NATIONAL INTELLIGENCE BULLETIN
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Publication Date:
December 17, 1977
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REPORT
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NATIONAL INTELLIGENCE DAILY CABLE
0 Saturday 17 December 1977 CG NIDC 77/292C 0
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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National Intelligence Daily Cable for Saturday, 17 December 1977.
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T e NID Cable is for the purpose o informing
senior US officials.
ITALY: Communists' Tough Line
EGYPT: Financial Implications
DJIBOUTI: Caught in the Middle
USSR: Siberian Oil Resources
ROMANIA: Hard Currency Deficit
PORTUGAL: Political Breakthrough
JAPAN: Opposition Cooperation
BRIEFS
Turkey
Yugoslavia
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ITALY: Communists' Tough Line
//Pressures on the Andreotti government
have increase markedly in the last week.
rganize Labor yesterday expressed issat.-
is ac ion i n reotti's latest economic proposals and is
threatening a general strike. Meanwhile, Andreotti's Christian
Democrats seem increasingly inclined to grant the Communist
Party a larger role, although they still appear reluctant to
admit it to the cabinet.//
//In the last week the Communists have veered
away from the conciliatory and pliant posture that has charac-
terized their behavior during most of Andreotti's 16-month ten-
ure toward a more combative and demanding line. Although they
have probed periodically for concessions, they have pushed hard
for major changes on only a few occasions; last spring, for
example, they demanded and received a formal role in drawing
up major parts of the government's program.//
/Communist chief Berlinguer now seems pre-
pared to risk Andreotti's collapse in an effort to gain more
influence for his party.
Berlinguer went on in a TV
interview to call--in an uncharacteristically rigid and insis-
tent tone--for direct Communist participation in a broadly
based government of "national emer enc ." 25X1
erlinguer's tougher line may have stemmed in part
from rank and file discontent with his cooperative approach to
the government, but there does not appear to have been a recent
increase in such internal party pressures. A more likely cause
is Berlinguer's perception that resistance to a deal with his
party is declining among leading Christian Democrats. In their
own recent deliberations about the political future, key Chris-
tian Democrats have shown a markedly increased receptivity to
closer collaboration with the Communists.
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The reasons behind the Christian Democrats' new open-
ness are complex, but probably include the growing belief in
Italy that Berlinguer's party is changing for the better, the
declining likelihood that the Socialist Party will ever become
a reliable alternative partner for the Christian Democrats, and
the desire of some leading Christian Democrats for Communist
support in next year's presidential election.
Adding all of this up, Berlinguer may have concluded
that ? e time was ripe for a determined drive toward a govern-
ing role. He faces some serious problems, however, in pressing
his challenge.
Despite the Christian Democrats' evident flexibility,
their c ief. strategist and most authoritative spokesman, party
president Aldo Moro, emphasized this week that there are still
"limits" to how far the Christian Democrats can go at this time
in collaborating with the Communists.
Moro left the door open to a larger policy role for
Berlinguer's party and even suggested that it could become
part of the government's formal majority in parliament--a step
the Christian Democrats have always resisted because it signals
in Italy that a party is qualified to serve in the cabinet. But
Moro asserted that an actual coalition with the Communists would
violate the Christian Democrats' electoral mandate, and that
Communist pressure for such a role could lead to a new elec-
tion--which no one appears to want at this time.
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The next few days will see intense political maneu-
vering as the parties weigh the implications of Berlinguer's
move. Although he has said he will accept no less than full
participation in the government, it is too soon to tell whether
that will be the Communists' official position in the bargaining
certain to get underway after Christmas; in the past, Berlinguer
has usually asked for more than he realistically expected to
receive. In any event, the Communist leader at this point seems
in a strong enough position at least to carry his art another
significant step toward a formal share of power.
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EGYPT: Financial Implications
//Egyptian President Sadat's diplomatic in-
Ztiatives could create serious financial difficulties for Egypt,
if Egypt's financial benefactors conclude that he is bent on a
separate agreement with Israel. Egypt needs an additional $500
million during the first half of 1978 to finance essential im-
ports and debt service payments falling due. Egypt would be
in for another financial squeeze if Arab support were not forth-
coming.//
/At least two-thirds of Egypt's cash aid this
year has come through the facilities of the Gulf Organization
for Development in Egypt, a multilateral Arab organization es-
tablished under Saudi auspices. The organization's initial $2
billion loan capital was severely depleted by this aid, which
was authorized on an emergency basis following the consumer
riots in Egypt last January. Arrangements for rebuilding the fund
have not been completed.//
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I //Egypt and its Arab benefactors were at odds over
disbursement of the organization's remaining capital of $750
million even before Sadat's diplomatic initiatives. Saudi Arabia,
Kuwait, Abu Dhabi, and Qatar preferred to reserve these assets
for project aid. The Egyptians wanted a cash disbursement of
$550 million to tide them over until 1978 aid arrangements are
firm. These donors now may withhold support altogether pending
further assurances that Egypt does not intend to make a separate
peace with Israel.//
//Arab donors suspended ad hoc aid in the second
half of over the issue of economic reform. Egypt was able
to cushion the impact at that time by drawing on inventories of
imported goods and deferring debt repayment. Attempts to restock
essential imported items this year may have been hampered by
congestion in the port of Alexandria. A lengthy delay in aid
receipts, therefore, could force the government into unpopular
controls on consumption.//
//Sadat could resort to massive short-term borrowing
and e er e t payments. This, however, would jeopardize the
standby agreement that was negotiated with the International
Monetary Fund this year, the basis for most of Egypt's other out-
side assistance.//
t also could launch a "peace bond" drive
/E
gyp
among expatriate Egyptians. Egyptians abroad are already financ-
ing imports of luxury goods worth at least $400 million annually.
A well-managed bond drive might conceivably siphon off some of
this cash for essential imports.//
I //Egypt probably can count on Saudi Arabia to mount
a financial rescue operation before economic conditions provoke
serious domestic unrest if Sadat does not negotiate a separate
agreement with Israel.
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DJIBOUTI: Caught in the Middle
A pro-Ethiopian terrorist band in Djibouti has re-
cent ,y carried out attacks against French citizens as part of
an effort to assert Ethiopian influence there. The attacks by
the band, which consists of members of the Afar ethnic group,
also reflect increasing animosity between the Afars and Somali-
related ethnic groups. The Afars may step up their attacks in
an attempt to force a complete withdrawal of French military
personnel from the newly independent country, leaving it vir-
tuaZZy defenseless against rival Ethiopian and Somali efforts
to dominate it. Somalia has the advantage for now, but this
could change if Ethiopia regains the initiative in the Ogaden.
L On Thursday, a grenade was thrown into a restaurant
frequented by French servicemen in the city of Djibouti, kill-
ing three people and injuring 25. All but one of the casualties
reportedly were French citizens, most of them military person-
nel. The terrorists were almost certainly Afar dissidents and
probably members of the Marxist-led Popular Liberation Move-
ment--MPL--which is financed and armed by Ethiopia. The police
have arrested large numbers of Afars, including many MPL mem-
bers.
I uIn late November, the MPL kidnapped two French teachers
in Western Djibouti. One of the hostages was killed and the
other seriously wounded in a subsequent shoot-out with security
forces. In October, the French pilot of an Air Djibouti aircraft
was killed in an unsuccessful hijacking attempt by Afar dissi-
dents who were almost certainly MPL members.
E The MPL's immediate goal is to prevent western Djibouti
from being used as a staging area by Somali-backed anti-Ethi-
opian Afar guerrillas, who have been infiltrating into Ethiopia
in an attempt to interdict the vital road between Addis Ababa
and the port of Assab. The road is Ethiopia's only remaining land
link to the sea.'
In support of its objective, the MPL is attempting to
diminish or eliminate central government and French influence
in western Djibouti. After the kidnapping of the French teachers,
France withdrew all its technical personnel from the area.
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The MPL is a small organization, but it can count on
the sympathy of large numbers of Afars in Djibouti. The Afars
believe they are being discriminated against by the government,
in which ethnic Somalis predominate. The Afars complain that
the government favors Somalis in official appointments and is
supporting Somalia in its war with Ethiopia. Ethnic rivalries
are besetting the cabinet. Afar ministers share the MPL's view
that the government is becoming a puppet of Somalia.
The latest terrorist attack in Djibouti has deepened
ethnic c eavages. Some ethnic Somali politicians believe the
attack was directed against them, and they are calling for the
arrest of Afar political leaders. Djibouti's politics are thus
heading swiftly toward a clash between Afars supported by Ethi-
opia and ethnic Somalis supported by Somalia.
I he MPL terrorist attacks are designed not only to deny
sanctuary to anti-Ethiopian guerrillas but also to test Paris'
resolve to maintain 4,000 troops in Djibouti. The troops re-
mained after Djibouti's independence in June in order to pro-
tect the country against aggression from Somalia or Ethiopia.
Attacks on French citizens could well trigger a reaction in
France against a continued French military presence in Djibouti.
A French withdrawal would probably work to Somalia's
advantage in the near term. Somalia would be free to try to take
over Djibouti, either by an invasion or through the use of its
agents in Djibouti. The Somalis give lip service to support for
Djibouti's independence but have not abandoned their goal of in-
corporating it into "greater Somalia."
Ethiopia, preoccupied with the conflicts in the Ogaden
and Eritrea, would be hard pressed to counter immediately a
Somali bid to gain control of Djibouti. The MPL and other pro-
Ethiopian groups in Djibouti would resist a Somali takeover, but
they would probably be overcome by the pro-Somali elements.
The situation would be reversed if Ethiopia gained
the military advantage and defeated the Somali forces in the
Ogaden--an unlikely development for several months at least.
Ethiopia, as part of a settlement imposed on Somalia, would
almost certainly demand either the incorporation of Djibouti
into Ethiopia or guarantees of Ethiopian hegemony over the
territory.
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Ethiopia would want to assure its control of the
important Addis Ababa - Djibouti railroad, which carried a
large part of Ethiopia's foreign trade before it was put out
of commission by Somali guerrillas in June. Djibouti's port
will be even more important now that Ethiopia seems likely to.
lose control of Massawa to Eritrean guerrillas, leaving the
already congested port of Assab as Ethiopia's only
of access to the sea.
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A recent report by the US Geological Survey that
the West Siberian basin may have as much as 48 billion barrels
of undiscovered oil in addition to total discoveries of 32
billion barrels does not change CIA estimates of Soviet oil
production up to the mid-1980s. Because of time Zags in dis-
covering and developing new deposits before production gets
under way, any estimate of undiscovered oil is not very rele-
vant to the question of how much oil the Soviets will be able
to produce over the next seven or eight years. More relevant
are additions to proved reserves. On this, the Soviets are
apparently running behind plan.
I IA estimated last April that some 27 billion barrels
of oil had been discovered in West Siberia--only 5 billion
barrels below the Geological Survey's estimate of discoveries.
Production to date from these fields has run about 7 billion
barrels. CIA has not independently estimated ultimate potential
oil resources of the West Siberian basin or any other Soviet
petroleum region.
I ased on analogies with US sedimentary basins and
using volumetric estimating techniques, the Geological Survey
estimated that the oil and gas potential in West Siberia ranged
from a low of 20 billion barrels to a high of 80 billion barrels
of oil; it reported the high estimate as the most realistic.
//Other researchers are much less optimistic about
potential oil and gas resources in West Siberia.
Soviet geologists undoubtedly have made estimates of
undiscovered oil. The director of the West Siberian Research
Institute for Petroleum Exploration recently stated in Pravda
that Soviet geologists have discovered only part of the pre-
dicted reserves of oil and gas in West Siberia. He also,said
that in West Siberia nearly all "structural traps"--the type
of geological formation in which most of the world's oil is
found--have already been prospected and that now "nonstructural
traps" must be sought. To date, these formations have been only
a minor factor in the total world output of oil.
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I The Soviet official also stated that geologists in
Tyumen--t e principal producing area in West Siberia--have
failed to meet the planned increase in oil reserves in 1976
and were also behind plan this year. The Soviets have not
reported a major oilfield discovery in the past few years.
ROMANIA: Hard Currency Deficit
Romania's hard-currency trade deficit will rise to
about $500 million this year, according to Romanian officials
and Western bankers. Bucharest will have little difficulty fi-
nancing the 1977 deficit because of its access to unused cred-
its and some $280 million in bank loans. The government's
efforts to reduce the imbalance to limit the growth in its
hard-currency debt are likely to provoke increasing consumer
unrest in the months to come.
The surging deficit stems largely from trade with the
West, where sluggish economic recovery and various restrictions
on textiles and clothing imports have limited the demand for
Romanian products. In addition, reconstruction needs from last
March's earthquake have lowered building material exports.
ucharest also planned to reduce oil product exports
by 60,000 barrels per day this year because of dwindling do-
mestic oil reserves, and agricultural exports have been held
back because of the poor grain harvest. On the import side,
machinery purchases may have rebounded from last year's sharp
cutbacks.
Because the trade deficit is increasing an already
I eavy cep burden, Romania is attempting to reduce the imbal-
ance by further restricting imports. Such efforts are likely
to intensify consumer unrest and increase the burdens on the
domestic labor force at a time of heightened general resent-
ment of such austerity.
PORTUGAL: Political Breakthrough
Portugal's Center Democrats have apparently in-
formed caretaker Prime Minister Soares of their willingness to
join his Socialist Party in forming a new government without
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the Social Democrats. Soares referred to the development as a
"breakthrough," but it is not at all certain that a new govern-
ment can in fact be formed on such a basis.
Even though Center Democrats would participate
as "independents" rather than as party members, the move would
jeopardize the party's conservative constituency, which is al-
ready threatened by a rightward shift of the Social Democrats.
Soares' own party, moreover, may not accept a de facto coali-
tion with Portugal's most conservative major party. Soares is
thus likely to use the development as a bargaining chip in his
discussions with other parties and the President.
The Center Democrats' proposal, one of three sub-
mitted to President Eanes, may stem partly from their desire
to avoid a new election, which might cost them votes and would
further delay efforts to confront Portugal's economic problems.
They are also impatient with Social Democratic intransigence
in dealing with the Socialists. The Social Democrats continue
to insist that any kind of minority government is unacceptable,
and they are unlikely to be forced by the Center Democrats into
an accommodation with the Socialists.
It is uncertain what President Eanes' response
will be. He has been moving to resolve the government crisis
himself since Soares fell last week. //He has been considering
party positions and proposed solutions to the government and
economic crises
JAPAN: Opposition Cooperation
Recent statements by the leaders of Japan's moderate
opposition--the Clean Government and Democratic Socialist
Parties--suggest that both parties are likely to cooperate
with the ruling Liberal Democrats in moving Tokyo's new eco-
nomic program through the Diet next year.
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n separate conversations with Ambassador Mansfield
I is wee , the leaders of the two parties expressed their con
cern about the impact of Japan's growing trade surplus on re-
lations with the US. Both emphasized, however, that they sup-
port mutual efforts to correct the problem. Democratic Social-
ist Party chairman Sasaki underscored his backing for the gov-
ernment's new economic program, including the plan for higher
economic growth targets to help correct the trade problem next
year.
The opposition leaders also expressed their support
for the US-Japanese mutual security treaty. Political conten-
tion over the treaty has diminished in recent years. The Demo-
cratic Socialists already publicly back the treaty; Clean Gov-
ernment Party chairman Takeiri's statement to the Ambassador
that the treaty would probably remain intact even if the ruling
party lost its majority in the Diet reflects his party's grad-
ual shift toward a more forthright stand on the pact.
Given the prospects for cooperation between the mod-
erate opposition and the ruling party, the Socialist Party's
new chairman, Ichio Asulcata, may hope to move the party toward
a more moderate stand on some issues in order to revive the
Socialists' declining political fortunes. Even so, his efforts
are likely to be limited by divisions within the party. 25X1
Turkey
I//Turkish Prime Minister Demirel emerged defiant
from meetings with Justice Party chiefs and his coalition part-
ners yesterday and announced that he will not resign until ousted
by a vote of no confidence.//
//Demirel's coalition has been severely weakened
by the resignation of nine Justice Party deputies since June, 25X1
and his intransigent stand may in fact incite more defections.
Although he appears determined to avoid losing power, his abilit
to hold on is in serious doubt.
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Yugoslavia
The Yugoslav Government has apparently jailed another
leader of the pro-Soviet Cominformists. According to a West
German news service, Professor Bogden Jovovic, an emigre who
spent many years in Kiev and helped to found an illegal Communist
Party in 1974 in Yugoslavia, has been arrested. Jovovic's cap-
ture, along with previous arrests of two other Cominformist of-
ficials, would leave the pro-Soviets nearly leaderless.
Jovovic left the USSR two years ago and spent some
time in Paris and London. As in the arrest of Cominformist
leader Mileta Perovic announced late last month, the Yugoslav
authorities will probably insist they apprehended Jovovic within
Yugoslavia. In a similar case in 1975, however, the Yugoslav
secret police kidnapped a Cominformist from neighboring Romania.
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