NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A029400010036-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 21
• Document Creation Date: December 20, 2016
• Document Release Date: September 19, 2006
• Sequence Number: 36
• Publication Date: October 22, 1976
• Content Type: REPORT

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Friday October 22, 1976 CI NIDC 76-248C
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NATIONAL SECURITY INFORMATION
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National Intelligence Daily Cable for Friday October 22, 1976.
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The NID a e is for flie purpose of informing
senior US o icials.
LEBANON: Situation Report
EGYPT: New Initiatives By Sadat
CHINA: Situation Report
SPAIN: Reform Bill
ZAMBIA-RHODESIA: Nationalists Released
LIBYA: Labor Problems
OPEC: Price Increase
USSR-MONGOLIA: Visit
USSR: Navigation Satellite Purchases
EC: Irish Block Progress on Fisheries
FRANCE: Indian Ocean Fleet
THAILAND: Split in New Council
CHILE: To Go It Alone
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LEBANON: Situation Report
Lebanon's latest cease-fire has substantially re-
duced e level of fighting, although each side has accused
the other of violations.
Artillery and rocket shelling continued intermit-
en y in Beirut yesterday, but at a much lower level than on
Wednesday. The Christians accused the Palestinians of shelling
in the Mount Lebanon area near Bdadun, but most positions in
the mountains east of Beirut seem to have been generally quiet.
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I lArab League secretary general Riyad yesterday ex-
tended o icial invitations to Arab monarchs and presidents to
attend a full summit conference on the Lebanon situation in
Cairo next Monday. The summit is expected to extend a routine
ratification of the agreement reached at Riyadh last weekend.
It he Cairo summit will focus on recruiting participants
for the expanded Arab League security forces. One result of
this arrangement will be a delay in organizing the enforcement
of the Riyadh agreement, leaving control of would-be trouble-
makers in the hands of their respective leaders in the interim.
I Lebanese President Sarkis--who has been given author-
ity over he League forces--might, as a result, turn to Damas-
cus to rein in Christian violators of the cease-fire, something
that could cause strains between the Syrians and their Chris-
tian allies. 25X1
EGYPT: New Initiatives by Sadat
I I The reconciliation between Egypt and Syria during the
Riyadh summit this week was an abrupt about-face for President
Sadat, who now appears anxious to promote Arab solidarity and
to refurbish his Arab leadership credentials before attempting
to press the US to resume Middle East peace negotiations after
the presidential election.
I I Other moves by Sadat also seem designed both to mend
ences in an effort to increase the Arabs' political strength
and to put the US and Israel on notice that Egypt will press
for new negotiations.
--Egypt's call on Wednesday for the UN Security Council to
discuss Israel's "repressive measures" in the occupied ter-
ritories is a gesture of solidarity with the Arabs and a
pressure tactic against the US.
--The Egyptians efforts to arrange a meeting between For-
eign Minister Fahmi and Soviet Foreign Minister Gromyko--
this would be the first in almost two years--are probably
also intended in part to exert pressure on the US for early
negotiating progress.
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Sadat's reconciliation with Syria is the most signifi-
cant of his recent moves. The UN initiative, the overture to the
Soviets, and the approaches to Libya are all largely tactical
steps that cost Sadat little. The rapprochement with Asad has
involved important concessions and a radical departure from
policies Sadat has pursued for the last year.
I I Sadat has been able to carry off the reconciliation
gracefully; Asad apparently did not during the Riyadh summit
challenge Egypt's adherence to the second Sinai agreement, a
principal bone of contention between the two, and the summit's
cease-fire resolution on Lebanon was based on an Egyptian pro-
posal.
I Sadat nonetheless in effect recognized Syria's suprem-
acy in Le anon. His policies toward both Syria and Lebanon have
until now been governed by a refusal to concede this Syrian pre-
eminence.
Iraq to transfer arms to the Lebanese leftists and Palestinians.
The most important factor was Sadat's realization--
somewhat belated--that only by cooperating with Syria could he
expect to achieve progress in Middle East peace negotiations.
I He has undoubtedly hoped throughout the last year to
Dr g t the cooperation with Syria on his own terms, but
with a new US presidential term about to begin he may believe
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At Riyadh, Sadat pledged to end his arrangement with
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there is little time for this. It would be difficult for Sadat
to present convincing evidence that the Arabs are ready for
peace negotiations--and thus press the US into action--unless
the Lebanese and the Eavptian-Syrian lems are resolved.
I
CHINA: Situation Report
I IChina's official news agency last night referred to the
appointment of Hua Kuo-feng as Chairman of the Central Committee
of the Communist Party and of the party's Military Affairs Com-
mission. It noted the promotion indirectly in a description of
a mass rally held in Peking yesterday. The news agency also re-
ferred for the first time explicitly to the antiparty clique
of Wang Hung-wen, Chang Chun-chiao, Chiang Ching, and Yao Wen-
yuan, saying Hua had smashed their conspiracy "with one stroke."
I It is not clear why the Chinese chose this method
of publicly confirming Hua's elevation. A major leadership
meeting is apparently still under way in Peking.
I There are signs that the purge of radicals earlier
is month has virtually ended the protracted and contentious
debate among China's leaders over foreign trade policy.
I I The debate had centered on the extent to which China
wou import foreign products and technology--the moderates
arguing for gradually expanding foreign trade and the radicals
for "self-reliance" and reduced imports.
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I Earlier reporting had hinted that the dispute over
oreign trade was in large part responsible for Peking's fail-
ure to draw up the five-year plan that was scheduled to begin
in January of this year. The elimination of opposition to rela-
tively liberal foreign trade policies clearly has encouraged
top officials to take a more optimistic stand on prospects for
agreement on a plan.
Although the removal of uncertainty in the trade sec-
tor should expedite China's trade recovery, economic constraints
that have limited trade growth since 1974 will continue to be
a primary concern. Further improvement in the trade balance this
year will permit an expansion of trade in 1977, but China's
traditionally conservative financial policies will probably tie
import growth to the pace of the country's exports.
A signal that the Chinese may hope to move quickly,
however, came on October 9 in an announcement of the opening
of the autumn trade fair in Canton. Citing a statement made by
Mao in 1949, the announcement said China hoped "to resume and
expand international trade," and asserted that Chinese trade
groups will "make wide contacts" with foreign businessmen, with
a view to "increasing trade."
These remarks are especially notable when compared
wi coverage of the previous two Canton fairs--in October 1975
and April of this year--which opened to relatively brief reviews
in the Chinese media that hasized internal developments
rather than foreign trade.
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I I The Spanish government is moving to protect its
right flank as parliament begins consideration of constitu-
tional reforms intended to set post-Franco Spain on a demo-
cratic course.
The government has taken a tough stand toward the
major socialist faction--the Socialist Workers Party--by an-
nouncing that it is withholding authorization for a party
congress in early November until certain "defects" in the ap-
plication to hold the meeting are corrected. Government and
Socialist officials have been at loggerheads over the Social-
ists' refusal to signal their participation in the govern-
ment's political reform program by applying for legalization
prior to the congress.
The government, however, seems to have settled for
delaying the congress--rather than flatly prohibiting it--
until after parliament has considered the reform bill, and
reportedly has made a deal with the Socialists to this end.
On Tuesday evening, Socialist leader Felipe Gonzalez announced
that his party would accept the postponement.
While trying to mollify the right, the government
has ma e it clear that it will brook no significant opposition
from parliament on constitutional reform. According to Second
Deputy Prime Minister Osorio, the draft bill setting up a bi-
cameral legislature must be approved virtually intact or the
Cortes will be dissolved and a direct referendum will be held.
Such a move would require the King to issue the ap-
propriate decrees, thus linking the future of the monarchy to
the success of the referendum. The questionable legality of
decreeing a referendum without recourse to parliament could
also weaken support from the military, which reportedly insists
that adoption of the reforms follow the prescribed path through
the institutions of the Franco era.
I I The government still believes it can win the battle
in parliament, but officials admit it will be close. According
to one estimate, about 90 of the deputies strongly support
liberalization, another 90 are die-hard opponents of any re-
form, and the remaining 300-odd are "floaters" who may be sus-
ceptible to pressure from the government.
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Government officials have been particularly con-
cerned that the newly formed Popular Alliance led by former in-
terior minister Fraga and assorted rightists could make strong
inroads into the "floaters" vote and gut the program. The Al-
liance is a disparate and fragile grouping, however, and its
members will have trouble mounting a concerted and effective
attack.,
Part of the Cortes debates on the reform bill--
which the government hopes will be over by mid-November--will
be televised nationally, and few ambitious politicians are
likely to risk ap ring before the public as opponents of
democratization.
Zambia released on Wednesday Zimbabwe African Na-
tional nion defense chief Josiah Tongogara and three other
ZANU officials who were on trial in Lusaka for the murder of a
rival last year.
Tongogara has wide influence among ZANU guerrillas
an us could play a major role in the Rhodesian settlement
discussions in Geneva. Zambia had released four other ZANU of-
ficials not directly implicated in the murder case last week-
end.
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/Tongogara is expected to participate in a ZANU
congress t a begins in Lusaka today. Mugabe apparently will
be elevated to ZANU's presidency, but Tongogara could become a
serious rival for power within the faction now that he is free.//
Libya's decision to extend the military draft to oil-
field workers and certain foreign nationals employed there un-
doubtedly will disrupt the economy if it is enforced.
Earlier this year, the government ordered all com-
panies to advise their Libyan wnrhers under the age of 35 to
register for military service. 25X1
the government has called up a number o ese emp oyees. sso
has complained to the government that the call-up will force
a cutback in operations. Other companies reportedly have the
same problem.
The oil sector--the country's sole source of foreign
earnings--has the largest reservoir of skilled and semi-skilled
Libyan workers. If a large number are ordered to military serv-
ice, the government will have trouble meeting plans to boost
oil output, which it is counting on to help finance its ambi-
tious new development plan.
//Government officials from member states of the
Organization of Petroleum Exporting Countries are now talking
more openly about the price rise expected on January 1. They
are suggesting that the increase will probably be greater than
10 percent.//
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//Fearful that the OPEC countries will prohibit
excessive iftings immediately preceding the price hike, oil
companies are lifting larger volumes now. The resulting ab-
normal market conditions are tending to strengthen the convic-
tion of many in OPEC that a large price hike is warranted.//
//This is in accord with earlier statements by
United Ara Emirates Oil Minister Utayba; Saudi Arabia and the
UAE are regarded as leading price moderates within OPEC. The
Venezuelan finance minister said last week that the price rise
would be no less than 15 percent, based on a consensus of the
13 OPEC members.//
//This may, in part, be a psychological game that
the OPEC states are playing with the industrialized countries
to prepare them for the increase, to make them feel relieved
when the rise is not larger, and possibly to extract some
political and economic concessions along the way.//
//The speculative surge in demand for OPEC crude
in e pas several weeks is unquestionable. Most OPEC states
are producing exceptionally large volumes--Iran is at near
record levels, and Saudi Arabia, Kuwait, the UAE, and Venezuela
are at or close to government-set production ceilings.//
//Companies seeking to increase liftings or con-
clude new purchase agreements in the fourth quarter of this
year are often being rejected. Crude and product prices in
major international spot markets have strengthened, while
volumes available for spot sale are drying up.//
//The petroleum industry must pay several costs
in order to lift crude oil before the price hike:
--Monthly interest costs for financing crude oil are esti-
mated at about 8 cents per barrel. OPEC states have recently
shortened payment terms because of the tight crude
market, posing potential financing problems for some
companies not immediately planning to process the crude.
--Monthly storage costs are also about 8 cents per barrel.
These are likely to increase as tankage facilities become
tight.
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--Surges in crude liftings tend to raise spot tanker rates,
which add to per-barrel costs.//
//Based on these factors, each barrel lifted this
month for speculative reasons will cost an additional 50 cents,
and other factors will further reduce the per-barrel savings.//
//Some OPEC countries that offer price discounts
to ormer concessionaires may not extend these terms for sales
above a given volume. For example, additional liftings by
British Petroleum in Kuwait will cost the company 15 cents per
barrel more than those under its long-term arrangement.
//Higher spot prices, which directly affect only
a small portion of crude oil and products traded, raise pro-
ducing governments' calculations of crude oil values and
encourage them to raise prices by adjusting crude differentials.//
//On balance, the cost of speculative buying will
be considerable, but the practice will still be profitable 25X1
the oil price hike is 10 percent or more. 25X1
I lAt a dinner in honor of visiting Mongolian party boss
se en a on Monday, General Secretary Brezhnev said that the
two leaders were giving special attention to Asian problems. He
also expressed Moscow's willingness to engage in a "construc-
tive dialogue" with anyone willing to work to resolve these
problems.
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Brezhnev's language was similar to that he has used
when discussing his Asian collective security idea, but in this
instance we think he was seeking to set the stage for--or per-
haps to reinforce--possible private Soviet messages to China's
new leaders on the need for some sort of high-level meeting.
Brezhnev emphasized that Moscow was prepared to improve relations
with other Asians step by step and to respect the equality and
sovereignty of other states.
Tsedenbal usually visits the USSR three or four times
a year. This latest occasion was billed as an official party-
government visit, and presumably was in return for Brezhnev's
trip to Ulan Bator in 1974.
For the Soviets, the most significant accomplishment
ot se en al's trip probably was the conclusion of a new border
treaty. The earlier one had been signed in 1727. It did not take
into account the Soviets' annexation in 1944 of a large area of
northwestern Mongolia that broke away from Mongolia at the end
of the Manchu Dynasty early this century.
I We do not know precisely what lay behind Moscow's de-
cision o update the treaty at this time. The Soviets may have
been prompted by the periodic need to redemarcate the border,
most of which lies in rugged, sparsely populated terrain. The
Soviets could also, however, have been trying to signal the
Chinese that Moscow can be reasonable in border negotiations.
For the Mongolians, the principal accomplishment of
the trip probably was the signing of new aid agreements detail-
ing Moscow's contribution to Mongolia's development over the
course of the next five-year plan. According to the Mongolians,
Moscow's contribution will be double that provided under the
previous plan and will involve construction of some 250 new
enterprises.
USSR: Navigation Satellite Purchases
//The Soviets are buying dual-channel navigation
satellite receiver systems from the US that could be used to
improve the accuracy of future long-range submarine-launched
ballistic missiles.
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//Soviet survey ships known to be using the re-
ceiver systems can determine their positions at sea more pre-
cisely and therefore can collect more accurate gravity and
ocean-depth data. The data could reduce errors in Soviet sub-
marine navigation and in missile alignment and trajectory.//
//At present, such data would result in only minor
improvements to the low-quality Soviet navigation and missile
systems, but would become more important if these systems are
significantly improved.//
25X1 //The Soviets could also use the US receivers to
evaluate their own navigation satellite system and to improve
other navigational calculations.//
//DIA believes that the significance of the sale
ot US navigation satellite receivers to the Soviets has been
exaggerated. If the Soviets did not receive such equipment from
the US, several options would be available to them.//
25X1
//They could purchase comparable equipment from
other western manufacturers, produce their own receivers using 25X1
US sets as a model, or use their own navigation satellite system.
Their satellite system is now assessed as being capable of suf-
ficient accuracy to support their SLBM program.
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Ec: Irish Block Progress on Fisheries Policy
//EC foreign ministers this week failed to agree
to establish at the end of the year a 200-nautical-mile zone
for Community fishing or to approve related guidelines for
negotiating fishing agreements with third countries.//
//An accord was impossible because of Irish in-
sistence at the EC Nine simultaneously agree on the major
elements of an overall internal EC fisheries policy. Strong
pressures will be brought to bear on the Irish to break the
deadlock when the foreign ministers meet in special session
at The Hague on October 29 and 30.//
//The Irish are holding out for a zone of up to
50 nautical miles for exclusive individual-country jurisdiction,
as opposed to the 12-nautical-mile zone proposed by the Com-
mission. Ireland also seeks EC financing for enforcement meas-
ures and modification of the proposed quota system, which
would allocate the fish catch among EC members, to take into
account the anticipated expansion of Ireland's fishing in-
dustry.//
//The UK has been an equally strong advocate of
a 50-nautical-mile zone but doubts the EC will resolve the
internal fisheries problem before the end of the year. The
British place a higher priority on declaring a 200-nautical-mile
zone for the Community and on initiating negotiations with
third countries; London wants internal fisheries issues to be
negotiated separately.//
//With the exception of Ireland, all EC members--
led by Wes Germany, which catches two thirds of its fish out-
side Community waters--fear that, unless negotiations start
soon, they will be prevented from fishing in Norwegian, US,
and Canadian waters when those nations declare 200-nautical-
mile zones early next year.
//A resolution of the issue is particularly im-
portant to. the UK, which is worried that a new "cod war" could
break out if the Community is unable to reach agreement with
Iceland befo the current UK-Iceland accord expires on
November 30.
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FRANCE: Indian Ocean Fleet
I //The French have added a support ship to their
fleet in the Indian Ocean--another indication of France's de-
termination to maintain its sizable naval presence in the area.//
//US defense attaches in Paris report that the
and repair ship Jules Verne, previously assigned
to the Atlantic, has been sent to Djibouti in the French Terri-
tory of the Afars and Issas. Djibouti is France's only remain-
ing major naval base on the Indian Ocean.//
//France may be asked to leave the base in Djibouti
after the FTAI achieves its independence next year. If so, the
Jules Verne and the remainder of the Djibouti detachment will
probably relocate to La Reunion or Mayotte--French island pos-
sessions in the South Indian Ocean.//
//The addition of the support ship will improve
the fleet's ability to operate independently of the extensive
shore facilities at Djibouti. It will be able to perform at
sea most routine maintenance and repair tasks needed by French
surface ships in the area, but major overhauls or repairs will
still have to be made at French bases or at ports with support
facilities.//
//The French Indian Ocean Fleet, the largest West-
ern flee in the area, strengthens France's image as a world
power able to influence events and protect French interests in
both Africa and the Middle East. The fleet, normally consisting
of about 15 ships, also helps to protect key oil transport
routes to.the West and maintain surveillance
activity in the region.
THAILAND: Splits in New Council
//Thailand's National Administrative Reform Council
increasingly shows signs of losing its cohesiveness, largely
because of maneuvering by General Yot, the deputy army com-
mander and recent commander of the First Army. Admiral Sa-ngat,
chairman of the council, clearly fears he is losing control.//
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I iSa-ngat's decision to put together a civilian admin-
istration rapidly was intended largely to frustrate Yot. A
cabinet made up largely of civilian technocrats has been ap-
pointed. The new civilian foreign minister, Upadit Pachariyang-
kun--currently ambassador to the US--apparently was chosen with
an eye toward fostering better relations with Washington.
I I Prime Minister Thanin has dealt thoroughly with his
twin o sessions--communism and corruption--in his first speeches
to the nation, and the ruling military council has already begun
arresting leftist activists. The left's potential for making
trouble is fairly limited, but if the round-up is carried to
excessive proportions, it could swing public opinion against the
government.
I lUnder a new government decree, the authorities are
arresting individuals known to have supported leftist and commu-
nist causes, purging bookstores and educational facilities of
"subversive" publications, and closing down some newspapers and
magazines, including some important ones. 25X1
w 1 e known anuses
have been ew, the oppor unity exis s or se fling private
scores.
I IThus far, the purge seems to have fairly widespread
public approval. Initial fears that substantial numbers of stu-
dents and other urban activists would join the rural insurgency
appear to have been exaggerated. Although a few students have
reportedly gone to Laos for training, most of the students who
had been politically active seem more interested in clearing
their names and remaining in school than in opting for the
rigors of the jungle.
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I IChile has informed US officials that it will no
longer seek new US aid. In a recent speech, President Pinochet
said that Chile had rejected a US loan that he described as
"linked to political conditions." Although Santiago claims to
be rejecting new aid, it is, nonetheless, seeking a $15-million
loan, under PL 480 Title I, to bolster wheat supplies in view
of another projected poor harvest.
The object of criticism for human rights abuses,
Chile sees itself as increasingly isolated from its traditional
allies outside South America. Last week, in its report to the
UN General Assembly, the Ad Hoc Group on Human Rights Recom-
mended that member nations restrict trade and aid with Chile
after Santiago's refusal to admit the Group's on-site investi-
gation team.
I I Encouraged by improved export earnings this year,
Chilean economic managers apparently are now gambling that
Chile's international financial obligations can be met without
further debt rescheduling and with minimal reliance on foreign
economic aid. This year, for the first time since 1971, Chile
managed to forego debt renegotiations.
A 33-percent increase in overall export earnings and 25X1
renewed foreign private loans have led to a dramatic improve-
ment in Chile's foreign reserve position--gross reserves tripled
to $445 million during the first eight months of 1976.
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