NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030600010078-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 19, 2016
• Document Release Date: July 20, 2005
• Sequence Number: 78
• Publication Date: April 14, 1978
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Friday 14 April 1978 CG NIDC 78/087C
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Top Secret
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National Intelligence Daily Cable for Friday, 14 April 1978.
The NIV a e s or a purpose o informing
senior o icials.
CONTENTS
WEST GERMANY: Neutron Weapons
PORTUGAL: Leadership Struggle
INTERNATIONAL: Copper Prices
CHINA-JAPAN: Conflicting Claims
USSR - EAST EUROPE: Trade Deficits
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WEST GERMANY: Neutron Weapons
//West German Chancellor Schmidt strongly defended
President Carter's decision to defer production of the neutron
weapon in yesterday's Bundestag debate that focused on West
Germany's response to that decision. Schmidt also expressed
trust that the US would uphold the West Europeans' security in-
terests while negotiating a SALT II treaty.//
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//Both the governing and opposition parties agreed,
however, that west Germany needs the neutron weapon as a nego-
tiating "chip." In discussing the weapon, Schmidt spoke of "dis-
parities which jeopardize the balance of power in the conven-
tional realm and, to a growing extent, in the nuclear medium-
range field" and said that it is important that the latter dis-
parities be considered during the SALT negotiations.//
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//The opposition called on the government to con-
vey to President Carter its support for stationing the neutron
weapon in NATO countries, including West Germany, but its res-
olution was defeated.//
//Leaders of the opposition parties charged that
the government had neglected West German and European security
rather than dispute openly the Social Democratic opponents of
the neutron weapon, especially former Chancellor Brandt and
Egon Bahr, one of the first Social Democrats to criticize the
weapon.//
/Spokesmen from both the governing and opposition
parties accused the other side of damaging relations with the
US. Schmidt accused Christian Social Union leader Franz Josef
Strauss of slandering President Carter while Strauss charged
that Schmidt is a feckless leader and accused Bahr of insult-
ing the President by characterizing the neutron weapon as a
"preversion of thought." There was acknowledgment from both
sides that relations with the US are not always easy.
PORTUGAL: Leadership Struggle
Differences between moderate and conservative
factions threaten to rupture Portugal's largest opposition
party--the Social Democrats--and have already prompted its gov-
erning political committee to resign. A showdown is expected
this weekend when moderates, Zed by party head Sousa Franco,
confront sympathizers of former party leader Sa Carneiro in a
meeting of the party's national council. President Eanes and
Prime Minister Snares, both, objects of Sa Carneiro's personal
vendettas, will face increasing pressures if the party's right
wing emerges victorious.
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//The decision on the next steps now rests with
the national council, which has a somewhat broader party base.//
The council will be extremely reluctant to accept the resigna-
tions and may try to persuade the current leadership to adopt
a harder line that will appease rightwingers.
If the resignations are accepted, t e matter will go
be tore the national party congress, where Sa Carneiro's support
is greatest.
Some accommodation of the right seems inevitable if
the party is to remain intact. As the party's spiritual leader
and former president, Sa Carneiro may still command majority
support among the Social Democratic rank and file. His views
appeal to growing numbers of party members who believe the gov-
ernment is selling out to Western financial interests and who
suspect Eanes and Snares of secret deals with the Communists.
In recent attacks Sa Carneiro accused Eanes of lead-
ing Portugal into "presidential militarism." He also asserted
that Eanes' failure to act in past government crises makes the
President and Soares responsible for the country's severe eco-
nomic and political problems. Such criticism poses no immediate
challenge to Eanes and Soares, especially now that the right
must devote itself to internal problems. It does, however, in-
dicate what can be ex ected if the right wing closes ranks be-
hind Sa Carneiro.
INTERNATIONAL: Copper Prices
Prices of copper on. the London Metal Exchange have
strengthened in recent weeks as a result of increasing bullish-
ness among traders. Several basic factors, however, militate
against a strong market recovery this year.
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Copper prices have risen from 54 cents a pound in
early March to 60 cents on Monday. Market optimism has been
sparked by the announced agreement between Zambia, Zaire, and
Peru to cut production by 15 percent. Zaire also decided in
late March to meet sales commitments with purchases from Lon-
don Metal Exchange copper stocks, which have dropped by 10
percent since mid-January, and thus added further to upward
speculative pressures.
I The impact of these moves will be temporary. Although
consumption may reach a record 7 million tons this year, demand
will remain well below capacity. Capacity has increased steadily
since the previous consumption record of 6.9 million tons in
1973.
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I I Prospects are further dampened by the 2 million tons
o refined copper that remain on the market, Chile's refusal to
go along with production cuts, and Peru's decision to measure
its 15-percent cut against capacity rather than against last
year's production. Peru will be able to observe the letter of
the agreement and still produce more than it did last year as
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CHINA-JAPAN: Conflicting Claims
Japan has officially protested the continuing pres-
ence of Chinese fishing vessels in Japanese-claimed waters
around the Senkaku Islands. The Chinese have rejected the
protest and reiterated their own claim to the Senkakus. At a
press conference in Taipei, meanwhile, a Chinese Nationalist
spokesman stated yesterday that Taiwan's claim to the islands
was "indisputable."
Japanese patrol vessels first sighted several Chinese
snips fishing inside the islands' 12-mile limit on Wednesday.
When asked to leave, the Chinese held up signs stating that
the waters were Chinese. Tokyo clearly does not plan to use
force; the Japanese have not boarded the Chinese ships or at-
tempted to drive them off, but are maintaining surveillance.
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In turning aside yesterday's Japanese protest, Chinese
official- linked the incident to lack of progress on the Sino-
Japanese peace and friendship treaty. Japanese officials have
said that they have no intention of connecting the two issues.
In 1972, when China and Japan restored diplomatic re-
lations, both parties agreed to put aside their rival claims to
the Senkakus for later negotiation. By sending 100 fishing ves-
sels into the area--32 of which have entered the 12-mile zone--
Peking is ignoring this agreement in an apparent effort to show
its displeasure with Tokyo.
USSR - EAST EUROPE: Trade Deficits
Moscow continues to provide substantial assistance
to its East European trade partners to cover their rapidly
rising trade deficits with the USSR. These deficits--totaling
$1.9 billion Zast year, compared with $157 million in 1974--
have been incurred largely because of rising Soviet oil prices.
Soviet help in sustaining deficits of this magnitude is par-
ticularly welcome to the East Europeans at this time because
they are also faced with severe hard currency trade and pay-
ments problems.
The Soviets have extended ruble trade credits on
terms that are not known to most of the East European countries
and have also arranged some indirect hard currency relief. A
multiyear agreement with Hungary, for example, provides for
the exchange of Soviet "hard" goods--items easily marketable
or in high demand--for Hungarian meat that had been shut out
of the West European market.
Moscow has sometimes allowed East European countries
to divert exports to the West to augment hard currency earnings.
In other instances, the Soviets have provided unplanned deliv-
eries of needed raw materials and semi-manufactures that other-
wise would have to be imported from the West.
Higher oil prices have accounted for more than half
the increase in the value of Soviet exports to the five East
European countries running deficits with the USSR. Only Romania,
which does not import Soviet oil but buys other raw materials
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from the USSR, enjoys a surplus in its trade with the Soviets,
and even this has been dwindling. Moscow raised its oil prices
20 percent last year, and another 20-percent hike is scheduled
for 1978, these increases will mean the East European will con-
tinue to have la deficits and a need for further Soviet fi-
nancial support.
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The reorganization of the Chilean cabinet announced
Tuesday night reflects President Pinochet's apparent determina-
tion to bring more civilians into the government. He may also
be trying to counter charges that he is losing his grip in the
face of pressing foreign and domestic problems. By naming a
trusted civilian lawyer to the key post of Interior Minister
and by giving him the authority to orchestrate further cabinet
Pinochet seems to be upholding a commitment he made last week
to give civilians a broader role in the planned transition to
civilian rule. The shift of a taciturn and austere Army general
from the Interior to the Defense Ministry seems calculated to
remove him from the initial process of completing a new consti-
tution and organizing a plebiscite to approve it.
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