CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030400010058-0
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• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Sequence Number: 58
• Content Type: REPORT

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Thursday 17 November 1977 CG NIDC 77 267C
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National Intelli ence Dail Cable for Thursda , 17 November 1977
The NID Cable is for the purpose of informing
senior US officials.
CONTENTS
MOROCCO-ALGERIA-FRANCE: Rhetoric
POLAND: Debt and Trade Problems
IRAQ-USSR: Diversification
Laos
Mexico
USSR
Afghanistan
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MOROCCO-ALGERIA-FRANCE: Rhetoric
Arab efforts to mediate Algeria's dispute with Morocco
and Mauritania over Western Sahara are continuing. Neither side
is willing to compromise but will probably respond to Arab urg-
ings to avoid a wider conflict.
Egyptian Vice President Mubarak returned to Cairo on
15 November after visiting Rabat, Algiers, Nouakchott, and Paris.
At each stop, Mubarak presumably stressed the need to avoid a
direct military confrontation that could distract the Arabs from
the broader issue of Middle East peace negotiations. Saudi For-
eign Minister Saud is also visiting the disputants.
The debate on Western Sahara in the UN trusteeship
committee ended inconclusively last week, and a resolution was
adopted to suspend debate and refer the matter back to the Or-
ganization of African Unity. There are some signs that support
for Algeria's position at the UN is increasing.
Morocco and Algeria continue to make tough public state-
ments and to blame each other for intensifying the quarrel. Al-
gerian demarches to foreign governments and international organ-
izations are intended to forestall Moroccan "hot pursuit" raids
against Polisario Front guerrilla sanctuaries in Algeria and
to counter French military pressure tactics.
French negotiator Claude Chayet returned to Algeria
last weekend for more meetings with Polisario representatives
aimed at securing the release of the French citizens held by
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the Front. Although Chayet's efforts continue to be inconclu-
sive--he reiterated this week that he does not expect rapid
progress--a Front representative in Brussels predicted a "happy
outcome" for the eight captives.
The most recent official French press releases have
emphasized the humanitarian aspect of the hostage issue and the
separation of that issue from the broader problem of Western
Sahara. The statements have reiterated France's professed neu-
trality on the sovereignty issue.
Meanwhile, Spain has been drawn into the latest public
exchanges on the Sahara dispute. Three Spanish fishermen were
taken from their boat off the coast of the Western Sahara on
Monday. Mauritanian allegations that the Polisario Front is
responsible have been picked up in the Spanish press but remain
unconfirmed. It seems equally possible that Mauritania--engaged
in a fishing dispute with Spain--or Morocco, despite its denoun-
cement of the incident, seized the fishermen in a deliberate at-
tempt to discredit the Polisario Front, which enjoys consider-
able support from the Spanish left.
Madrid has asked Mauritania and Morocco for information
,and, according to the Spanish press, has dispatched a destroyer
to protect the fishing fleet in the area.
On Monday the Spanish leftwing opposition issued a
statement condemning the Madrid accords, which provide for a
phased turnover of territorial administration to Morocco and
Mauritania, and calling for an immediate halt to delivery of
Spanish arms to Rabat and Nouakchott.
Spanish officials announced last week that no new arms
contracts would be signed with Morocco and Mauritania.
any Spaniards, particularly leftists but also some
members of the armed forces, believe that Spain abandoned the
Saharans to Morocco and Mauritania. During the past two years,
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Spanish leftist parties have lent moral support to the Polisario
Front, endorsing its claim to be the legitimate representative
of the Saharan people.
The official Spanish position on the Western Sahara
is that the decolonization process initiated in November 1975
will not be completed until a valid referendum of the Saharan
population has been held.
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Poland's hard-currency debt grew from $800 million
in 1970 to $10.2 billion by the end of 1976 as a result of its
soaring trade deficits with the developed West. Although Warsaw
had planned for a Large increase in its debt, its Larger than
expected imports of Western capital equipment and grain, com-
bined with recession in its Western export markets, helped push
Poland's debt even higher. So far, Poland has been able to ob-
tain the funds it needs to cover its trade deficits and to meet
growing debt obligations, but both Warsaw and some Western
Lenders are becoming increasingly concerned over Poland's grow-
ing debt burden.
Warsaw has made some attempts to bring its hard-cur-
rency trade deficit under control. Efforts to boost exports,
however, continue to be thwarted by sluggish Western economic
recovery and soft world prices for Poland's major exports. Po-
land has had more success in holding down imports. It has been
assisted in this by a commitment of more Soviet oil through
1980 and by last year's Soviet credit, which probably has
allowed Warsaw to shift some of its hard-currency raw material
purchases to the USSR. Even so, Poland's trade deficit with
the developed West this year is expected to exceed $2.5 billion.
Poland has limited options over the next few years in
managing its hard-currency debt. Warsaw must continue to curb
imports, even though economic growth plans and consumer needs
require large imports of Western machinery, industrial materials,
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and agricultural products. Rather than reduce growth targets
substantially and make consumers tighten their belts, Warsaw
probably will seek some form of assistance from the West.
//So far this year, Warsaw has approached West
Germany and the US for extraordinary concessionary credits.
The Poles may also ask one or
both CEMA banks for a hard-currency loan. The money could be
borrowed by the CEMA institutions from Western banks on behalf
of Poland--with no public announcement.
If such loans prove to be insufficient to ease Poland's
financial difficulties, Warsaw may have to reschedule some of its
debt. Poland probably would turn first to individual Western
commercial banks to which it is heavily in debt.
As a last resort, the Poles might try to reschedule
Western government and government-backed credits. Warsaw prob-
ably would start with Austria, France, or the UK because of the
large amount of government-backed debt outstanding and the ex-
cellent political relations Warsaw has with these countries.
Warsaw probably will be reluctant to approach the West Germans
because of Bonn's past extensions of large financial assistance.
Poland might also hesitate to turn to the US for rescheduling,
especially if it receives US concessionary credits for its ag-
ricultural purchases.
Whatever approach or combination of approaches Warsaw
might take to ease its financial burdens, major rescheduling or
borrowing could take place as early as next year and possibly
by 1979.
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IRAQ-USSR: Diversification
Iraq has been buying
weapons systems in Western F,urope since early 1974. Iraqi
leader Saddam Husayn is pursuing a deliberate policy of diver-
sification in order to acquire the most advanced military
equipment available; he also hopes to limit Moscow's ability
to use arms for political leverage. There is no indication
that Iraq intends to end its military relationship with the
USSR.//
//Soviet attempts to enforce the provision
in its military supply contracts that no Western materials be
used for replacement parts for Soviet-supplied items are ap-
parently causing friction between the Soviets and the Iraqis.
Iraq's new a ense minister, Adnan K.ayra a Ta a , is
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"vexed" by these contractual. difficulties and is convinced
that most Soviet material is inferior to that available from
the West.//
There are other irritants in relations between Mos-
cow and Baghdad. This spring, Iraq for the first time openly
criticized Moscow for urging the Arabs to participate in any
reconvened Geneva talks and for supporting negotiations with
Israel. Although officially the Iraqi Government has been si-
lent on the US-Soviet joint statement of 1 October, the
government-controlled media have been very critical.
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Z2oscow is unhappy with Baghdad's support for Somalia
Eritreans in their conflict with Ethiopia. The Soviets
d th
e
an
have also repeatedly urged Iraq and Syria to reconcile their
differences.
the Soviets are unhappy with the precarious
Finally
,
's Communist Party. Although the party is legal
of Ira
t
t
q
us
a
s
and two Communists are cabinet members, the Iraqi Communists
are excluded from the decisionmaking process and are closely
monitored by a distrustful Iraqi leadership.
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Twenty-six residents of a village near Vientiane
were executed on 10 November for plotting to assassinate gov-
ernment leaders, including Premier Kaysone Phomvihan. Neither
Thailand nor the US has been accused of complicity in the al-
leged attempted revolt.
There had been no reports of assassination plots in
the press or in the rumor mill, and the plots may never have
developed beyond the talking stage. Security for Kaysone and
other leaders is extremely tight.
Wide domestic coverage of the trial and execution
reflects the regime's preoccupation with internal threats, and
could presage harsher security measures.
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Mexico apparently has concluded agreements for a
$1.2 billion syndicated Eurocurrency loan, one of the largest
such loans ever arranged for a foreign government. A consortium
of 119 banks in 13 countries will provide the loan, which will
reportedly be for seven years with an interest rate 1.75 per-
cent above the London Inter-Bank offer rate.
Approximately 22 percent of the loan will involve
rollovers of existing loans. The remaining funds are earmarked
for a number of public investment purposes, including expanded
petroleum exploration, increases in electrical generating capa-
city, agricultural development, and a modest industrial loan
program.
he Soviets have completed the first rail spur to
the southern Yakutsk coal basin, which contains an estimated
20 billion tons of coking coal. The 4400-kilometer rail line--
the first branch opened on the Baikal-Amur railroad--will fa-
cilitate development of an open-pit coal mine at Neryungri.
Mining is scheduled to begin in late 1978 or early 1979. The
rail line will be extended several hundred kilometers north
through the southern Yakutsk region, where iron ore deposits
estimated at 2.5 billion to 3 billion tons are located.
The rail line is part of a joint Soviet-Japanese
project. Japan is providing $540 million in credits from its
Export-Import Bank and will receive 5.5 million tons of coking
coal annually from the Neryungri mine between 1983 and 1999--
10 percent of its current demand.
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Afghanistan
//The assassination yesterday of Afghanistan's
Planning Minister Khurram does not appear to have been politi-
i
n
cally motivated. Although there is considerable discontent
the cabinet and at least five ministers have submitted their
resignations, Khurram was not involved in the dispute. The US
Embassy in Kabul believes the assassin was probably either a
disgruntled ministry employee or someone who acted because of
a family feud.
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