NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030200010051-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: August 4, 2006
• Sequence Number: 51
• Publication Date: July 1, 1977
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Friday July 1, 1977 CG NIDC 77-152C
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National Intelligence Daily Cable for Friday July 1, 1977,
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25X1 IT he ID Cable is tor the purpose o informing
senior o ici.als .
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TURKEY: Political
EC: Summit
INTERNATIONAL: Maritime Industries
CANADA: Pipeline Report
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MIDDLE EAST - US: Reaction to US Statements
I The US statement on the Middle East Monday has
prompted genera ly favorable comment from Arab moderates. They
view the statement as further assurance of US determination to
continue peace-making efforts in the face of what they believe
to be the unfavorable outcome of the Israeli election last
month.
I Syrian officials described the statement as timely
and positive. They commented that it was encouraging to the
Arabs, who feared the US might be backing down in the face of
the "current Zionist pressure campaign."
I IThe Egyptian media clearly signaled Egypt's pleasure
with the statement. Egyptian commentators seized on the aspects
of the statement which most closely parallel the official Egyp-
tian position regarding settlement issues.
//Egyptian Foreign Minister Fahmi, however,
was totally negative in private remarks to the US ambassador.
He castigated the statement for its ambiguity and contended
that it was a "one hundred percent" reflection of the Israeli
position. Fahmi's comments do not appear to reflect the Egyp-
tian position. Moreover, in a subsequent conversation with the
ambassador, Fahmi admitted he was a minority of one on this
subject. The foreign minister has become increasingly skeptical
of US ability and determination to force concessions from the
Israelis, and he is trying to convince Egyptian President Sadat
and others that Egypt must begin to develop a more balanced
policy toward the US and the USSR. Fahmi's deputy, in contrast,
termed the US statement a courageous and helpful action at a
particularly difficult time.//
Palestinian broadcasts have taken a negative stand.
A commentary from Cairo quoting a newspaper of the Palestine
Liberation Organization published in Beirut described recent
announcements by the US as part of a "campaign to weaken the
Arab nation and create further confusion in the minds of its
citizens." The chairman of the Palestine National Council,
Khalid Fahum however, reportedly issued a statement applauding
the US statement.
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Official Israeli reaction to the US statement has
been subdued, but unnamed government officials quoted in the
press have expressed bewilderment and anger at some parts of
the statement.
A tersely worded Foreign Ministry announcement re-
ease yesterday noted that it was incorrect to say that the
Begin government had ruled out negotiations on any of the occu-
pied territories. The Foreign Ministry called attention to Prime
Minister Begin's statement of last week that "all issues" are
open to negotiation without prior conditions. The low-key
official reaction is probably because of an Israeli desire to
avoid troubling the atmosphere prior to Begin's visit to Wash-
ington.
The Israeli press, frequently relying on quotes from
anonymous government sources, has reacted sharply. Most news-
papers assert the statement indicates a significant erosion of
US support for Israeli negotiating positions and see it as the
first step in a US campaign to pressure Israel.
Former prime minister Yitzhak Rabin called
statement an "act of unprecedented impoliteness" and
that it contradicted assurances he had received from
Carter during his visit to Washington in March.
I I
the US
asserted
President
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Yugoslavia has agreed to increase political contacts
with the US. The Yugoslavs would like to be in a better posi-
tion to exert influence on US policy while President Tito is
still alive.
Party secretary Stane Dolanc has told Ambassador
ag e urger that he deplores the "serious handicap" in our re-
lations resulting from the lack of political contacts. Dolanc
said that Belgrade accepts US initiatives and is ready now to
begin "party-to-party" meetings and to approve other exchanges
involving Yugoslav youth groups and mass front organizations.
Informal contacts have been minimal since Tito began a "vigil-
ance campaign" against Western influences in 1972.
I I Dolanc's stance does not signify that Belgrade is
departing from the support of radical groups or governments in
the Third World that frequently results in clashes with the
US. Rather, Belgrade probably hopes that the impact of these
differences can be softened if channels of communication are
reopened.
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Turkish Prime Minister Ecevit's minority government
wz ace its first test of strength in a confidence vote in
the next few days, perhaps as early as Sunday. All indicators
point to a close vote on Ecevit's efforts to attract the few
deputies necessary to give his Republican Peoples Party a work-
ing majority in the National Assembly.
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Even if Ecevit achieves a majority, his position is
likely to be sufficiently tenuous--at least in the short run--
to force a cautious approach to the decisions that need to be
made soon on the economy and domestic disorders. If Ecevit fails
to gain a working majority, President Koruturk will probably
give Justice Party leader Demirel a chance to form a government.
I lArrayed against Ecevit are the leaders of the three
center-right parties, who among them nominally control a major-
ity of seats in the lower house. The three are working feverishly
to hold their respective blocs together, and Ecevit cannot win
if each can maintain voting discipline.
cevit needs to win only a majority of those present
and voting when the confidence motion is raised, however, and
behind-the-scenes efforts are undoubtedly being made to persuade
five or six opposition deputies to change sides or be conven-
iently absent. Ecevit's cabinet, moreover, was clearly designed
with the confidence vote in mind; it is a carefully balanced
collection of old and new faces chosen to maximize support and
minimize controversy.
Interest in the confidence vote is running high among
politically aware Turks, and various groups are seeking to in-
fluence the outcome. Earlier this week, Turkey's largest labor
confederation, which had remained neutral during the election
campaign, endorsed Ecevit's efforts to form a government. There
have been rumors that some industrialists--who as a group tra-
ditionally support Demirel--are lobbying for Ecevit as the best
hope for political stability. On the other hand, there has been
at least one press report that extreme right-wring groups plan
to attack those deputies of the rightist artier who vote for
the new government.
//EC Commission president Roy Jenkins characterized
as 'strong on discussions, but not so strong on decisions" this
week's meeting of EC leaders in London, the second European
Council meeting this year. Not all the EC heads of government
would share Jenkins' apparent disappointment, since discussion
may have its own rewards, but the two-day summit again confirmed
that the leaders have no magic touch for solving pressing prob-
lems or instilling a new sense of community purpose.//
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I /Largely to demonstrate that the EC could play a role in
combating low economic growth, the Commission has been trying to
promote a large borrowing on international financial markets to
bolster EC investment and form the basis of a deliberate commun-
ity-wide investment policy. French and West German suspicions
of a Commission role overcame the willingness of the other members
to consider the Commission plan, however, and the question has
been remanded to the finance ministers for further examination.//
//The leaders did approve more liberal lending by
the European Investment Bank for capital investments, but this
merely confirmed a decision taken last week by the finance min-
isters. An increase in the bank's lending capacity is also likely
to be approved next year.//
//Growth, unemployment, and inflation occupied most
o the lea ers' time in London, but programs for joint action
or EC-wide coordination are not in the cards. Controversies
over strategies against unemployment were even more clearly in
evidence earlier in the week at an EC forum for labor, business,
and government representatives in Luxembourg; again, there was
no resolution.//
I //The economic discussions in London presumably
found British Prime Minister Callaghan emphasizing unemploy-
ment and West German Chancellor Schmidt warning against infla-
tion. The two countries are at odds on other issues that came
up at the summit. Their rivalry over a site for an expensive
EC nuclear fusion research project was not resolved. Press re-
ports have suggested that West Germany was willing to relax
its stand on another important matter--the UK request for a
lower contribution to the EC budget--in order to gain the nu-
clear project for West Germany. At a post-summit press confer-
ence, however, Callaghan was still calling for locating the
project in the UK.//
//The London Summit is the last under the UK's
curren erm in the EC presidency. In light of their criticism
of the UK's performance--ranging from charges of indifference
to hostility toward the EC--the UK's partners may not be sorry
to see the presidency pass to Belgium for six months. To what
extent Callaghan was lectured by his partners is not known. His
press conference allusion to the UK's keeping up with the others
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on introducing legislation for direct elections to the Euro-
pean Parliament may, however, imply that the timing and form
of the belated UK action--which threatens to force postponement
of next spring's scheduled elections to the European Parlia-
ment--also came in for criticism.//
//The EC leaders not surprisingly had difficulty
enunciating unequivocal support for free trade. A rewritten
portion of the communique now calls attention to the potential
adverse impact on employment in sensitive domestic industries
of an open and liberal commercial policy. French President Gis-
card was reportedly the main advocate of the watered-down trade
commitment. While Giscard was in London, at home the French em-
ployers' association issued a statement that went even further
and called for a temporary suspension of the Geneva trade nego-
tiations in favor of an effort to aim at an "orderly" expan-
sion of trade through a "new economic order" rather than through
a division of labor and lowered customs duties.//
//For Giscard, the principal achievement of the
summit was the declaration on the Middle East. The statement,
an "updated" version of one that the EC had ready to issue last
January but held back because of a US request, is now--probably
to the dismay of many EC members--being portrayed in much of
the press as an attempt to align the EC with recent US state-
ments.//
//The new EC declaration differs from the earlier
one notably in calling explicitly for a Palestinian "homeland"
and in offering the Nine's participation in guarantees "in the
framework of the UN." In a press interview following the sum-
mit, Giscard used the Middle East statement to demonstrate to
his domestic audience that the European Council--an institution
that resulted largely from the French President's efforts--is
a successful embodiment of the "confederal" approach to Europe:
it ensures the convergence and rapprochment of national policies
without taking power away from individual countries.
F777 I
The depressed world tanker market is becoming increas-
ingly burdensome to shipowners, shipbuilders, banks, and gov-
ernments. Several major shipbuilding nations have increased
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subsidies to attract ship orders. Foreign maritime nations are
concerned that the US may require more oil imports to be carried
on US flag tankers.
Shipowners worldwide are having difficulty covering
operating costs and paying the interest on an estimated $20
billion in tanker mortgages. Some major European and Japanese
shipping companies already have failed because of their heavy
investment in tankers. Surplus tanker capacity will exist at
least into the early 1980s.
I IThe consequent decline in demand for new ships has
stimulated a number of governments to provide shipbuilding sub-
sidies that threaten to nullify an effort that the Organization
for Economic Cooperation and Development has been making for
the past ten years to end such subsidies.
Foreign maritime nations are watching with grave con-
cern a US bill that would reserve 30 percent of US oil imports
by 1980 for US-flag tankers. Their current share is about 5 per-
cent. If the legislation is confined to US-built tankers, it
would require the construction of ships totaling 10 million to
20 million dead weight tons in US yards, thereby prolonging the
depression for foreign tankers. US firms owning 17 percent of
foreign-flag tanker capacity would also suffer unless provision
were made to permit their foreign-built tankers to be trans-
ferred to US registration.
CANADA: Pipeline Report
//The recommendations of Canada's National Energy
Board on competing Arctic gas pipeline proposals will be re-
leased on July 4 and are likely to play a major role in the
government's selection of a pipeline route. The government has
agreed to make a decision by September 1.//
//The report, in conjunction with the Berger re-
port on the Mackenzie Valley route issued last month and the
Lysyk report on the Alcan route due August 1, will be used by
the Canadian cabinet in mid-August to address the country's
energy needs and pipeline options. Current speculation in Ot-
tawa holds that the board is leaning toward the Mackenzie Val-
ley option despite Berger's negative appraisal.//
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//Although. the Mackenzie Valley route presents a
host of environmental, social, and financial problems, the
board may believe that substituting delta gas for expensive
imported oil in the eastern markets of Canada, particularly in
Quebec, could outweigh the potential problems. The government
may also be influenced by the argument that the Mackenzie pipe-
line would-be a cheaper way of moving gas from the Mackenzie
Delta south than would the Alcan line, which could also be
used to transport delta gas.//
//The cabinet clearly faces a tough task. In ad-
dition to e Lysyk report, the cabinet will also review an
environmental impact statement on the Alcan route and a second
Berger report on the Mackenzie Valley route. Each can be ex-
pected to revive the political debate that started with the
original Berger report.//
//The underlying question is which route would
give the best trade-off between northern development and
southern energy requirements without either provoking Canadian
national sentiments or offending the native
people.
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