NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030200010105-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 16, 2016
• Document Release Date: June 16, 2005
• Sequence Number: 105
• Publication Date: August 4, 1977
• Content Type: REPORT

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Thursday August 4, 1977 CG NIDC 77-180C
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NATIONAL SECURITY INFORMATION
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National Intelligence Daily Cable for Thursday August 4, 1977.
I T e NID Ca e is for the purpose o informing
senior o icials.
SYRIA: Strengthening Ties with PLO
ISRAEL: Coalition Talks Snarled
US-USSR: Pravda on Relations
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CHINA: Huang Ko-cheng Rehabilitated
TURKEY: Payments Situation Worsens
PORTUGAL: New Communist Strategy
BRIEF:
USSR
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SYRIA: Strengthening Ties with PLO
strengthen his ties with the Palestine Liberation Organization
seem designed both to protect his domestic flank and to bolster
his negotiating hand with Secretary Vance.// On the eve of thr
Secretary's visit, the government-controlled press summed up
Syria's "minimum requirement" for peace, reemphasizing Asad's
insistence on Palestinian representation at Geneva or in "any
negotiating framework." The press has strongly implied that
Syria is not prepared to compromise on this issue as the price
for a resumption of the Geneva peace conference.
I IThe media have cautioned the public not to expect too
much rom the Secretary's visit and have sought to play up the
recent closer coordination between Syria and the PLO. Asad held
well-publicized talks with Yasir Arafat and other Palestinian
leaders the day before the Secretary arrived.
I IThe reputable "AZ-Anwar" newspaper in Beirut re-
ported yesterday that Syria and the PLO have reached a written
agreement calling for an independent Palestinian delegation at
Geneva and an independent Palestinian state on the West Bank
and Gaza strip. According to "Al-Anwar," the Syrians and the
PLO ruled out links between such a Palestinian state and Jordan
unless the two states were part of a larger confederation with
Syria.
//Syrian President Asad's recent efforts to
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//There has been previous press speculation that
Asad agreed to support independent Palestinian participation at 25X1
Geneva in exchange for PLO cooperation in implementing the
Cairo accords regulating the Palestinian presence in Lebanon.
//Both Arad and Arafat, however, probably have
reached some understanding in an effort to strengthen their po-
sitions in anticipation of renewed US diplomatic efforts to
promote peace talks in Geneva. Asad may have decided that
closer coordination with the PLO was necessary in an effort to
forestall what he saw as US wavering on the issues. At the same
time, he probably thought he had to protect his domestic posi-
tion in case current diplomatic efforts reach an impasse.//
I I
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I Coalition negotiations in Israel between the Begin
government and the Democratic Movement for Change, which were
resumed early last month, have again stalled over many of the
same issues that Zed to the original breakdown in talks in June.
Serious differences persist within the Democratic Movement over
the wisdom of joining Begin's right-wing coalition. A new break-
down in the negotiations probably would not have much impact on
the government's position on Arab-Israeli issues.
I I Following a negotiating session earlier this week,
Democratic Movement leader Yigael Yadin rated his party's chances
of entering the government as "only 50 percent." He emphasized
that he could not recommend that the Democratic Movement join
the government unless there is significant progress in subse-
quent meetings. The party's governing council was scheduled to
discuss the issue yesterday.
Begin undoubtedly would welcome the Democratic Move-
ment's participation in his government, both to strengthen its
narrow parliamentary majority and to give the appearance at
least of broadening support for his approach to peace negotia-
tions with the Arabs. His unwillingness thus far to pay more
than a token price for the Democratic Movement's inclusion,
however, indicates that he does not regard its support as es-
sential.
A breakdown in their coalition talks probably would
have little immediate effect either on Begin's prospects for
remaining in office or on the position of his government toward
key Arab-Israeli issues. Begin would still retain his largely
uncontested control over a small but tightly knit coalition
made up of conservative parties that share compatible views on
most major foreign and domestic questions.
I I On substantive issues, Yadin's call for electoral
changes t at would favor direct election of parliamentary depu-
ties--in contrast to the present system of national party elec-
toral lists--continues to encounter strong opposition from Be-
gin's senior coalition partner, the National Religious Party.
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The National. Religious Party has long feared that
Yadin's plan would benefit only the larger, wealthier parties
and damage its own prospects in national elections. Begin's at-
tempts to bridge the gap between Yadin's demand for a large
number of electoral districts and the National Religious Party's
willingness to accept only a small number have so far proven un-
successful..
I Faced with the National Religious Party's opposition
on is point, many Democratic Movement leaders suspect that
Begin may be hedging on his earlier promise that the National
Religious Party would not be given veto power over future elec-
toral legislation.
I Similarly, Begin appears to have qualified his earlier
commitment to the Democratic Movement concerning the establish-
ment of new Israeli settlements in the occupied territories. In
their earlier talks, Begin reportedly promised that any Demo-
cratic Movement minister could have settlement plans referred
to the foreign affairs and security committee of parliament,
which includes several Democratic Movement representatives.
Last week, however, Begin announced that a government
committee headed by Agriculture Minister Ariel Sharon, which is
dominated by hard-liners in Likud and the National Religious
Party, would have jurisdiction over settlement affairs.
Impasses also appear to have developed over the dis-
tribution of several senior cabinet posts. The Democratic Move-
ment, which made reduction in the number of cabinet positions
a major plank in its campaign platform, continues to insist
that it be given control of a combined health. and social welfare
ministry. The health portfolio, however, is now held by a senior
Likud official and Begin has so far been unwilling to reverse
this appointment.
Similarly, Yadin's demand that a Democratic Movement
figure be put in charge of the police within the Interior Min-
istry, which is controlled by the National Religious Party, has
been rejected. Yadin himself reportedly remains uncertain that
he would be given significant authority as deputy prime minister
if his party entered the cabinet.
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I Finally, a new dispute has emerged concerning dis-
cipline among coalition members in voting on religious questions.
Yadin says he had been promised that his party would be free
to vote its conscience on religious matters, even on no-con-
fidence motions in parliament. The leader of the National Re-
ligious Party, however, has flatly denied that he had agreed
to this stipulation.
Frustrated with the deadlock in coalition talks,
Amnon Rubenstein, the number-two man in the Democratic Movement,
announced earlier this week that he was withdrawing from the ne-
gotiations and that he would refuse to accept a cabinet post
even if his party joined the government. Rubenstein, the former
leader of a small liberal movement, has never been happy with
the possibility of joining Begin's government and in recent
weeks has become the rallying point for others within the Demo-
cratic Movement who share his reluctance.
This opposition clearly has reduced Yadin's capacity
to bargain with Begin. It has made Yadin less willing to com-
promise on his key demands for fear of provoking defections
from the Democratic Movement and perhaps even causing the break-
up of the party. F77 I
In a major Pravda article yesterday, Georgiy Arbatov,
the ea of the USA Institute, blamed the Carter administration
for the current impasse in Soviet-American relations. A rb atov,
the USSR's leading academic expert on the US, accused Washington
of placing barriers in the way of arms control and economic re-
lations and implied that the US was doing nothing to address
these problems. It appears that Moscow, after examining Presi-
dent Carter's remarks in Charleston two weeks ago, has decided
there is little reason for particular optimism in its dealings
with Washington.
The Soviets had initially reacted midly to the Presi-
dent's Charleston speech and also called for "reserve and pa-
tience" in discussing differences between Moscow and Washington.
An editorial in the foreign affairs weekly New Times even raised
the possibility that Moscow was considering greater moderation
in relations with the Carter administration.
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I I Following the discussions in Geneva in May between
Secretary ance and Foreign Minister Gromyko, the Soviet press
had been painting a highly pessimistic picture of the President's
policies. Arbatov's article--the most authoritative Soviet re-
sponse to the President"s speech--is another example of Soviet
pessimism.
I I Arbatov charges that US efforts to "emasculate" de-
tente have nothing to do with the "lack of experience" of a
new administration or the "peculiarities" of the President's
political style, but are a result of Washington's attempt to
negotiate "from a position of strength" with the USSR. This
factor, according to Arbatov, explains the change for the worse
in the political atmosphere between the US and USSR.
Arbatov's article strongly suggests that Moscow will
now return to more critical attacks on the US.. His skeptical
assessment of Soviet-American relations last winter, which ap-
peared in Pravda on December 11, set the tone for subsequent
commentary on the US at that time.
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I The second summit meeting of the Asscciation
of Southeast Asian Nations opens today in Kaula Lumpur with a
definite emphasis on the steady, if modest, progress member
states have made toward establishing a framework for economic
cooperation. The pace and scope of regional economic integration
in ASEAN remain slow, however, and the outcome of discussions
after the meeting with industrial nations in the area will for
the most part continue to depend on balancing individual na-
tional priorities with collective regional concerns.
For the first time, leaders of the ASEAN member
states--In onesia, Malaysia, the Philippines, Thailand, and
Singapore--will meet informally with the leaders of Australia,
New Zealand, and Japan. Attention will focus on post-summit
ASEAN consultations with Japanese Prime Minister Fukuda. US-
ASEAN economic consultations will be held in Manila in early
September.
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ASEAN leaders hope that Japan will meet their requests
for financial and technical assistance. ASEAN sees Japan as its
best and most economic source of high-quality consumer and in-
dustrial products and as the primary pipeline for the technology
and organizational skills needed for its industrial development
plans.
I IFor its part, Tokyo is taking an active interest in
cultivating closer ties with ASEAN. The Japanese are pleased
with ASEAN's deliberate effort to avoid antagonizing Vietnam.
They have also gradually come to view ASEAN's emphasis on ex-
panding economic cooperation as directly affecting their own
substantial stake in the region.
Since the first summit conference--at Bali, Indonesia,
in February 1976--ASEAN has established, in response to a Jap-
anese initiative, the Jrapan-ASEAN forum, a permanent venue for
economic contacts between ASEAN members and Japan. ASEAN members
have focused on the need to obtain Japanese concessions on trade
and aid as their price for wider collaboration.
I I In this regard, Fukuda is expected to unveil a variety
or apanese aid concessions and to promise to consider future
adjustments in the terms of trade. Fukuda will meet with ASEAN
leaders both after the summit conference and on a Southeast
Asian tour later this month.
The Japanese leader is expected to offer up to $1 bil-
I for financing five major ASEAN industrial projects pending
completion of feasibility surveys and market studies. The pro-
jects include urea plants for Malaysia and Indonesia, a diesel
engine production facility for Singapore, fertilizer plants for
the Philippines, and a soda ash production facility for Thailand.
I Fukuda is also expected to offer grants for cultural
exc aness and medical facilities. He may raise the possibility
of assisting ASEAN's exports through an expanded general system
of preferences and a global liberalization program for tropical
products but would probably go no further than agreeing to con-
sider an export stabilization plan for Southeast Asia's primary
products.
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Japan would not want to agree to any arrangements
that would deviate significantly from its overall pattern of
economic relations elsewhere in the world or undercut its bargain-
ing position in multilateral trade negotiations.
ASEAN policy toward Australia and New Zealand is di-
rected toward encouraging them to be more sympathetic to the
interests of their neighbors than to those of their industrial
allies in other parts of the world.
Australian Prime Minister Fraser will probably do
littlee than attempt to justify and explain Australia's
present trading policies, coupling this with vague assurances
that tariff reductions might be possible once his country's
economy improves.
I New Zealand Prime Minister Muldoon can be expected
to otter sympathetic support to ASEAN's objectives and con-
tinued access to New Zealand's limited markets for ASEAN pro-
ducts.
Dramatizing the tenth anniversary of the organization,
President Marcos of the Philippines may renounce manila's claim
to the East Malaysian state of Sabah. This would eliminate a
long-standing irritant between the Philippines and Malaysia and
serve to highlight ASEAN's contribution to muting antagonism
between two of its member states.
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CHINA: Huang Ko-cheng Rehabilitated
Huang Ko-cheng, a former Chinese vice minister of
defense and chief of staff, reappeared at the celebrations in
Peking on August 1 marking the 50th anniversary of the Chinese
army. Huang was purged in 1959 along with former defense minis-
ter Peng Te-huai, who was accused of being pro-Soviet. Now in
his mid-70s, Huang was Listed only among those who attended
the celebrations and apparently has no official job.
Huang made a brief comeback in 1965 as a vice gover-
nor of Shansi Province, but during the Cultural Revolution he
disappeared again, under Red Guard criticism.
I IHis past close links with Peng Te-huai could make
his rehabilitation an especially delicate issue. Moscow could
conceivably read his return as signaling a re-evaluation of
Peking's policies toward the Soviet Union. Such a reading is
unlikely, however, because Peking continues to criticize Peng
Te-huai and to take a strong anti-Soviet line. An authoritative
editorial on August 1 again castigated the USSR for its mili-
tary activities around the world.
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I Huang's second rehabilitation comes at a time when
the regime is praising prominent old military leaders, includ-
ing deceased marshals Ho Lung and Chen I. Huang evidently num-
bers among this group, which the regime now thinks was wrong-
fully purged by overzealous party "leftists." In the late 1950s,
Huang had a reputation for being a strong disciplinarian and
for favoring military modernization, two policies that are now
receiving strong support. F77 I 25X1
TURKEY: Payments Situation Worsens
Turkey's coalition government, which won a vote of
confidence on its overall program Last Monday, faces an in-
creasingly dismal economic picture. The foreign exchange
shortage of the last few months has worsened and sources of
financing are drying up. Export industries are beginning to ex-
perience production slowdowns because of the scarcity of im-
ported raw materials. The announcement on Wednesday of small
exchange rate realignments of the Turkish Lira against several
currencies will have no significant impact on the situation.
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Since March, Turkey's Central Bank has been conserv-
ing its limited foreign exchange by refusing to authorize for-
eign exchange transfers for all but the highest priority im-
ports, such as oil and military goods. The backlog of transfer
requests now stands at $1.5 billion, of which about half is
for imports already in the country.
As a result, foreign suppliers are holding up ship-
ments of badly needed goods, including steel, chemicals, and
food. With foreign exchange reserves as a low level and obliga-
tions mounting, the Central Bank is depending on day-to-day re-
ceipts of foreign exchange to pay essential bills. These earn-
ings will begin to suffer as export industries slow production.
IThe shortage of foreign exchange also has slowed re-
payment o foreigners' deposits in Turkish banks, which in turn
has discouraged new deposits. In June, deposits of foreign ex-
change showed a net decline for the first time in two years.
Such deposits have been a major source of financing for the
large current-account deficits of the last few years.
Prime Minister Demirel's coalition program was pur-
posely vague in order to win the necessary vote of confidence.
Although calling for high growth rates and a reduction in un-
employment, the program does not explain how these goals will
be achieved. In particular, no mention is made of sources from
which necessary foreign financing would be obtained.
I The government will have to outline specific step
soon if Turkey is to obtain new foreign credits. All major
sources of funds already have been exhausted, and no new loan
extensions are likely until Ankara approaches the International
Monetary Fund with a request for assistance. While the Fund
probably would require belt-tightening economic measures that
would be extremely unpopular in Turkey, the alternative would
be an even more severe economic slowdown and higher unemploy-
ment.
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PORTUGAL: New Communist Strategy
Portuguese Communist Party Leader Cunhal's
call earlier this week for the resignation of the Socialist
minority government indicates that the Communists for the time
being have given up trying to coax the Socialists into a "ma-
jority of the Left." The new Communist strategy probably will
not bring down the Socialists, but it will enable the Communists
to save face with militants who might have been tempted to de-
fect to more violent parties on the far Left. The Communists
are likely to make some trouble in the streets, but they prob-
ably realize they would only further weaken their position if
they attempted to take on the security forces.
I Cunhal, speaking for the party's central committee,
a so eman ed the dissolution of the legislative assembly, the
suspension of legislation recently passed by the assembly, and
the holding of a general election within 90 days. The Communists
say the Soares government has reneged on its campaign promises
and has become a tool of the right.
The Communist leader did not say whether the party
intended to bring a motion of censure before the legislature.
The assembly last week adjourned an extended summer session,
but plans a brief session next Tuesday to wrap up details of
legislation that has been approved in principle.
I The Communists are trying to make up for recent set-
backs eat them by the Socialists in legislation curtailing
Communist influence in agrarian reform and worker control. Com-
munist leaders probably realize that their demands are unlikely
to be heeded, but are anxious to signal a definite policy change
to save face with the party membership and head off defections
to violence-prone far-left groups.
//The Communists will probably engage in
,
street demonstrations and some violence, but they are unlikely
to encourage widespread conflict because they are no match for
the security forces. Isolated clashes would provide the Commu-
nists with enough propaganda to retain the loyalty of party
activists without forcing an all-out confrontation with the
authorities.//
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I IRepresentatives of the Socialists, the centrist So-
cial Democrats, and the conservative Center Democrats have at-
tacked Cunhal's announcement as a desperate maneuver that proves
the Communists are unable to function in a democratic society.
At the same time, the Center Democrats noted that the Communist
position makes it easier to bring a censure vote against the
Soares government and reminded the Socialists that they would
be better off in a coalition government with parties to their
right.
I Ambassador Vorontsov, the chief Soviet delegate to
e preparatory meeting in Belgrade on European security and
cooperation, yesterday presented a compromise proposal, which
includes concessions to the West, on the framework of the main
review conference in the fall. The preparatory meeting may be
able to adopt a final document and close tomorrow.
I I The Soviets accepted the Spanish compromise formula
su.mi e last weekend as the basis for an agreement. This
agreement sets October 4 as an opening date for the fall con-
ference and December 16 as a closing date for the work of the
commissions charged with reviewing compliance with the 1975
Helsinki Final Act. It stipulates that if the main meeting has
not finished its work on a final document by December 22, it
would continue for another four weeks from mid-January to mid-
February.
The Soviet proposal submitted yesterday further blurs
possibility of forming drafting groups to replace the commis-
sions and by requiring consensus to close the main meeting.
the crucial issue of a firm closing dates by providing for the
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