to create the turmoil
that greeted Thanom's return two years ago.
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SWEDEN: Social Democrats Upset
I ISweden's Social Democrats suffered their first defeat
in near y 44 years in yesterday's election. With approximately
90 percent of the vote counted, the three non-socialist parties
appeared to have won a clear majority, although the final offi-
cial tally will not be known until midweek.
I IComputer projections give the Center, Liberal, and
onserva ive parties a total of 180 seats, against 169 for the
Social Democrats and their Communist Party allies, in the 349,
seat parliament. Swedish election analysts claim the final re-
sult is not likely to vary more than one or two seats from the
computer projection.
Thorbjorn Falldin, chairman of the Center Party, is
almost certain to be named prime minister if the non-socialist
parties can agree on a coalition. The Centrists' and Liberals'
differences with the Conservatives have thwarted cooperation
in the past.
I] Recent statements by the leaders of the three parties,
howev r, suggest that they will make every effort to put to-
gether a government this time. Prime Minister Olaf Palme ap-
peared convinced that their efforts would succeed when he all
but conceded defeat in a statement late last night.
I Some Social Democratic leaders blamed the loss on the
opposition's concentration on the nuclear power issue. In Au-
gust, Falldin focused on the government's elaborate and expen-
sive plan for expanding nuclear energy throughout Sweden. Fiye
nuclear plants are operational and several more are under con-
struction.
I IThe main issues, however, were high taxes and greater
centralization of the government under successive Social Demp-
cratic administrations.
I IThe nuclear issue could complicate efforts of the
non-soc list parties to cooperate among themselves. Some Con-
servatives, for example, have supported nuclear expansion and
may have difficulty rationalizing unified opposition to it.
This is just one of a number of issues a non-socialist coalition
may have to resolve in order to govern.
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The new government will be formally announced when
parliament convenes on October 4. If the non-socialist parties
succeed in forming a coalition headed by Falldin, he is likely
to insist that deputy Center Party chairman Johannes Antonsson
be his foreign minister. Speculation on other key cabinet posts
in such a government include Conservative Party leader Gosta
Bohman as defense minister and Per Ahlmark, head of the Liberal
Party, as finance minister. F7 I 25X1
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