NATIONAL INTELLIGENCE BULLETIN
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CIA-RDP79T00975A030200010099-7
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99
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Publication Date:
August 1, 1977
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REPORT
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NATIONAL INTELLIGENCE DAILY CABLE
Monday August 1, 1977 CG NIDC 77-177C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Crimina9 Sanctions
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National Intelligence Daily Cable for Monday, August 1, 1977
The NID Cable is for the purpose o in orming
senior officials.
ALGERIA-TUNISIA-ITALY: Gas Pipeline
LIBYA: Tight Manpower Situation
CHINA: Army Day Celebrations
NORTH KOREA - USSR: Prices Rise
PERU: Receiving Soviet T-62 Tanks
BRIEFS:
Egypt.-Libya
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ALGERIA-TUNISIA-ITALY: Gas Pipeline
I The Italian state oil company has reached agreement
with the government of Tunisia on transit rights for a $2.5-
billion natural gas pipeline linking Italy and Algeria. The
pipeline is scheduled to begin operation in 1981 with an initial
annual capacity of 425 billion cubic feet, rising eventually
to 705 billion cubic feet. Algeria does not have sufficient
proven gas reserves to fulfill this contract and still meet
its other commitments for gas exports.
I Negotiations between the Italian company and Tunisia
were s a led late last year over the issue of transit fees.
Italy must still reach an agreement with Algeria to convert an
existing contract for liquefied natural gas to one for gas
transported through the pipeline. Use of the pipeline would
eliminate the 15- to 20-percent loss of feedstock incurred by
liquefaction.
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Algeria claims the world's fourth largest reserves
o na ura gas--130 trillion cubic feet. Only two thirds of
these are proven, however. Based on existing long-term contracts
and commitments, including the original liquefied natural gas
contract with Italy, Algeria has oversold the supply of its
proven reserves. Unless new reserves are found or proven or
several contracts are canceled, Algeria will not be able to
meet its commitments beyond the mid-1990s--five or more years
before some contracts expire.
Algeria is firmly committed to liquefied natural gas
export contracts totaling 1.3 trillion cubic feet annually
and has reached preliminary agreements that would double its
overall commitment. Agreements with US companies account for
405 billion cubic feet of the amount under firm contracts and
920 billion cubic feet of the gas tentatively committed.
LIBYA: Tight Manpower Situation
//Libya's recent border clashes with Egypt are
likely to accelerate President Qadhafi's plans both to reduce
the large Egyptian presence in Libya and to expand the Libyan
military establishment. These measures will worsen an already
tight labor situation, threaten Libya's economic development
program, and disrupt public services.//
//Qadhafi appeared to be grappling with the nega-
tive consequences of both policies before the recent outbreak
of fighting, but he had not made substantial progress on either.
He originally intended to increase his military forces by some
70,000 to a total of 100,000 by 1980.//
//He also tried to use the threat of expelling
Egyptians as a restraint on Egyptian President Sadat. Egyptians
working in Libya are an important source of foreign exchange
for Egypt. Qadhafi apparently shelved the idea of mass expul-
sion when Sadat ignored his threat and a number of economic
repercussions to expulsion were brought to his attention.//
//The increasing tensions between the two countries
encourage a exodus of about 20,000 Egyptian workers on their
own. Only those in sensitive government and military jobs were
actually expelled.//
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//Manpower shortages were proving to be a serious
cons rain on Libyan development plans even before the military
build-up and the departure of the Egyptians. Investment spending
under the five-year plan for 1976-1980 has been running 30 per-
cent behind schedule, in large part because of shortages of
skilled labor and management personnel. The government has been
unable even to process the paper work needed to initiate many
projects.//
//Libya's small population--2.5 million--cannot
provide enough workers to man the many ambitious industrial-
development, construction, and oil-related projects programmed
in the five-year plan. Manpower shortages are compounded by a
high illiteracy rate, low rates of female participation, and a
general Libyan disdain for labor associated with urban rather
than pastoral life.//
//To alleviate the shortages, Libya has turned to
foreign workers to expand its labor force. Foreigners make up
more than a third of Libya's 900,000-man workforce, and the
share is likely to rise over the next decade. ]Foreigners re-
portedly already account for 60 percent of the skilled managers
and civil servants. A law requiring 70 percent of the employees
of foreign companies to be Libyan nationals is rarely observed.//
//The major foreign contingent has consisted of
about 250,000 Egyptian workers throughout the economy. In addi-
tion, there reportedly are more than 75,000 Italians, Yugoslavs,
and Greeks working in the oil, construction, and other new in-
dustries. About 6,000 East Europeans work under commercial con-
tracts. Poland and Romania have been active in a number of in-
dividual projects, usually connected with infrastructure.//
//The Egyptian community in Libya.---including fam-
ilies of workers--probably numbered more than 400,000 at its
zenith last year, forming the backbone of :Libya's professional,
bureacratic, and skilled workforce. Egyptians have filled many
technical and specialized jobs--construction workers on civil
and military projects, teachers, doctors, and civil servants.
Egyptian specialists also have been involved in the various
ministries responsible for preparing the national budget, sta-
tistics, and planning.//
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//It will be difficult for Libya to replace depart-
ing Egyptians--especially construction workers, whose skills are
in short supply throughout the Middle East. Professionals and
civil servants who have specialized knowledge of the workings
of the Libyan economy also would be difficult to replace. Turks,
Pakistanis, and Europeans, often mentioned as possible replace-
ments for Egyptians, generally lack a command of Arabic, which
is a virtual necessity in Libya.//
I //Other North African countries--Morocco, Algeria,
and Tunisia--which could provide Arabic-speakers, would be un-
able to provide all the skilled manpower required.
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CHINA: Army Day Celebrations
China celebrated the 50th anniversary of the founding
of the People's Liberation Army yesterday with a large rally
in Peking's Great Hall of the People. AZZ the active members of
the Politburo except for Chen Hsi-lien, who is visiting Inner
Mongolia, were in attendance. Chairman Hua Kuo-feng presided
over the rally in uniform, but the day clearly belonged to
Defense Minister Yeh Chien-ying, who gave a lengthy keynote
address. The newly rehabilitated Teng Hsiao-ping, who holds
the titles of vice chairman of the party's military commission
and chief of the General Staff, was also prominently featured,
in uniform, in press and television coverage of the rally.
I Yeh's speech was a comprehensive statement of the
army's traditions, goals, policies, and position with regard
to the party. Lavish in its praise of Mao Tse-tung, the speech
stressed the importance of continuing the army's tradition of
absolute loyalty to the party and obedience to the chain of
command. One of the keys to ensuring this subordination is the
system of political commissars and party committees at all
levels of the army, and Yeh strongly reaffirmed its importance.
Yeh and today's issues of Peoples Daily, Liberation
Army Daily, and Red Flag magazine deal at length with the
issue of military modernization. Yeh called for accelerating
the modernization of the People's Liberation Army and repeated
the now-standard idea that only through effective political work
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can modernization be accelerated. Neither Yeh's speech nor the
journals, however, tie the issue of the pace of military modern-
ization to the speed of overall economic recovery.
Yeh reaffirmed the army's loyalty to Hua in the strong-
est of terms: "With Chairman Hua as our leader, we are assured
that the supreme leadership of our party and, state will remain
stable for a long time to come."
I IThe fact that Chen Hsi-lien was the only major leader
to miss Army Day festivities may be significant. Chen is widely
believed to have opposed the rehabilitation of Teng Hsiao-ping,
and his absence from Peking on the first holiday following Teng's
return reinforces that belief. Nevertheless, Chen's trip to
Inner Mongolia, which is part of the Peking Military Region,
which he commands, has received wide publicity in an apparent
effort to convey the impression that his political status is
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The turnout for the Army Day rally was not as large as25X1
a_ car the 1975 celebrations,
NORTH KOREA - USSR: Prices Rise
North Korea's trade with the USSR, by for its
most important supplier of machinery, fuels, raw materials,
and grain, dropped by 14 percent in 1976 as neither side fuZ-
fiZZed its export commitments. North Korean exports to the
USSR feZZ 24 percent to $158 million, while imports feZZ by 6
percent to $243 million. In terms of volume, however, North
Korean exports were probably down 40 percent and imports down
30 percent. The decline appears to be largely a resuZt of North
Korean industrial problems and a phasing out of shipments un-
der Soviet aid projects.
I orth Korea and the USSR last year realigned the
prices used in their foreign trade--the first realignment in
many years. This adjustment, expected to last through 1980, in-
cluded much higher ruble price increases than we expected.
North Korea's import prices jumped by about one third while
its export prices rose only by about one fourth.
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The price of Soviet crude oil and petroleum products
was increased by more than 70 percent. North Korea has been
looking for cheaper oil, but the Soviet price--around $8 per
barrel--is still well below world levels. North Korea, more-
over, does not pay hard c.arrency for Soviet oil.
/None of North Korea's major export items was
shipped in greater quantity in 1976 than in 1975. Exports to
the USSR dropped to low levels in the first three quarters of
1976, but regained some ground in the fourth quarter following
Soviet pressure on North Korea to reach the levels specified
in the trade agreement. Only a little more than half of the
exports specified in the agreement were shipped during the year.//
I IThe decline in Soviet exports was caused in part by
the completion or near-completion of Soviet industrial aid proj-
ects scheduled for North Korea's six-year plan (1971 to 1976).
As a result, machinery exports--nearly half of Soviet exports
to North Korea in 1974--accounted for less than 30 percent of
total Soviet exports to North Korea last year.
//The Soviets reportedly are determined to force
North Korea to meet a higher share of its export commitments and
have threatened to suspend petroleum and coking coal shipments.
Some curtailment may have already taken place. In the first quar-
ter of 1977, North Korean trade with the USSR fell sharply from
the peak reached in the fourth quarter last year. North Korea's
continued trade problems, both with the West and the communist
countries, will significantly limit its capacity for industrial
growth over the next several years.//
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PERU: Receiving Soviet. T-62 Tanks
//Peru may receive up to JuO Soviet T-62 medium
end of the year,
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VThis u.wouZ be the first time a South
American country has received such a sophisticated tank.//
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one T-62 was already at the
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military academy in Lima. Soviet advisers may be training Peru-
vian personnel in the operation and maintenance of the tank.
The T-62 is the most advanced tank now being exported by the
USSR to developing countries.//
//The arrival of T-62s probably would lead to an
increase in the number of Soviet military technicians in Peru;
there are about 80 there now. Peru's maintenance capabilities
have not kept pace with the sophistication of Soviet weaponry
entering the country.//
//in May,
the Peruvian army had decided to purchase enough T-62s for two
battalions, one to be stationed in the north opposite Ecuador
and the other in the south near Chile. Peruvian forces reportedly
are increasing the size of their tank battalions to 46 or 47
tanks each. The purchase of 100 tanks would fill out these units
and allow for spares.//
//Peru already has more than 300 Soviet T-55 medium
tanks as t hp frontline armor weapons of its ground units. A T-62
purchase could represent an attempt by Peru to circumvent main-
tenance problems on the T-55s. The T-62 has a larger main gun
but does not differ radically from the T-55. Peru probably would
also have maintenance problems with the T-62s.//
//Since 1973, the USSR has signed agreements with
Peru for more than $650 million worth of arms--70 percent of the
total value was arranged during the past year. Arms orders in-
clude modern equipment for both the Peruvian army and the air
force. Moscow has delivered this year at least $250 million
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worth of arms under these agreements, including 26 SU-22 fighter-
bombers, 20 T-55 tanks, and surface-to-air missiles.
I I
The cease-fire continues to hold along the Egyptian-
Libyan border. There was no significant military activity over
the weekend.
Efforts by Palestinian and Kuwaiti mediators to arrange
a truce and schedule a meeting between the Egyptian and Libyan
foreign ministers have apparently stalled, however, and the two25X1
sides are continuing their propaganda attacks. An Egyptian
official denied press reports on Saturday that a meeting of the
two sides was scheduled to be held in Kuwait.
I //Ghanaian head of state Acheampong's announce-
ment last week that he will adhere to his original two-year
schedule for a return to civilian rule has drawn fire from the
country's educated class.//
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//A group made up of doctors, lawyers, pharmac-
ists, and others has accused Acheampong of reneging on his
pledge--made last month under pressure from striking profes-
sionals--to return the government to civilians within 12 months
Acheampong maintains the he only promised to consider the
shorter transition period, not to adopt it.//
//Angry professionals have begun new meetings
to decide on a response. They are likely to resume their strikes
in an attempt to add to the public sentiment against Acheam on 's
five-year-old military regime.
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