NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030900010062-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: December 19, 2016
• Document Release Date: August 12, 2005
• Sequence Number: 62
• Publication Date: November 7, 1978
• Content Type: REPORT

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NATIONAL INTELLIGENCE DAILY CABLE
Tuesday 7 November 1978 CG NIDC 78/260
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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IRAN: Situation Report
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//Tehran was generally quiet yesterday after
the Shah appointed a military government, but there were some
anf-Agovernment demonstrations, 25X1
Most businesses
in the city remained closed, and the pre ars to be
strict control. In Esfahan, scattered violence broke out
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osition leaders in Tehran were cautiously
Some o
pp
optimistic about the Shah's speech in which he named General 25X1
Azhari as Prime Minister. One opposition figure expressed the
hope.. that military rule would soon give way to a coalition gov-
ernment.
Supporters of exiled extremist Muslim leader Khomeini.,
however, continue to denounce the new government, labeling
Azhari a stooge of the British and Americans. Spokesmen of the.
opposition National Front announced over French radio that they
will not cooperate with the new government or negotiate with.
the Shah.
Eight of the 11 ministers in the
itary men. Senior civil servants will head
until a full cabinet is announced. About a
including Foreign Minister Afshar-Qasemlu,
the previous government.
new cabinet are mil-
several ministries
third of the cabinet,
are holdovers from
A major test of the new government's initial effec-
tiveness will be its ability to convince strikers to return to
work. In the vital oil industry, the strike has widened to in-
clude support workers. In most cases, striking workers have
shifted from economic to political issues. Their demands include
an end to the Shah's rule, the release of political prisoners,
and the abolition of martial law. The xenophobic character of
the protests has grown, with oil, telecommunications, and air-
line employees calling for the firing of expatriate employees.
I Kuwait, perhaps the most likely of Iran's neighbors
to be a ected by political turbulence in Iran, is worried
about the possible eclipse of the Shah, whom it re ards as a
ma-ior force for stability in the Persian Gulf.
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National I i en e Tuesda 7 November 1 78
e -Cable is or e purpose o informing
senior o icials.
CONTENTS
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AUSTRALIA: Defense Spending
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AUSTRALIA: Defense Spending
//The Australian Government has abandoned the five-
year e ense development plan that it announced in 1976. This is
the first official acknowledgment that the country's economic
condition will not permit attainment of the midrange moderniza-
tion objectives of the plan.//
//Defense minister Killen, in a speech to Parlia-
ment on 24 October, acknowledged that the objectives of the
development plan, which were formalized in adefense white pa-
per in November 1976, would not be met. Killen admitted that
defense spending has grown in real terms by only about 1 percent
annually, compared to the 5 percent specified in the plan, but
he described the slowdown in growth as temporary.//
//Under the plan, the defense budget was allotted
a ive-year expenditure of $12 billion--US $15 billion at 1976
prices--that would be insulated from inflation. The 5-percent
annual real increase in spending was to be guaranteed and was
judged to reflect a minimum level necessary for modernization
and development of Australia's defense capabilities.//
I //The impact of the new policy on the defense es-
tablishment will be considerable. Killen announced that the
Army would not be allowed to expand from its present strength
of 31,900 to the 1981 ceiling of 34,000 envisaged in the de-
velopment plan. Selection of a replacement frontline fighter
for the Mirage III is to be deferred at least until 1980, and
plans for extending the useful life of the Mirages suggest that
further deferral of the replacement decision is likely.//
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//Backtracking on earlier government promises to
support the ard-pressed Australian defense industries, Killen
indicated that the domestic shipbuilding and aircraft industries
could not expect subsidies when foreign procurement was cheaper.
The level of local procurement has rarely exceeded 3 percent of
the defense budget--the allotment for last year was $108 mil-
lion--but even this now seems to be in jeopardy.//
//Killen's speech is an official acknowledqment
that even defense modernization is not exempt from the govern-
ment's austere spending policy--a key element in Australia's
economic recovery strategy. Nevertheless, the government ap-
parently intends to honor current modernization commitments,
including the acquisition of three frigates, maritime surveil-
lance aircraft, transport aircraft from the US, and Rapier sur-
face-to-air missiles from the UK.//
//Inflation and the absence of an immediate mili-
tary threat will delay any additional developments. E_ I
//The USSR will continue to import substantial
amounts o grain to satisfy livestock feed requirements and
to rebuild depleted stocks, despite Soviet Premier Kosygin's
announcement on Saturday that the Soviet grain crop would be
greater than 230 million tons. Unless the record harvest is
far in excess of 230 million tons, we expect the Soviets to
purchase some 15 million tons of grain for delivery between
1 October 1978 and 30 September 1979.//
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Cuba is undertaking a massive expansion of its infant
citrus industry aimed initially at boosting earnings from member
countries of the Soviet-dominated Council of Mutual Economic As-
sistance through greater export sales. Realization of production
goals would enable Cuba by the mid-1980s to compete with the US
for the rank of second leading exporter of fresh citrus after
Spain and to capture at least half of CEMA's rapidly growing mar-
ket for citrus. The CEMA countries--now supplied mainly by Medi-
terranean producers--will prefer Cuba as a supplier to save on
hard currency.
I
pact
cess
sales
Cuban
citrus
development could have a substantial im-
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on
to
the US
the US
citrus
market,
industry. Even if Cuba failed to gain ac-
the US industry could be hurt by Cuban
to
third
country
markets, particularly the EC.
I The three-week UNCTAD negotiating conference for a new
international Wheat Agreement convened in Geneva yesterday.
Since the last conference in February and March, the interim
committee has come to terms with some of the most contentious
issues, and chances are good that the conference will make sub-
stantial progress in negotiating a new agreement. The conference
is of prime importance to developing countries because of its
implications for food security, and to wheat exporters because
of its price stabilization goal.
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The conference will consider a nationally held, in-
ternationally coordinated system of wheat reserve stocks that
will stabilize prices and assure adequate supplies as well as
a food aid program designed to channel wheat through both multi-
lateral and bilateral aid programs. The principal issues at the
conference will be:
-- The price level at which to accumulate and release
reserves.
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-- The total size of reserves and individual country
shares.
-- What assistance will be made available to developing
countries to assist them to hold reserves.
A US proposal providing for an increase in food aid in
times of substantial production shortfalls in developing na-
tions as a whole.
I Soviet press reports state that oil--including gas
con ensa e--production through September was up 5 percent over
the same period in 1977; we estimate the increase at 4.4 per-
cent. Output for the year is not likely to exceed 11.4 million
barrels per day, about 100,000 barrels per day below plan. Much
of the shortfall is from new fields in West Siberia that were
to supply nearly 45 percent of Soviet planned oil output. Out-
put is also lagging in the Perm, Emba, Mangyshlak and offshore
Caspian Sea producing regions, primarily because new fields
have not been brought on stream to compensate for declining pro-
duction in older fields.
Soviet gas output this year should reach the target
of 370 billion cubic meters, although growth is slowing.
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